CASBO Training

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 ASBO Certification
 Increase personal knowledge
 Tier 1 Requirement
 Tier 1 annual update.

 What are the major categories of expenditures in a typical district?
 Salaries & Benefits
 Supplies/Equipment
 Services
 Capital Outlay
 Debt Service.

What is the proportion of each to the whole operating budget?
 Salaries & Benefits
 Supplies/Equipment
 Services
 Capital Outlay
 Debt Service.

 Salaries
 Contracted wages
 Time sheet pay

 FICA – 6.2% (maximum salary $113,700 in 2013)
 Medicare – 1.45%
 Teacher Retirement – 14%
 =
21.65%
 Other benefits provided by the district for all certified and/or classified employees
 Health - $131, moving to $150 in January
 Dental, Disability Insurance
 Worker’s Compensation
 Unemployment
 For estimating purposes, total @25%.
 Will vary slightly by district.

 Approved Salary Schedules for various groups of employees
 Approved way for paying for extra assignments
 Contracts issued in a timely fashion
 Educational Increments
 Savings from retirees vs. new hires
 Severance Issues
 Multi-year impact of salary policy
 Educational Excellence Trust Fund compliance.

 Difference is important as it relates to accounting and the inventory of fixed assets
 Inventory vs. fixed asset
 Inventory – a detailed list of items in stock
 Fixed asset - Any tangible asset with a life of more than two years used in an entity's operations.

 Professional Services
 Property Services
 Other Services.

 Professional and Consultant Services are exempt from bidding
 Accounting
 Engineers
 Architects
 Legal
 Medical
 Information/Technology
 Appraisal
 Do they give advice or do they supply a product?
 Generally, are they licensed or recognized in some way by a certifying professional organization?

 Utilities
 Construction Services
 Lawn care
 Cleaning services
 Rental.

 Transportation
 Insurance
 Advertising.

 Purchases/Construction of a fixed asset of such a significant amount that it is considered unusual and substantial in relation to the overall budget of the district.

 Payment is in three parts
 Principal
 Interest
 Fees
 Debt Schedule

 Your Fiscal Agent
 Taxable vs. Non-Taxable Bonds
 Arbitrage - Attempting to profit by exploiting price differences of identical or similar financial instruments on different markets or in different forms.

 The definition of accounting is “ the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results.
”

Why should I care about accounting for money?
 It is the right thing to do.
 People lose their job quicker over money and sex than anything else.
 You have a responsibility to your public.
 You have a responsibility to your kids.

 Establishes point-in-time when revenues or expenditures and related assets and liabilities are recognized in district accounts and reported in financial statements
 Determines timing with which the accounting system recognizes transactions.

 Cash Basis – Recognized when cash is received or disbursed
 Accrual Basis – Measures financial position based on economic resources and obligations

 Revenue recorded when cash is received
 Expenses recorded when cash is paid
 Financial condition measured b cash balance
 Receivables, payables or accrued items are not recognized.

 Revenues are recognized when earned – regardless of when received
 Expenses are recognized when incurred – regardless of when paid
 Economic status reflects resources and obligations – regardless of cash flow timing.

 You will spend money.
 How will you know how much you are spending and what you spent it for?
 How can you report that information out to your Board and to your Public?
 How can you prepare for the annual visit of your auditor?

 Handbook II, Financial Accounting for Local and
State School Systems: Standard Receipt and
Expenditure Accounts, 1957
 Handbook II Revised, Financial Accounting:
Classification and Standard Terminology for Local
and State School Systems, 1973.

 Handbook II R2- 1990
 Reflects changes and clarifications in generally accepted accounting principles (GAAP)
 Financial Accounting for Local and State School Systems.
2003 Edition (NCES)
 NCES Revised Edition published June, 2009. http://nces.ed.gov/ppubsearch/pubsinfo.asp?pubid2009325
 State Accounting Systems (ADE, etc.) adapt Handbook II
R2 for use by local school districts

Access on
APSCN site

Interest relative to Handbook IIR 2 is widespread
 Account coding is required to reveal:
 Athletic expenditures
 Student transportation
 District administration
 School administration
 Instructional facilitators
 Supervisory aides
 Substitutes
 Property Insurance

 Requires gathering information on these expenditures:
 Student growth
 Declining enrollment
 Special education catastrophic occurrences
 Special education services
 Technology grants
 Debt service supplement
 General facilities
 Distance learning
 Gifted and talented

 Act 1006 provides for ADE to publish rules to identify error rates by local schools in reporting and provides that fines or other penalties may be assessed.

 The 21 digit number that indicates what fund will pay, what kind of expenditure, what cost-center, what type of goods or services the expenditure is.
 It provides the detail of the expenditure.
 It also provides a way to report and analyze the expenditures of a district and ultimately the state.

 Six sections of the budget unit:
 1000-1140-049-000-00 61110 – Certified Salary
 2000-1120-042-000-00 62210 – Certified Social Security
 2281-1105-040-987-00 66100 – Supplies for early childhood
 2000-2134-005-000-79 65800 – Nurse ’ s travel budget

 1000 – Teacher Salary Fund
 2000 – Operating Fund
 3000 – Building Fund
 4000 – Debt Service Fund
 5000 – Capital Outlay Fund
 6000 – Federal Funds
 7000 – Activity Funds
 8000 – Food Service Fund
 9000 – Fixed Assets
 2 281-1105-040-987-00 66100

 Federal Funds
 Activity Funds
 Grants
 Categorical Funds
 223 – Professional Development
 275 – ALE
 276 – ELL
 281 – NSLA
 Facilities Funding
 2 281 -1105-040-987-00 66100

