Mike Dooley & Paul Stone May 11 and 12, 2017 · Mike Dooley & Paul Stone. May 11 and 12, 2017. The...

Mike Dooley & Paul StoneMay 11 and 12, 2017

The School Financial Services Update by Office of Superintendent of Public Instruction is licensed under a Creative Commons Attribution 4.0 International License.

2017 Annual Conference, Spokane WA 1

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Michael J. (Mike) Dooley, CSBO, WMSSupervisor, School District and ESD Budgeting

(360) [email protected]

2017 Annual Conference

Some good news:o No new items in the General Fund.

• Yeah!!!o No new items in the Associated Student Body Fund.

• Yeah!!!o No new items in the Debt Service Fund.

• Yeah!!!o No new items in the Capitol Projects Fund.

• Yeah!!!o No new items in the Transportation Vehicle Fund.

• Yeah!!!


Some not so good news:o With the passing of the ESB 5023, as you work through your budget

planning for 2017–18 and the coding of Levy Dollars – will you need tobudget with the local levy sub-fund in mind this year?

• The short answer to this question is YES. The SDAAC is currently workingon a plan to implement a sub-fund into the accounting structure, but that willnot happen before the start of the 2017–18 school year.

• Starting with levies collected in calendar year 2018, districts will have toseparately account for the expenditures paid for with local levy money.

• Districts will have to report outside of the F-196, how they spent their levyproceeds during the spring of 2018 when they do their 2017–18 closeout inthe fall of 2018.


Some more not so good news:o What we do not know at this point is if the Legislature will specifically

define what levy proceeds can or cannot pay for.

o We are working to define and answer some high level processquestions with regard to how districts will report to OSPI and howthey plan to use local levy proceeds prior to the levy going to ballot.

o We are also hoping to have a more clear pathway forward througheither this vehicle of accountability or another before sessionadjourns.

o We will be sure to keep everyone informed as we figure out how tomove forward with the language as approved in ESB 5023.


But some better news:

o For now until a local levy sub-fund is defined and in-lieu-of a local levy sub-fund, to meet budgetingrequirements for 2017–18 [that is, the F-195 formatauthorized under WAC 392-123-053] we would expectschool districts to budget for, and include, these locallevy proceeds as they have in prior years asauthorized by RCW 84.52.053 and described underWAC 392-123-055.


Interfund Transfers and the Budget ProcessTransfers for the redirection of state apportionment are authorizedunder RCW 28A.150.270 and WAC 392-121-445, subject to thefollowing conditions and requirements:

o The transfer will not result in a negative estimated ending fund balance in theGeneral Fund.

o The district board of directors must execute a resolution requesting OSPI toapprove the transfer. However, the district’s board adopted budget, if itaccurately reflects the desired transfer, may serve as the required resolution.

o Interfund Transfer resolutions must be received by OSPI on or before the tenthof the month in which the transfer is to begin.


Interfund Transfers and the Budget ProcessWhether the Interfund Transfer resolution is included in theresolution to adopt the budget or if it is a separate,independent board resolution:

o A copy must be sent to OSPI.

o The documentation must specify the justification in detail and thedollar amount to be transferred.

o The redirection of state apportionment is subject to specific useas authorized under RCW 28A.150.270 and WAC 392-121-445.


Interfund Transfers and the Budget Process

Resources transferred are committed to a specificpurpose and cannot be used for another purpose withoutthe district taking the same type of action it employed topreviously commit those amounts. (GASBS 54 §10)

o This same type of action includes, but is not limited to, acopy of the amended-use resolution sent to OSPI.


Interfund Transfers and the Budget Processo The board resolution authorizing an interfund transfer may be

executed in increments.

o The amount and frequency of transfers may be determined bythe district so long as the total transfer authority within theresolution is not exceeded.

o A budgeted transfer amount not previously credited into thereceiving fund may be rescinded in accordance with the samerequirements which were met to initially authorize the transfer.



o Once apportionment moneys have been credited into thereceiving fund by the County Treasurer, the resourcescannot be subsequently transferred to the credit ofanother fund.

o The term “another fund” is not intended to imply theGeneral Fund. Such resources may be credited back tothe General Fund, for its original intended use.



o Apportionment, redirected by board resolution, maybe transferred back into the General Fund for itsoriginal intended purpose.

o In accordance with the same requirements whichwere met to initially authorize the transfer.


