FINANCIAL POLICIES AND PROCEDURES COMMITTEE MINUTES
September 23, 2011
Meeting held:
Jefferson County Education Center; Basil T Knight Center, Mesa 51 School District; Swink 33 School
District; Centennial BOCES, Greeley
Members Present
Dave Montoya, Poudre R1
Marita Vogrin, Academy 20
Kim Krause, Akron R-1
Kathleen Askelson, Jefferson County R-1
Terry Kimber, Delta 50J
Karin Slater, Montrose County Re-1J
Velva Addington, Swink 33
Amy Lyons, Bayfield 10JT-R
Paula Sublett, San Juan BOCES
Ex-Officio Members Present
Leanne Emm, CDE
Terry Christensen, CDE
Wendi Chapin, CDE
Eileen Johnston, James Irwin Charter
Alternates Present
Shae Martinez, Mapleton 1
Jane Schein, St Vrain Valley RE-1J
Guests Present
Dan Domagala, CDE
Karl Greve, PERA
Joanne Vergunst, Fountain-Ft. Carson 8
Kay Schreiber, East Central BOCES
Misty Manchester, Canon City Re-1
Vickie Sanger, Ellicott 22
Suzi DeYoung, Brighton 27J
Adrienne Bradshaw, Adams-Arapahoe 28J
Dan Huenneke, Cherry Creek 5
Rick Howell, Pueblo City Schools
Patty Buckle, Adams 12
Willie Leslie, Clear Creek Re-1
Natalie Morin, Cheyenne Mtn. 12
Chuck Struck, Colorado Springs 11
Ken Wieck, Colorado Springs
Jon Kvale, Englewood 1
Jan Brummond, Platte Valley Re-7
Meggan Sponsler, Greeley 6
Nikki Schmidt, Windsor 4
Brian Lund, Park R-3
Sherry Shay, Thompson R-2J
Katrina Brossin, Thompson R-2J
Colleen Love, Ridgway R-2
Teri Arnett, DeBeque 49JT
Nancy Paregien, Mesa County Valley 51
Wendy Winfrey, Ouray R-1
Doug Shawcroft, Mesa County Valley 51
Rose Belden, Garfield 16
Bill Sutter, Boulder Valley RE-2
Brad Arnold, Cherry Creek 5
Carole Herman, Liberty J-4
Terry Buswell, Centennial BOCES
Linda Rau, Plateau Valley 51
Mike Thomas, Fowler R4J
Cassie Walgren, Fremont Re-2
Karen Andrews, Dolores Re-4A
Adam Williams, CDE
Kirk Weber, CDE
Crystal Dorsey, State Auditor’s Office
Wendy Swanhorst, CSCPA
Donna Holstlaw, Littleton 6
Lynn Warner, CDE
Suzanne Collins, Denver 1
Stacey Sondberg, Byers 32J
David Brungardt, Valley Re-1
Janice Martin, Buena Vista R-31
Tina Woodrum, Miami Yoder 60
Sue McKnight, Brighton 27J
Angie Skalla, Widefield 3
Karen Cordova, Pueblo City Schools
Terry Scharg, Gilpin Re-1
Sharon Thompson, Holyoke Re-1J
Lynne Winchell, Adams 14
Dana Thomson, Harrison 2
Mark Capps, Colorado Springs 11
Scott Myers, Littleton 6
Kay Bridges, Jefferson County R-1
Mike Lee, Fort Morgan Re-3
Mandy Hydock, Greeley 6
Tim Unrein, Eaton Re-2
Gerald Gabbard, Park R-3
Luke Gonzales, Thompson R-2J
Cheryl Brewster, Weld Re-1
Cathy Kiser, Meeker Re-1
Barb Hazelton, Mesa County Valley 51
Vi Crawford, Mesa County Valley 51
Kurt Shugars, Telluride R-1
Kelly Cheney, DeBeque 49JT
Mark Rydberg, Moffat County Re-1
Anne Gundersen, Ignacio 11JT
JoAnn Valdez, Archuleta County 50JT
Don Trujillo, Pueblo 70
Dottie Burnett, Santa Fe Trails BOCES
Sherry Herman, Cheraw 31
Jean Bushong, Clifton Gunderson CPA
Janell Wood, Archuleta County 50JT
Steve Cole, Dolores County Re-2J
Doug Moss, Manzanola 3J
Patty Venem, Rocky Ford R-2
Paul Backes, McMahan & Assoc.