 1000 – Instruction
 2000 – Support Services
 3000 – Operation of Non-Instructional Services
 4000 – Facilities acquisition and Construction
 4610 – Building Acquisition and Construction
 4630 – Athletic Building Acquisition and
Construction
 5000 – Other (debt)
 22811105 -040-987-00 66100

 Normally, it is the last three digits of the building ’ s
LEA number. Can be a building number designated by the district for non-instructional buildings.
 ??-??-040
 2281-1105040 -987-00 66100

 Used to further identify the specific use of the funds to be expended.
 Districts may use 900-999
 Special Ed – 200
 Athletics - 115
 2281-1105-040987 -00 66100

 Used to provide even more detail on the expenditure.
 The State can use both Program and Subject codes at their discretion.
 Currently, the State does not use this portion of the budget unit.
 2281-1105-040-98700 66100

 Sometimes called the Account. Tells us what was purchased
 2281-1105-040-987-00 66100
 61000 – Salaries
 61100
 61110 – Certified Salaries
 61120 – Classified Salaries
 62000 – Benefits
 62200
 62210 – Certified Social Security
 62220 – Classified Social Security

 63000 – Purchased Professional and Technical Services
 63370 – Architect
 64000 – Purchased Property Services
 64240 – Lawn Care
 65000 – Other Purchased Services
 65210 – Property Insurance
 65310 – Telephone

 66000 – Supplies and materials
 66100 – General Supplies
 66410 – Textbooks
 67000 – Property
 67100 – Land and improvements
 67200 – Buildings
 68000 – Other Objects
 68830 – Property Tax
 69000 – Other
 69310 – Transfer to Teacher Salary Fund

 2281-1105-040-987-00 66100
Fund/Source of Fund
Function
Location
Program
Subject
Object

Determining Which Coding to Use
 Accounting is both a science and an art.
 I could give you an invoice and we could come up with 10 different ways to code that invoice.
 Pay attention to what the Department says to do.
 Be honest.
 Be consistent.
 Ask other people ’ s opinion.
 It really does matter.

Management Strategies For
Expenditure
 Establish Procedures
 Purchase Order (P.O.) Process
 Receipts/Reimbursements
 Do you have a written purchasing procedure?
 Do you have a written travel reimbursement procedure?
 Frequent Monitoring and Reporting
 Ask for reports periodically.
 Report to your Board frequently.

 Learn how to operate “Excel”
 Track important numbers
 Ending Balance
 Total Revenue
 Total Expenditures
 Property Tax Assessments
 Student ADM
 Be cautious about adding new personnel.

 Control of Organizational Chart of Accounts
Structure
 A single person should control the chart
 Internal Controls
 Systems of cross checking and balancing to minimized
 Segregation of Duties
 A key operational control to ensure that one key operational function
 Security of your unwritten checks and signature stamps.

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Declining balance to jeopardize fiscal integrity of a school district
Act or violation to jeopardize fiscal integrity
Any other fiscal condition of a school district deemed to have a material detrimental negative impact on the continuation of educational services by that school district.

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Material failure to…

Properly maintain school facilities

Violation of local, state, or federal fire, health or safety code provisions
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Violation of local, state, or federal construction code provisions or law
Material state or federal audit exceptions
Failure to provide timely and accurate legallyrequired financial reports to ADE, Division of
Legislative Audit, General Assembly or IRS


Materially…
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Insufficient funds to cover payroll, salary, employment benefits or legal tax obligations
Failure to meet legally binding minimum teacher salary schedule obligations
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Failure to comply with state law governing purchasing or bid requirements
Default on any school district debt obligations
Discrepancies between budgeted and actual school district expenditures


Materially….

Failure to comply with audit requirements of 6-20-301

Failure to comply with any provision of the
Arkansas Code that specifically places a school district in fiscal distress based on noncompliance.

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Finding by State Board of Education
Publication of notices
Limited rights of appeal
Submit plan to ADE within 10 days
ADE oversight of plan and implementation
Required ADE approval of plan
ADE technical assistance
ADE recommendations/mandated staffing and fiscal practices.

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Replace superintendent
Suspend local board authority
Transfer authority to new board/superintendent
Required reporting requirements
ADE monitoring of accounts and operations
Training required for district board members and employees
.

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Consolidation
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Annexation

Reconstitution

Other appropriate action

 Restricted Fund Balance
 Categoricals, vocational, adult ed., etc.
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201 Adult Basic Education
202 Adult General Education
203 Workplace Adult Education
205 Other Adult Education
212 Isolated Funding
223 Professional Development
275 Alternative Learning Environment
276 English Language Learners
281 National School Lunch Act
293 Secondary Workforce Centers
320 Adult Center Support
323 Short-term Adult Skill Training
386 Pulaski County Magnet School
387 M-to-M Revenue
388 Magnet & M-to-M Transportation
391 Public School Facilities Escrow
401 Academic Facilities-Immed Rep
402 Academic Facilities-Catastrophic
403 Academic Facilities-Transitional
404 Academic Facilities-Partnership
Bal Sheet 01915 Deposits-Paying Agents(QZAB)

 Unrestricted Fund Balance is used to determine fiscal distress.
 It is your operating balance minus restricted funds.

 NSLA
 ELL
 ALE
 Professional Development
 Federal Funds

Spending Requirements for Categorical
Funds
Act 1220 of 2011
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At least 85% of NSLA Funds must be spent
Transfer authority among categories is granted
Commissioner may grant waivers
Balance in categorical funds shall not exceed 20% of annual allocation
Provisions for 10% annual reduction required
Failure to comply results in reduction in future
NSLA funding.

 Handbook IIR 2 also includes instructions on recording
& classification of fixed assets
 Journal Entries.

 Make your Auditor happy
 Be detail-oriented about your finances.
 Revenue low expenditures high,

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 Call me
501-450-4800