BAR Update October 2013
Cell Phone Tax Exemption
Presently, we are treating cell phone stipends as exempt from federal withholding, but not exempt from
FICA (Social Security). We’ve recently determined these are also exempt from FICA and are making
programming changes in PPMS. An announcement will go out on the PPMS list from SBCTC-IT when
this is ready.
COSO Internal Control Integrated Framework
A new version was released May 14, 2013, Effective December 16, 2014. This framework is particularly
useful when designing internal control systems or when you’re asked to do a risk assessment. It is not
specifically required that you use this, but since it’s a tool used by auditors, it’s worth reading the
Executive Summary so you can speak their language. Unfortunately, only the Executive Summary is
available online. If you need to delve deeper into the concepts, you’ll need to purchase the full
framework.
Link to the webpage http://coso.org/IC.htm
Executive Summary http://coso.org/documents/990025P_Executive_Summary_final_may20_e.pdf
Department of Defense MOU
New version released recently. Now compliant with President’s Executive Order. Colleges that serve
active duty military through the Tuition Assistance program will need to review and sign the new MOU.
Some institutions continue to have concerns with the MOU language. See the link for NACUBO’s
feedback and more links to related documents.
http://www.nacubo.org/Business_and_Policy_Areas/Student_Financial_Services/Student_Financial_Ser
vices_News/Higher_Education_Associations_Comment_on_Proposed_Changes_to_DOD_MOU.html
DES Purchasing Training Requirement
The training program has been delayed. DES was given the authority to hire an outside contractor to
help layout the trainings. DES did a RFP and no one applied. DES is doing research now and hopes to
repost the RFP and receive bids soon. The general class will be first then others will be added as time
goes on.
DES Agency Contract Reporting
DES is using a pilot group to test their agency reporting approach before rolling it out to all agencies.
All state agencies and higher education institutions are required under state law to annually submit a list
of all contracts entered into or renewed during the previous fiscal year. The Department of Enterprise
Services (DES) has gathered input and established a policy to guide the submission and publication of
that data.
What has happened so far?
Developed Excel spreadsheet template for listing all contracts, and partnered with several
agencies to test it and provide feedback. The data will also be uploaded to data.wa.gov.
Created a contract reporting frequently-asked-questions document and posted it on the
department’s web site.
Set up a ContractReporting@des.wa.gov mailbox for collecting contracts data from agencies.
Created business rules and processes for communicating with and collecting data from state
agencies and higher education institutions.
What is next?
The department identified volunteer agencies to participate in the contract reporting pilot. Pilot
agencies will submit all contracts with effective date on or after January 1, 2013 through June
30, 2013. All contracts must be submitted to DES by no later than October 1, 2013.
Agencies not participating in the pilot will not be required to report until next year. However,
they will be required to submit all contracts with effective date on or after January 1, 2013
through June 30, 2014 (18 months).
DES is currently developing a training plan that will help answer policy and technical questions
about the Excel template and process. Agency training for pilot agencies is tentatively
scheduled to begin September 2013. DES will send out a communication to our pilot agencies
once a schedule is finalized.
DES Procurement Reform in a Higher Education Setting
There continue to be questions about how procurement reform interacts with the pre-existing
procurement authority given to higher education institutions in RCW 28B.10.029. The four-year
colleges’ purchasing officers have engaged a consultant to help write sample purchasing policies which
can then be vetted by the Attorney General’s Office. The SBCTC is participating in this project.
Federal Government Shutdown
Never mind 
Financial Statement Project Update
Discussed in separate presentation
Fiscal Health Measures
SBCTC recently distributed FY13 measures AS IS. We also plan to use the financial statement project as
a way to re-examine what data is available and what comparisons may be useful – not only among other
system colleges, but also nationally. After discussion with BAR members, if you find that the figures
reported to you do not match the description of included G/Ls and funds that was described in the
attached Word document, please let Joann know.
IRS Proposed Penalties for 1098-T
All 30 colleges received notices of proposed penalties. SBCTC provided a copy of Yakima’s response and
some Q&A related to responding to the IRS. We followed up with copies of NACUBO’s guidance once it
became available.
At present, colleges cannot enter Individual Taxpayer Identification Numbers - ITINs (issued to resident
and non-resident alien students) into the SMS SSN field. In the case of resident alien students, the
college is required to issue a 1098-T if they meet the other reporting criteria. In the case of nonresident
aliens, the college is not required to issue a 1098-T but may choose to voluntarily report in order to
avoid manual processing. In both cases, the college is at risk because an electronic 1098-T will not
include the ITIN, even though the college has it in its possession. As a result, SBCTC-IT is making
programming changes to allow entry of ITIN in SSN field for 2103 reporting. An announcement will go
out to Registrars from SBCTC-IT when this is ready for use.
Rumor has it that some colleges may be using unusual action codes to exclude issuing a 1098-T to
students who did not provide SSNs. We don’t get enough information at the SBCTC level to be able to
tell how the colleges are using these unusual action codes, so we cannot determine whether the rumor
might be true – or which colleges may be following this practice. IRS regulations clearly state that the
college must issue a 1098-T, even if the student does not provide their SSN or ITIN, so if your college has
been excluding these students, you will need to make changes to ensure they are reported in thefuture.
SBCTC staff will follow up with Student Services and Registrars to determine if the colleges are
interested in putting together a group to look at best practices that could be shared throughout the
system.
Laser Check Printing for Payroll Checks
A one-pager was emailed out a few weeks ago. There is no perfect time to transition, since colleges
have varying levels of existing check stock on hand.
SBCTC staff addressed follow up questions surrounding #9, #10 security envelopes. SBCTC-IT paid for
initial laser check stock. We’re looking at billing colleges for check stock at the end of each year for
actual number of checks issued.