Madeline Quigley, Clifton Gunderson CPA
Members and Alternates Absent
Phil Onofrio, Eagle County Re-50
Dale Mellor, Steamboat Springs RE-2
Melissa Brunner, Montezuma-Cortez Re-1J
Rhonda Bohlander, Crowley County Re-1J
Diane Raine, Mesa County Valley 51
Denise Pearson, Kiowa C-2
Brenda Johnson, Weld Re-8
Anthony Whiteley, St. Vrain Valley Re-1J
MINUTES
FINANCIAL POLICIES AND PROCEDURES COMMITTEE
September 23, 2011
I.
Call to Order and Introductions
Leanne Emm called the meeting to order at 9:30 am. Those in attendance were asked to introduce
themselves and their district. She also announced staff additions/changes in the PSFU unit. Wendi
Chapin, formerly with Platte Valley 7 School District, is a new principal consultant splitting duties
between PSFU and Capital Construction. Scott Abbey has been appointed as the Audit Supervisor.
II.
Approval of Agenda
Kim Krause made a motion to approve the agenda as presented. Carole Herman 2nd the motion.
Motion carried.
III.
Approval of Minutes
Kathleen Askelson made a motion to approve the minutes from the June 24, 2011 meeting. Marita
Vogrin 2nd the motion. Motion carried.
IV.
Impact of proposed new GASB rules on financial reporting as an employer affiliated with
PERA – Karl Greve, PERA
Leanne introduced Karl Greve, Chief Financial Officer for PERA. Mr. Greve presented an overview of
proposed changes to GASB pension reporting requirements. The current GASB approach is funding
based. School districts record statutorily required contributions as an expense. The only liability
would be if the required contribution was not made. The disclosures are minimal in comparison to
what GASB is proposing. GASB is proposing an accounting base approach which would primarily
make the employer responsible for the unfunded pension obligation. A portion of the unfunded
liability would need to be displayed in the employer’s financial statements. To give you a magnitude
of this liability, the unfunded liability based on the current rule for the school division trust fund was
$11.5B at December 31, 2010. This would get allocated out to all employers in the school division
fund. In addition to all the changes to the financial statements and note disclosures, they are
proposing adding required supplemental information that would need to be included in the employer’s
statements. Basically they would require 10 years of information about the net pension liability,
pension expense and contributions. There are many implementation issues: PERA would have to
provide the needed information to employers at a year-end other than its year-end; the allocation
methodology would have to be devised; data may not be available at the level employer reports on
financial statements; timeliness of when PERA’s CAFR is completed; etc. School districts can
potentially expect to see additional administrative costs and audit costs to implement these rules. Full
accrual accounting would impact governmental proprietary funds such as food service fund.
Comments on the exposure draft are due September 30, 2011 but the deadline has been extended
two weeks. Hopefully districts have been inspired to submit a comment letter. Final statements are
expected to be completed mid-2012 with an effective date for financial periods beginning after June
15, 2013.
Leanne asked if there were going to be made available standardized draft notes for districts to use.
Mr. Greve felt that would have to happen since a school district would not know the information
unless it was provided by the plan. There will definitely have to be some coordination between
districts and PERA to implement these changes. If anyone has questions they may contact Mr.
Greve at kgreve@copera.org. Additional information can be accessed at the following websites:
GASB Exposure Draft Comments
Public Pension Financial Forum list of implementation issues
V.
Paid Lunch Equity: Changes Regarding Meal Prices and Indirect Costs – Lynn Warner, CDE
Nutrition Unit
Leanne introduced Lynn Warner with the Nutrition Unit at CDE. Lynn presented an overview of the
Healthy, Hunger-Free Kids Act of 2010. He stated that a more comprehensive program has been
presented to food service managers over the last nine months. The law was passed and signed in
December 2010. It will be implemented over the next three years and made changes in all the
federal food service programs. Some specific changes that districts need to be aware of beginning
with the FY11-12 school year is that water must be available at lunch time. This doesn’t mean that it
must be provided, just that it has to be available. A water fountain in the cafeteria meets this
requirement. Nutrition program review cycle will increase to every three years from the current five
years. Districts will be required to make the results of these reviews available to the public. USDA
has not defined what available is for SFAs, but most likely will involve posting on district websites or
perhaps publishing.
Additional reimbursement of $.06 per lunch will be forthcoming sometime after October 1, 2012.
SEA’s must certify compliance with a new meal pattern in order for districts to receive the additional
reimbursement.
School districts are also required to comply with equity in school meal pricing to ensure that
free/reduced meal reimbursements are not subsidizing paid lunch meals. This may require some
districts to raise the price of their paid lunches. If a district is charging less than $2.46 for lunch they
are out of compliance and need to raise the lunch price or provide additional non-federal funding to
nutrition services. The Nutrition Unit and USDA have developed a tool, which has been distributed to
all nutrition directors and is available on the website, to do a price equity analysis.