July 10 Budget Deadline – RCW 28A.505.040o The statute requires a school district budget be

submitted to its ESD and copies be made available tothe public by July.

o Final adoption deadline is August 1 for 2nd class schooldistricts and August 31 for 1st class school districts.

o Notice requirements for final hearing and adoption arerequired to be at least once each week for twoconsecutive weeks with the last notice no later thanseven days prior to the hearing. [WAC 392-123-054]


And the question you’re all probably thinking about asking:o Is it a legal requirement to have the F-195 document

available to our school board in order to adopt abudget?

o Or can we use some other form of documentation thatprovides the budget information for adoption??


Both RCW 28A.505.090 and WAC 392-123-053 say:

“… every school district budget shall be prepared, submitted andadopted in the format prescribed by OSPI. The budget classificationscontained in said format shall be in accordance with theaccounting manual for public school districts [emphasis added],published by OSPI and SAO. Budgets prepared and adopted in aformat other than that prescribed by OSPI shall not be official and willhave no legal effect …”

So what the heck does “… in accordance with the accountingmanual for public school districts …” mean??


“…. in accordance with the accounting manual for public schooldistricts ….” is found in the School District Accounting Manual [SDAM] inChapter 2 – Budgeting, page 2-3, first paragraph. It says:

o “The Budget DocumentEach fiscal year, the district’s adopted official budget document (Form F-195), shall be submitted in the format prescribed by OSPI. Refer to RCW28A.505.090 and WAC 392-123-053. (Districts may prepare additionalbudget information for local use.)”

o SO…. We would counsel to proceed as planned to adopt even withoutthe F-195 format. Districts can always load information into the F-195system after the budget is approved.


As authorized in WAC 392-123-010 and prescribed in SDAM,Chapter 2 – Budgeting, page 2-3, all school districts must completeF-203 estimates for state revenues as part of the budget process.

o The F-203 follows the same time schedule as referenced for the F-195 inWAC 392-123-054.

o The F-203 estimate data must be entered and the file must have a statusof 'Ready for ESD review' before data can be imported into the F-195.

o School district budgets will not be considered official until filed for firstclass districts and approved for second class districts with the final F-203accompanying the F-195 document in the prescribed format pursuant toRCW 28A.505.090.


School districts may go ahead and adopt their budgets without theF-203 system. The F-203 X option may be used to calculaterevenue. The budget pivot tables and other information for budgetpreparation are available on the web at http://www.k12.wa.us/safs/.

School districts that do use the X option will be required to enter theinformation a second time into the F-203 system once the system isavailable. School districts using the X option should review editsclosely.

School districts are cautioned against transmitting budgets to theirESDs prior to completing the final F-203. If they do, the X optioncannot be extracted to the ESD for further review and schooldistricts will need to re-extract when the F-203 system is available.


School districts adopting their budgets without the F-203system are strongly encouraged to review F-195 MasterRevenue Edit No. 300 after the system is available and theyhave entered F-203 information. This edit will compareselected F-195 revenues with the F-203 revenues.

The main purpose for this edit is to compare the F-195entered revenue (as calculated or estimated using the Xoption) to the final F-203 calculated revenue.

Since this edit cannot distinguish whether the school districthas used the X option or final F-203, it is informational only.


Districts are cautioned against allowing F-195entered revenue (as calculated or estimated usingthe X option) to greatly exceed the final F-203calculated revenue.

If they do, approval of the school district’s budgetcould be delayed to allow for adjustments needed tothe expenditure appropriation levels, thus requiringanother school board hearing for re-adoption of theschool district’s budget.


Reminder that WAC 392-123-078 says:o Annual budgets of first-class school districts shall be

reviewed by the educational service district prior to theadoption by the school district board of directors.

And also….

Reminder that WAC 392-123-079 says:o Annual budgets of second-class school districts shall be

reviewed by the educational service district prior to adoptionby the school district board of directors.


Budget Extension Reminders for FY 2016–17:o All of you are busy preparing your new year budgets, but don't

forget any remaining current year budget extensions.

o August is the final month to file your F-200 budget extensions withyour ESD and OSPI.

o Depending on when you submitted your current year F-200 forapproval and when you printed your new year F-195 budgetdocument, you may need to reprint your new year budget to allowyour current year budget extension to be accurately displayed inthe middle column of your new year F-195.