On a related note, SBCTC is looking at other courier options (current service is very expensive). We’ve
also had requests to look at whether colleges who print their A/P checks on laser check stock could print
payroll checks locally. Under that scenario, the processing would still happen in Bellevue, only the
printing would happen at the college. For the time being, we will focus on completing the roll-out of
laser check printing from Bellevue. Once that’s complete, you’ll be hearing more as we research these
other ideas.
Megamations Update
Megamations has functionality to report info we cannot currently track in FAE. The facilities
environment has been very dynamic over the past several years, with a number of new reporting
requirements being added almost every year. We recently got legislation that directs OFM to review all
the competing reporting requirements – both state and federal – and see what can be streamlined.
This is related to the Megamations/FAE conversion because one of the key goals for the conversion was
for colleges to have a single system that would track all of these elements, have the flexibility to add
more, and meet reporting needs – whether financial or regulatory.
Some examples of Megamations functionality are:
 Work order system
 Managing preventative maintenance activities
 Keeping inventory data below the room level
 Building GIS coordinates
 Whether building is in a Homeland Security Zone
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Whether building is “critical facility”
New OFM definition of building (one wall and a roof)
I am hearing but have not verified that Megamations has been able to replicate FAE reports and
functions – and has been tested successfully. BAR also raised a question of whether the data conversion
into Megamations has been successfully tested. I’ll follow up on those issues and get back to you.
As we look forward to ctcLink, which will have more functionality, but still not as much as we have in
Megamations, it’s raising questions about what will be in ctcLink and what will be in Megamations. Guy
Hollingbury from SBCTC-IT has been assigned to this.
Minor Works
Historically, colleges have spent about 40% of their minor works money in the first biennium. We know
colleges need all this money and more, however it’s difficult to make the argument to OFM and the
Legislature when we don’t spend it very quickly. We understand there are many scheduling,
coordinating and logistical challenges to getting this work completed. That said, we are encouraging
colleges to make every effort to complete these projects more quickly. Anything BAR members can do
to support their college facility staff in meeting this goal would be much appreciated.
NACUBO Debit Card Guidance
Earlier this month, NACUBO testified in front of the Consumer Financial Protection Bureau (CFPB)
concerning how colleges use financial products marketed to students. This includes financial aid
disbursement accounts, student banking, prepaid/debit cards and credit cards. You can read a quick
description of their comments and find a link to more extensive comments NACUBO files in advance at
http://www.nacubo.org/Business_and_Policy_Areas/Student_Financial_Services/Student_Financial_Ser
vices_News/NACUBO_Participates_in_CFPB_Banking_on_Campus_Forum.html.
As our students’ needs and colleges’ options evolve, these best practices may be worth revisiting.
Record Retention - Scan and Toss
Microfiche Storage versus other options
The Community College Records Schedule currently requires certain payroll records to be maintained on
microfiche. It has become more and more difficult to find a microfiche vendor for a reasonable cost.
SBCTC-IT is interested in looking at scanning options instead. Technically, the colleges are currently
covered by BOTH the Community College Record Schedule and the general government schedule, so we
may have the flexibility to make a change in our practice without getting the CC schedule changed. (On
a related note, the Secretary of State’s Office has attempted in recent years to put together a group to
revisit the CC schedule, but it’s getting a slow start.)
The Secretary of State approved guidelines for “scanning and tossing” in May 2012. These new rules
allow agencies to scan and toss non-archival records when they can “scan and verify in a consistent and
systemic fashion that ensures a complete and accurate copy of the source record”. See guidance at
http://www.sos.wa.gov/_assets/archives/RecordsManagement/Requirements_for_the_Destruction_of_
Non-Archival_Paper_Records_After_Imaging_v1.1_May_2012.pdf
You can look at this as there being three types of records:
Archival records – things the state has to keep permanently. These we can scan for ease of access but
we cannot destroy the paper copies – ever. Eventually such records are supposed to go the SOS’ state
archives. Interestingly, when they get them, they digitize them – for ease of retrieval – and also store
the paper.
Long term, non-archival records – these are documents with a retention period of more than 6 years.
Payroll and personnel source documents that may have retention periods of 50 to 75 years are the big
ones here. If it originated as a paper record, we can scan it then destroy that paper copy as long as
we’ve gone through a verification process. One of the big issues for this kind of record is that we have
to retain not only the record, but also whatever hardware or software is necessary to be able to read the
record. As technology continues to evolve, we can also convert data from an old electronic format to a
new electronic format, again, as long as we go through a verification process.
Short term, non-archival records –these are documents with a retention period of six years or less. The
requirements are the same as the long term records, it’s just assumed that we’re unlikely to need/want
to convert to some future electronic format or to have issues about keeping hardware and software to
read the records.
SAO Audits
Accountability Audits
At the June Financial Management Advisory Council (FMAC), SAO provided the following areas that will
be potential subjects for audits during 13-15.
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Department of Transportation highway construction
Improper payments to incarcerated individuals
Health insurance eligibility
Medical provider overpayments
Single Audit
For the statewide single audit SAO is primarily looking at research grants at UW and WSU. They have
now added Head Start.
State CAFR Audit
Any individual colleges with material balances have likely already been contacted by SAO.
This year, SAO also looked at all colleges’ cash balances and reconciliation procedures. Some variances
were identified, but determined not to be material to the CAFR. However, as many as six colleges may
receive management letters regarding timeliness and/or accuracy of bank reconciliations.
SBCTC Operations Reviews
A letter describing which colleges and programs we plan to review between now and next June went to
Presidents and Business Officers on October 9, 2013. We are still finalizing some of the reports from last
year’s reviews, so if you have not yet received yours, it’s on its way.