SCHOOL DISTRICT ACCOUNTING ADVISORY COMMITTEE
Meeting Minutes
December 4, 2009 – Final Reading
Members Present: Brian Aiken, Holly Burlingame, Susan Smith Leland, Patricia Luat, Doug Matson, Becky Montgomery, Kim Scott, Neil Sullivan, Kathie Technow, Chuck Hole, Marilyn Sollers, Jean Deming, Amy Fleming, Jody Hockaday, Rick Bonner, Cal Brodie, Mike Dooley, Daniel Lunghofer. (18)
Members Absent: Jeff Phan, Angela Watts, Bill Tilton, Dave Rudy, Judy Ainslie, Darrel Jensen, Pam Peppers. (7)
Guests: T.J. Kelly, OSPI; Ralph Fortunato, Kent School District; Denise Wolff, OSPI; Jeanne McMinds, OSPI. (4)
Introductions: Those in attendance introduced themselves. Cal introduced Jeanne McMinds, who joined OSPI as a part of the team working on implementing the changes from HB 2261.
Meeting Minutes: Neil Sullivan made a motion to approve the minutes from the October 16, 2009 meeting as presented. Chuck Hole seconded. The motion passed with a unanimous vote.
Funding Formula Technical Workgroup: Cal mentioned that the Funding Formula Technical Workgroup, created as a part of HB 2261, had produced its final report for presentation to the Quality Education Council and the Washington Legislature on December 1, 2009. This report was the culmination of much hard work over the summer and outlines a new funding system for school apportionment.
Cal mentioned that he would like to use the SDAAC in a role as being a sounding board for the required changes to implement the new funding system proposal as well as the data requirements under 2261. He proposed that the SDAAC meet in January to discuss and gain feedback on the FFTWG implementation and then start a series of meeting February to discuss the Accounting Data Requirements under 2261.
New systems to implement the proposed funding structure are intended to be in place, pending Legislative approval, for the 2011-2012 school year. For changes to the accounting system, this means that changes would have to be in place by the time the 2011-12 Accounting Manual is completed, and so worked on during the 2010 working sessions.
In the work session starting in February, prior discussions of the SDAAC covering sub-object coding to new funds like Enterprise Funds are “back on” the table,
SDAAC Schedule for 2010: With such a short timeframe to develop the necessary guidelines to implement the changes recommended by the Funding Formula Technical Workgroup, it was decided that it would be necessary to add additional meetings throughout the year for the SDAAC. Traditionally, there have been five meetings during the year plus 3 summer sub-committee working meetings. For 2010, the number of meetings has been expanded. The proposed schedule of meeting dates for 2010 are as follows:
· Friday January 22 @ Highline School District
· Friday February 26 @ Highline School District
· Friday March 19 @ Highline School District (traditional first Full Committee meeting)
· Friday April 16 @ Highline School District
· Tuesday May 4 @ WASBO Conference (afternoon meeting)
· Friday June 18 @ Highline School District (summer subcommittee meeting #1)
· Friday July 16 @ Highline School District (summer subcommittee meeting #2)
· Friday August 13 @ Highline School District (summer subcommittee meeting #3)
· TBA: September meeting (Full Committee meeting)
· TBA: October First Reading for changes to 2011-2012 Accounting Manual
· TBA: December Final Reading for changes to 2011-2012 Accounting Manual.
With the exception of the May 4 meeting at WASBO, all meetings are planned from 9:30 AM to 4:00 PM.
The January meeting is to address the changes that will need to be made in the financial systems to address the recommendations of the FFTWG, should they be adopted by the Legislature, and meetings in February, March & April, are intended to address the Accounting Data requirements under 2261 such as building-level reporting and revenue-to-expenditure accounting.
ARRA Reporting: In the ARRA bill language had been an almost unknown statement that districts receiving Title I allocations under ARRA would have to report per-student expenditures from state and local sources by building to the state education agency (that is, OSPI) by December 1, 2009. Formal guidance from the Department of Education had been slow in coming out, and final guidance was not issued until November 23. Accordingly, each state was being given the option of establishing its own criteria for when this information would have to be collected from districts.
To accomplish the reporting task, the School Apportionment and Financial Services staff produced a pair of Excel spreadsheets to report on the information outlined in the Federal guidance. This information is based off of salary and staffing information collected on the S-275 School Personnel Report and school enrollment information collected from each district to produce the reports. Districts will have a window of opportunity to correct any material errors to the reports before submitting them to OSPI. The deadline for districts submitting the information to OSPI is 30 calendar days from the release date of the final reporting tools on the SAFS website.
Accounting Manual Final Reading: The committee approved the proposed changes to Chapter 1.
While reviewing the changes to the language for the differences between short-term debt and long-term debt in Chapter 3, debate sprang up over whether or not long-term debt will actually create a budgetable resource and thus increase a district’s budget capacity or not. It was decided that the final language to go into the 2010-11 Accounting Manual on the topic would state that long-term debt creates an Other Financing Source while short-term debt does not. With that modification, the changes to Chapter 3 were accepted.
Prior to the review of the new General Ledger account codes towards the end of the meeting, there was only one change to material in Chapter 4, the opening of GL 635 (Deferred Compensation Payable) in the Pension Trust Fund. This change was approved by the committee.
Chapter 5 had a reference to trust fund activity numbers, such as what the ASB fund uses, changed to be a listing of identifying numbers. The committee did not feel that there was a need for recording “activities” within trust funds.
In Chapter 6, it had been previously recommended that the program, activity and object codes be closed within the Transportation Vehicle Fund. As a form of “Capital Projects Fund” as defined by GASB, the question had been raised about whether the program codes were needed as they were not used for the CPF. When this change was being reviewed, the rather simple question was asked of how districts would be able to report on different types of expenditures within the TVF, such as the purchase of buses, or the authorized repair of buses, or debt service payments. The committee started to look at using type codes within the TVF in a manner similar to the CPF. However, the extent of this work caused it to be pushed back to being a 2011-12 Accounting Manual item, and the proposed changes were rejected.
The proposed changes to the journal entries in Chapter 7 were approved, except for the journal entry for the accrual of an announced donation. The committee members all agreed that they would not record a donation until they had received it, and that this journal entry seemed to be unnecessary.
The new changes to Chapter 9, which include the allowable uses of Capital Projects Fund money as outlined in HB 1619, were reviewed. There was discussion that centered on being certain about what sorts of moneys within the Capital Projects Fund could be used for the new purposes and the transfers. After reviewing the RCW, the proposed changes were accepted.
A minor update was reviewed for the new note for districts which are on the cash basis of accounting. The note now clearly refers to the amount of unequalized deductible revenue outstanding at the end of the year as being the source of the reservation of fund balance. This change was accepted by the committee.
After all previously reviewed changes were approved; a few new items were brought forward. The first was a re-write of Appendix E, which was originally a bulletin written to incorporate changes to the Accounting Manual based on the 2007 Legislative session. Most of the information contained within the original Appendix E has been subsequently incorporated into other parts of the Accounting Manual (or other OSPI publications), and so the need to continue to have the bulletin discretely presented is no longer there. The sole exception is the information on calculating To/From transportation costs, which currently have no “better” place to be in the Accounting Manual. Daniel shared the changes that he made to accomplish this re-write. With a handful of out-of-date references, such as OSPI staff information and the separate fuel inflators, the information contained in this guidance was maintained intact. The committee recommended changing any language from the original guidance that stated that it may “cause districts to change the way in which they account for (X)” be deleted, as it has been a few years now since the guidance came out, and the assumption is that districts will have (or should have) changed their accounting practices in the interim. With those additional changes, Appendix E was approved.
The final set of changes that were reviewed involved changes to Fund Balance definitions as outlined in GASB Statement 54. This Statement expands the number of types of fund balance from three (Reserved, Unreserved Designated, Unreserved Undesignated) to five (Nonspendable, Restricted, Committed, Assigned, and Unassigned). The intent of these new fund balance designations is to increase transparency in financial reporting for governments.
For the Accounting Manual, the original intent had been to do a simple “crosswalk” where the existing fund balance general ledger codes were simply reclassified within the new framework. As meetings went on and discussion grew, this was changed into each fund balance classification would be given a “range” of general ledger codes, and specific accounts would be used within those codes. The committee reviewed the proposed changes and agreed with most of them. Chuck Hole recommended the addition of two more codes within the Capital Projects Fund, one for Impact Fees and one for Mitigation Fees. The committee approved those additions.
The presentation of the new fund balance types was discussed. Currently on the F-196, only the three categories of fund balance are reported, each in their own aggregate. In Statement 54, two methods for reporting fund balances are presented: a single line for each of the fund balance types, or with each individual sub-account reported separately. The committee felt that attempting to report each sub-account separately would “clutter” the balance sheet, and so the committee recommended displaying the fund balance types in aggregate on the balance sheet. In addition, a separate detail report would be created that shows the breakdown of the sub-accounts for each district. These reports would be ready in time for the 2010-11 school year.
Adjournment: There being no further business, the meeting was adjourned at 2:33 PM.