expenditures casbo training. values and money we spend our time and our money on what we value
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ExpendituresCASBO Training
Values and Money
We spend our TIME and our MONEY on what we VALUE.
Why are you here?
ASBO Certification
Increase personal knowledge
Tier 1 Requirement
Tier 1 annual update.
Expenditures
What are the major categories of expenditures in a typical district?Salaries & BenefitsSupplies/EquipmentServicesCapital OutlayDebt Service.
What is the proportion of each to the whole operating budget?
Salaries & Benefits
Supplies/Equipment
Services
Capital Outlay
Debt Service.
Salaries/Benefits
Salaries Contracted wages Time sheet pay
Benefits CalculationsFICA – 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 employeesHealth - $131, moving to $150 in JanuaryDental, Disability InsuranceWorker’s CompensationUnemployment
For estimating purposes, total @25%. Will vary slightly by district.
Salary EssentialsApproved 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.
Supplies/Equipment
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 stockFixed asset - Any tangible asset with a life of more
than two years used in an entity's operations.
Services
Professional Services
Property Services
Other Services.
Professional 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?
Property Services
Utilities
Construction Services
Lawn care
Cleaning services
Rental.
Other Services
Transportation
Insurance
Advertising.
Capital Outlay
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.
Debt Service
Payment is in three partsPrincipalInterestFees
Debt Schedule
Debt Service
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.
Accounting Procedures
ACCOUNTING
The definition of accounting is “the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results.”
ACCOUNTING - 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.
Basis of Accounting
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.
Basis of Accounting
Cash Basis – Recognized when cash is received or disbursed
Accrual Basis – Measures financial position based on economic resources and obligations
Cash Basis
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.
Accrual Basis
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.
Accounting for Expenditures
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?
Evolution of Account Classifications
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.
Account Classification Standards-Present Edition
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 Access on on APSCN APSCN sitesite
Interest relative to Handbook IIR2 is widespread
Account coding is required to reveal: Athletic expendituresStudent transportationDistrict administrationSchool administrationInstructional facilitators Supervisory aidesSubstitutesProperty Insurance
Act 1006 Requires gathering information on these
expenditures:Student growthDeclining enrollmentSpecial education catastrophic
occurrencesSpecial education servicesTechnology grantsDebt service supplementGeneral facilitiesDistance learningGifted and talented
Do it Right…or Pay the Price!
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 BUDGET UNIT
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.
THE BUDGET UNIT
Six sections of the budget unit:1000-1140-049-000-00 61110 – Certified Salary2000-1120-042-000-00 62210 – Certified Social
Security2281-1105-040-987-00 66100 – Supplies for early
childhood2000-2134-005-000-79 65800 – Nurse’s travel
budget
What is this budget strip used for?
2281-1105-040-987-00 66100
FUND1000 – Teacher Salary Fund2000 – Operating Fund3000 – Building Fund4000 – Debt Service Fund5000 – Capital Outlay Fund6000 – Federal Funds7000 – Activity Funds8000 – Food Service Fund9000 – Fixed Assets2281-1105-040-987-00 66100
Source of Fund - SOF
Federal FundsActivity FundsGrantsCategorical Funds
223 – Professional Development275 – ALE276 – ELL281 – NSLA
Facilities Funding2281-1105-040-987-00 66100
Function
1000 – Instruction
2000 – Support Services
3000 – Operation of Non-Instructional Services
4000 – Facilities acquisition and Construction4610 – Building Acquisition and Construction4630 – Athletic Building Acquisition and
Construction
5000 – Other (debt)
2281-1105-040-987-00 66100
Location
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
2281-1105-040-987-00 66100
Program
Used to further identify the specific use of the funds to be expended.
Districts may use 900-999
Special Ed – 200
Athletics - 115
2281-1105-040-987-00 66100
Subject
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.
2281-1105-040-987-00 66100
ObjectSometimes called the Account. Tells us what was
purchased
2281-1105-040-987-00 6610061000 – Salaries
61100 61110 – Certified Salaries 61120 – Classified Salaries
62000 – Benefits 62200
62210 – Certified Social Security 62220 – Classified Social Security
Object63000 – Purchased Professional and Technical Services
63370 – Architect
64000 – Purchased Property Services 64240 – Lawn Care
65000 – Other Purchased Services 65210 – Property Insurance 65310 – Telephone
Object66000 – 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
The Budget Strip2281-1105-040-987-00 66100
Fund/Source
of Fund
Function
Location
Program
Subject
Object
2281 1105 040 987 00 66100
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 ProceduresPurchase Order (P.O.) ProcessReceipts/ReimbursementsDo you have a written purchasing procedure?Do you have a written travel reimbursement
procedure?
Frequent Monitoring and ReportingAsk for reports periodically.Report to your Board frequently.
Management Strategies For Expenditure
Learn how to operate “Excel”
Track important numbersEnding BalanceTotal RevenueTotal ExpendituresProperty Tax AssessmentsStudent ADM
Be cautious about adding new personnel.
Management Strategies For ExpenditureControl of Organizational Chart of
Accounts StructureA single person should control the chart
Internal ControlsSystems of cross checking and balancing to
ensure the opportunity for theft and fraud are minimized
Segregation of DutiesA key operational control to ensure that one
individual does not participate in more than one key operational function
Security of your unwritten checks and signature stamps.
Targets of “Fiscal Distress” 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.
Potential “acts or violations”
Material failure to… Properly maintain school facilities Violation of local, state, or federal fire,
health or safety code provisions Violation of local, state, or federal
construction code provisions or law Material state or federal audit exceptions Failure to provide timely and accurate
legally-required financial reports to ADE, Division of Legislative Audit, General Assembly or IRS
Other ways to violate….
Materially… Insufficient funds to cover payroll, salary,
employment benefits or legal tax obligations Failure to meet legally binding minimum
teacher salary schedule obligations 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
Other material ways…
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.
What Happens then? 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.
Other ADE actions…
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..
Final Action
Consolidation Annexation Reconstitution Other appropriate action
The Legal Fund Balance Restricted Fund Balance
Categoricals, vocational, adult ed., etc. 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)
The Legal Fund BalanceUnrestricted Fund Balance is used to
determine fiscal distress. It is your operating balance minus
restricted funds.
What about balances in restricted funds?
NSLA
ELL
ALE
Professional Development
Federal Funds
Spending Requirements for Categorical Funds Act 1220 of 2011
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.
etc
Handbook IIR2 also includes instructions on recording & classification of fixed assets
Journal Entries.
etc
Make your Auditor happy
Be detail-oriented about your finances.
Revenue low expenditures high,
What is your favorite color?
$ $
Key Word for staying in the black in your district:
