School District Accounting Advisory Committee s1

SCHOOL DISTRICT ACCOUNTING ADVISORY COMMITTEE

Meeting Minutes

March 23, 2007

Members Present: Aiken, Burlingame, Smith-Leland, Lirio, Matson, Montgomery, Phan, Scott, Sullivan, Watts, Emerson, Sollers, Tilton, Deming, Fleming, Hockaday, Hole, Bonner, Brodie, Peppers, Thompson (21)

Members Absent: Moffatt, Nichols, Merlino, Rudy, Ainslie, Adams, Amos, Jensen, Dooley (9)

Guests: JoLynn Berge, OSPI; Harvey Erickson, Bethel SD (2)

Introductions and Announcements:

§ Meeting was opened at 9:45 a.m.

Minutes

§ Minutes from the December 8, 2006, meeting were approved.

Procedures of the Committee:

§ SDAAC Procedures were discussed, with an emphasis on enforcing maintenance of membership.

SAO Update:

§ Rick Bonner reported that it is becoming more common for booster clubs to fundraise to pay coaches additional money. Districts should be aware of Title IX issues. The consensus was:

o It is not necessary to disclose booster club fundraising in the notes.

o The easiest way for booster clubs to do this is to raise money and donate the money to ASB.

o Districts should meet annually with their booster clubs.

o The WASBO ASB manual is available on the web and has some information on this topic.

§ Statement on Auditing Standards (SAS) 112 was discussed. SAO has not developed their position on this yet. However, they audit to standards and this is a new standard that, in part, puts the onus on internal staff at the district to prepare financial statements. Others raised the question: at what point has SAO received the final financial statements. SAO will implement SAS 112 with non-school districts one year earlier because the effective date includes calendar year entities, so they will have more school district guidance after they audit other entities using SAS 112. Rick assured the committee he will control implementation consistency among the state’s audit teams.

§ Because the topic is related to booster clubs, at this point in the meeting (rather than under Other Topics) Susan Smith Leland read an e-mail regarding charging substitute teacher costs to ASB when the regular teacher attends a conference. Discussion followed and the committee concluded this treatment is allowable for the substitute teacher costs only, not the regular and substitute teacher costs. Districts should set a policy on this topic.

OSPI – School Apportionment and Financial Services (SAFS) Update:

§ Cal Brodie gave an update on the closure of Vader School District and noted that WACs and RCWs are not clear on closing a district.

§ Cal reported that we are not moving forward at this time on proprietary funds and sub-object coding. With the new SAFS computer system that will replace the VAX, we may implement pieces of the sub-object coding changes in 2008–09.

§ Cal reported the next K–20 videoconference with Terry Bergeson is scheduled on May 1 from 1:00 p.m. to 4:00 p.m., which is the same time as the next SDAAC meeting. The committee decided to reschedule the change the time of May 1 meeting to 10:00 a.m. to 1:00 p.m. The videoconference will be available for SDAAC members at ESD 105.

Accounting Manual Changes:

Late-breaking potential changes for 2007–08:

§ After discussion about options on how to handle post-publication changes, the consensus was OSPI will decide how best to disseminate the information.

§ Excess cost accounting: revenue 3121—We will add revenue 3121 if the Legislature approves the methodology for excess cost as proposed.

§ Transportation: break out to-from—We will add guidance depending on legislative action.

§ CPF: pay for on-going license fees through transfer to General Fund—We will add guidance if the Legislature approves these transfers.

§ Medicaid process change—Medicaid revenue will flow through DSHS – not OSPI – in 2007–08. Therefore, districts need to use revenue account 6321 instead of 6121. This will be a topic of training but will not require accounting manual changes.

Topics to be considered for 2008–09:

See List of Topics document at the end.

JLARC K–12 Study Update:

§ Cal presented the JLARC K–12 study and discussion ensued around building level data. Members reminded us that WESPaC conversions are happening at the same time as potential changes from this study. Many resources will be needed to accomplish these changes.

§ Transportation JLARC study was discussed for to-from transportation costs.

Other Topics:

§ Holly asked about inventory and what other districts consider inventory. There was discussion that inventory consists largely of food service items and that districts need an inventory policy.

Adjournment:

§ The meeting was adjourned at 3:30 p.m.

§ Next meeting is scheduled for May 1, 2007, at ESD 105 in Yakima from 10:00 a.m. to 1:00 p.m. to accommodate the OSPI videoconference that is scheduled from 1:00 p.m. to 4:00 p.m. the same day.

SDAAC MINUTES Page 8 of 8 March 23, 2007

School District Accounting Advisory Committee

Projects for the 2008–09 Accounting Manual for Public School Districts

March 23, 2007

1. Chapter 1, page 5, and others – Transportation Vehicle Fund: In the Capital Projects Funds section, there is confusion about whether TVF is a type of capital projects fund. See the sentence, “…two funds are considered to be capital projects….” A study is needed to decide whether to separate CPF and TVF and if so, re-format the guidance, and make guidance on this topic consistent throughout the accounting manual, F195, F196, and GASB 34.

OSPI Recommendation: Needs further study. Refer to Accounting Manual subcommittee.

3/23/07: Refer to subcommittee.

2. Chapter 1, page 10 and Chapter 7 – From 2007–08 (item 24): Donated Capital Assets and Donated Services: We had a request to add more guidance and journal entries on how to handle donated capital assets and donated services. Donated capital assets are mentioned in Chapter 1, page 10 under Valuation of Capital Assets, “Capital assets should be accounted for at cost or, if the cost is not practicably determinable, at estimated cost. Donated capital assets should be recorded at their estimated fair value at the time received. (GASB Cod. Sec. 1100.106. See also Sec. 1400, ‘Capital Assets.’)” Do we want to include journal entries, and if so, where?
OSPI Recommendation: Needs further study. Refer to Accounting Manual subcommittee.

3/23/07: Refer to subcommittee.

3. Chapter 3, Section 8, page 7 – Certificates of Participation and LOCAL from 2007–08 (item 26): Because Certificates of Participation (COP), especially through the Local Option Capital Asset Lending (LOCAL) Program, are becoming more common and we currently have no specific guidance on them, we need to consider adding COP and LOCAL guidance, showing specific fund and debt service fund entries. The State Treasurer web site explains these. Can we ask SAO to search their database for an example. Which Chapter should it go in? These are similar to shared service arrangements, so possibly guidance in the same place and journal entries in the chapter 7.
OSPI Recommendation: Refer to Accounting Manual subcommittee.

3/23/07: Refer to subcommittee.

4. Chapter 3, Section 10, page 1 – Interlocal Agreements: In 2006, HB 2676 amended RCW 39.34.040 to allow electronic listing of interlocal agreements. The last sentence under Authority currently says, “RCW 39.34.040 requires the agreement is to be filed with the county auditor.” The sentence should be amended to read, “RCW 39.34.040 requires the interlocal governmental agreements to be filed with the county auditor or, alternatively, listed by subject on a public agency’s web site or other electronically retrievable public source.”
OSPI Recommendation: Approve suggested language.

3/23/07: Approved as revised.

5. Chapter 4, Section 3, page 9 and Chapter 4, Section 3, page 18 – GL 530 and GL 960: The Statement of Changes in Fiduciary Net Assets reports Additions and Deductions instead of Revenue and Expenses. However, for the fiduciary funds (PPTF and PTF), GL 530 is called Expenses and GL 960 is called Revenues. We discussed last year the possibilities of adding new GL accounts for Additions and Deductions or using the same GL accounts but adding a new section for these funds. GL 530 already uses this treatment and has 2 sections, Expenditures and Expenses, for different funds. We need to decide which treatment to use, change the matrix on chapter 4, section 2, page 2, and make any other consistency changes in the SDAM and F196.
OSPI Recommendation: Discuss at meeting and decide on disposition.

3/23/07: Check the glossary for definitions of expenditures, expenses, and deductions. Bring proposed language to the May meeting. (Clarify which funds go where.)

6. Chapter 4, Section 3, page 18 – GL Account 810 Reserved for Other Items: It has become apparent that districts do not always reserve fund balance correctly. Therefore, we need to clarify the guidance on reservation of fund balance, especially making clear which carryovers and recoveries need to be reserved (ex: vocational carryover.) Add language, “Districts should be including carryover and recovery.”
OSPI Recommendation: Discuss at meeting and decide on disposition.

3/23/07: Cal proposed revised language. Refer to subcommittee with new language that Cal brings in May distinguishing guidance for cash vs. accrual districts.

7. Chapter 5, Section 4, page 5 – Revenue Account 2500 Gifts, Grants, and Donations (Local): There is confusion because the description includes the phrase “in trust or otherwise” but the language does not include a further reference to the PPTF and Permanent Fund. Add language to say, “For information on recording PPTF additions, see Chapter 9, Section 9.”
OSPI Recommendation: Approve proposed language. In 2009–10, consider identifying all
funds in Chapter 5, not just the four in the matrix (GF, DSF, CPF, and TVF).