There is also a new requirement that revenue from non-program foods must be in proportion to the
cost of obtaining these foods. The intent is to ensure that reimbursable meal revenue is not being
used to subsidize non-program food costs. Non-program food applies to ala cart sales, catering,
adult lunches, etc. There is also a tool on the website to help with calculation of the proportional
costs allocation.
Essentially there are no fiscal penalties or action that will be taken for non-compliance with any of
these regulations. The SEA is required to make certain everyone is aware of the new regulations
and provide technical assistance to bring all into compliance.
The USDA will be conducting a study of indirect costs. Study will access what types of indirect costs
are being charged to nutrition services and the appropriateness of those costs.
VI.
State Longitudinal Data Systems & ADE Update – Dan Domagala, CDE Chief Information
Officer
Leanne introduced Dan Domagala the Chief Information Officer at CDE. Dan stepped through the
Department’s data strategy and how it relates to the state-wide longitudinal data systems program.
There are four key proponents of the Department’s data strategy; capture, link, provide and perform.
Capture is the movement of information from school districts to the State. The current system is quite
antiquated for moving information. The intent is to unify the process to make it easier to move the
data. The ultimate goal being a more student and teacher centric collection process instead of
program centric, as has been in the past. The challenge is having 178+ difference student
information systems out in the field and coming up with a commonality between the systems. Some
of the capture projects currently underway are: reducing the data burden; revamping the automated
data exchange; overhaul of the financial system, more specifically updating the grant tracking and
payment system and state equalization payment system; a state-wide individual education plan
system. Hopefully this will facilitate less redundancy and more automation.
Link is the way the information is connected, not only within CDE but also outside of the K-12 space.
Projects currently under way here are: Teacher/Student Data link, which is in the pilot process;
National Student Clearinghouse project to gain information on post-graduate students outside the
State; Colorado Unique Person ID project in conjunction with the governor’s office of information
technology to connect information from agency to agency. The goal is to not create a huge repository
but to create ways to connect the information from data bases.
Provide and Perform are the final two pieces. A major piece of the Department’s effort in providing
information is through SchoolView and the growth model. The ultimate goal is to have a shared
learning structure that will help improve academic achievement.
VII. Fiscal Health Indicators – Crystal Dorsey, Office of the State Auditor
Leanne introduced Crystal Dorsey from the Office of the State Auditor (OSA). Crystal gave highlights
from the Fiscal Health Analysis of Colorado School Districts that was presented to the Legislative
Audit Committee in August. The analysis provides information on financial indicators that can be
used to evaluate the financial health of Colorado school districts. The OSA ensures that all local
governments, including school districts, comply with the local government audit law. Once audits are
received the school district division review the report and sends letters of deficiency to school
districts. The audit division of the OSA developed the financial indicators appropriate for school
districts by researching analysis conducted by other states, state agencies and accounting firms.
Using the audit reports submitted to the OSA and looking at a three year period to review, ratios can
be tracked over time that offer information that can provide warning indicators of potential fiscal
stress. The analysis focuses on areas of highest risk, which for a school district is the General Fund.
She explained the factors used to define the six ratios used in the analysis which are: asset sufficient
ratio; debt burden ratio; operating reserve ratio; operating margin ration; deficit fund balance ratio’;
and change in fund balance ratio. This analysis evaluated warning trends over the three year period
of FY2007-08, FY008-09 and FY2009-10. Of the 178 school districts, the analysis showed 20
districts with one warning indicator, five with two warning indicators and one with three warning
indicators. A warning indicator does not always mean there is a problem. Planned capital
expenditures and deliberate spending of reserves will generate warning indicators, however, the more
warning indicators, the greater the risk of a potential problem. By identifying any potential problems
early allows for conversations between school districts, BOE’s and CDE to ensure steps are initiated
to correct any problems. Overall the number of districts with 2 or more warning indicators declined,
from 15 districts in 2009 and 19 districts in 2010 to 6 districts in 2011.
Crystal did state that they do not include charter schools in the fiscal year analysis but she has heard
from some districts that they use the same ratio calculations to see how their charter schools are
doing and use the information to report to their boards.
VIII. September Economic Forecast Update
Both the Legislative Council Staff and the Governor’s Office of State Planning and Budgeting (OSPB)
presented their September 2011 Economic Forecasts to the Joint Budget Committee. Both forecasts
were less optimistic than the outlook in June. Both cite increased chances of another economic
recession which would continue to strain the revenue forecasts.
There was discussion regarding the State Education Fund (SEF). For the past couple of years,
transfers out of the SEF for the financing of schools have been greater than the transfers in. This
reduces the fund balance in the SEF that is available for use and with this decline in fund balance,
increased pressure is placed on the General Fund.
One piece of good news is that preliminary property tax valuations were better than originally
projected and if they hold could provide approximately $34 million that may potentially benefit the
state’s general fund if this additional local share were used to reduce the state share – this will be up
for discussion by the legislature. They will have the option to maintain State Share at the current
appropriated level and let the local share increase or decrease the negative factor, or they could
decrease the State Share amount by the $34M amount and keep Total Program the same. There are
many factors that will effect Total Program between now and January, i.e. student count, final
assessed valuations in December, December economic forecast, etc.
Leanne advised to be prepared for cuts going into next year. The Governor will be presenting his
budget to JBC on November 1. OSPB is saying that 2012/2013 will be challenging and constrained.
The inflation rate the first half of the year was 3.8%, current estimates are 3.5% for OSPB and 3.2%
for Legislative Council. If it comes in around the 3.5% range there will be an estimated increase need
of $260M for Total Program. In the current school finance act, legislature did put aside $67.5M and
all indications are that it will be available for appropriation.
Links to both forecasts are below:
OSPB September 2011 Forecast
Legislative Council September 2011 Forecast
IX.
Financial December Automated Data Exchange (ADE) Update
Adam Williams reported on the current status of the Financial December ADE submission. He also
reviewed the changes made to edits for the current year submission.
X.
Webinar Training Sessions
Kirk Weber reported that the following webinars training sessions are scheduled:
a. Financial December ADE Submissions for Newcomers – Tuesday, Oct. 11th and Wednesday, Oct.
12th.
b. FPP Handbook and Chart of Accounts Overview – Wednesday, Nov. 16th and Thursday, Dec. 8th.
XI.
Chart of Accounts
a. GASB 54 – Fund Balance & Chart of Accounts Coding Sub-committee report.
Adam Williams reported that at the May 13th meeting there were four options presented to align
the Chart of Accounts with the new GASB 54 fund equity reporting requirements. At that meeting
it was decided to appoint a sub-committee to review the options and bring recommendations back
to the committee as a whole. The sub-committee of Adrienne Bradshaw, Molly Janzen and Phil
Onofrio meet in July to review the options. Adrienne Bradshaw presented the recommendation
from the sub-committee to adopt Option 2 as presented. These changes will be effective for
FY11-12 ADE collection. Terry Buswell made a motion to approve the sub-committee’s
recommendation. Dave Montoya 2nd the motion. Motion carried.
b. Elimination of use of two grant codes for one grant: i.e. 5XXX or 6XXX
Adam Williams reported that allowing multiple grant codes to be used for the same grant/CFDA#
makes reconciling grant payments difficult. Using one grant code for most Federal grants will
make reconciling grant payments easier, and it will clean up the chart of accounts. Adam is
recommending the following:
1. Formula grants will continue to be assigned a 4XXX grant code.
2. Competitive grants will no longer have two grant codes: 5XXX or 6XXX
a) 5XXX will be the Competitive grant
b) 6XXX will no longer be an option
3. If needed, grants that have multiple competitive facets tied to the same CFDA# will start with
5XXX as the primary competitive grant, and move on to 6XXX, 7XXX, 8XXX and 9XXX as
needed.
It is proposed that this go into effect for FY2012-13. After discussion, Terry Buswell made a
motion to approve the recommendation as presented. Carole Herman 2nd the motion. Motion
carried.
XII. Other Topics of Interest
a. American Jobs Act
Leanne reported that there are preliminary estimates that Colorado may receive approximately
$478M from The American Jobs Act targeted to preserve teacher and first responder jobs, if the
funds are approved. In addition, the Colorado amount slated for K-12 modernization is $265M.
The Department was also notified that there was going to be small supplemental distribution to
Colorado for ARRA-EdJobs in the amount of $2.3M.
b. NCLB Waiver
Leanne also mentioned that Commissioner Robert Hammond was sitting with President Obama
today as he announced his proposal to allow states to opt out of mandatory participation in No
Child Left Behind laws.
c. Open Forum Meeting – Rule Changes for Charter Schools
If anyone is interested, there will be an open forum meeting on potential rule changes for charter
schools on Monday, September 26th at 9AM at CDE. Additional information is available on “The
Scoop”. Leanne also reported that the Department has been audited on federal grant funds
received for charter school start-up. The Department was found to be in non-compliance in two
areas: 1) student achievement as the #1 priority for revocation of charter schools and 2) audits
are a requirement for all charter schools, independent of the school district audits.
d. Reporting upcoming election information to CDE
Leanne reminded districts that as we go into the election season that they are required to report
their ballot questions and election results to Mary Lynn Christel. She will be sending out the form
through the finance listserve.
e. BEST Application Process/Timeline
Wendi Chapin reviewed the current Best grant cycle timeline. If districts have questions they are
encouraged to contact their BEST tech assistant or Ted Hughes.
There being no further business to come before the Committee, the meeting was adjourned.