Budget Extension Reminders for FY 2016–17:o Review budget monthly to determine necessity of an extension.

o Must complete a budget extension prior to incurring expenditures inexcess of the total appropriations as required by RCW 28A.505.150, andWAC 392-123-071 and 072:

• For 1st class school districts, adopted and filed prior to incurringexpenditures that exceed the appropriation in each fund.

• For 2nd class school districts, adopted and approved by both the ESDand OSPI prior to incurring expenditures that exceed the appropriationin each fund.

• The ESD and OSPI will adjust budget extensions that do not meet thisrequirement.


Budget Extension Reminders for FY 2016–17:o WAC 392-138-110 requires that the Associated Student

Body initially review revisions to the Associated StudentBody (ASB) budget. Therefore, an extension of the ASBFund budget should occur prior to the closing of school tosecure the necessary student involvement.

o Check your DSF appropriation for adequate spending levelfor your district’s debt payment schedule.

o Check your TVF appropriation for adequate spending levelfor that too-good-to-pass-up year-end close-out bus deal.


Budget Extension Reminders for FY 2016–17:

oAugust 31st is a very specific deadline for budgetextensions for both 1st and 2nd class school districts.

oBoth WAC 392-123-071 and 072 say “shall be theclose of business on August 31 or the lastbusiness day prior to August 31 if August 31occurs on a non-business day.”

oSo what the heck does that mean??


Budget Extension Reminders for FY 2016–17:o For 1st class school districts, in accordance with WAC 392-123-

071, the final date for school district boards to adopt appropriationresolutions exceeding budgets (a.k.a., F-200 budget extensions)is close of business on Thursday, August 31st.

o Friday, September 8th will be the last day for ESDs to file budgetextension requests with OSPI for 1st class school districts.

o Any budget extensions received after Friday, September 8th

from a 1st class school district cannot be processed and will notbe included in OSPI calculations and data files.


Budget Extension Reminders for FY 2016–17:oFor 2nd class school districts, in accordance with WAC

392-123-072, the final date for forwarding schooldistrict board approved F-200 budget extensionrequests by ESDs to OSPI for final approval is close ofbusiness on Thursday, August 31st.

oAny budget extension from a 2nd class district that issubmitted after Thursday, August 31st to OSPIcannot be processed and will not be included in OSPIcalculations and data files.


Budget Extension Reminders for FY 2016–17:o For more information on processing budgeting

extensions, go to the WASBO Small SchoolsCommittee website and access the April 26th

committee meeting presentation materials “BudgetExtensions: Do’s and Don’ts” with handouts.

o A recording of the meeting can also be found there.


Michael J. (Mike) Dooley, CSBO, WMSSupervisor, School District and ESD Budgeting

(360) [email protected]


Revisions to the 2017–18 Accounting Manual

◦ Updating the Long-Term Debt Account Group

◦ Warrant Cancellation and Unclaimed Property

◦ Updating Guidance for Interfund Transfers

Fiscal Hot Topics

◦ Potential Changes to the Account Code Structure◦ GASBS 75 ◦ Revenue 5500◦ Skill Center SB5644◦ Indirect Rates


Warrant Cancellation and Unclaimed Property in Chapter 3 ◦ Different accounting treatment for accounts payable verses

unearned revenue ◦ General Journal Entries in Chapter 7

Updated guidance for Interfund Transfers ◦ A few minor edits

Questions on these revisions to the SDAM?


Long-Term Debt Account Group◦ New G/L Account Codes ◦ New narrative descriptions

The primary goal was an alignment to the Schedule of Long-Term Liabilities.

District-use of these “holding accounts” is optional.


Look for the change to these two General Ledger Account Codes.


Alignment to the Schedule of Long-Term Liabilities Description New G/L #

Voted Bonds 701

LOCAL Program Proceeds in lieu of bonds 702

Non-Voted Bonds 711

LOCAL Program Proceeds 712

Capital Leases 713


Alignment to the Schedule of Long-Term LiabilitiesDescription New G/L #

Contracts Payable 714

Non-Cancellable Operating Leases 715

Claims and Judgements 716

Compensated Absences 717

Long-Term Notes 718


Alignment to the Schedule of Long-Term LiabilitiesDescription

Anticipation Notes Payable–Long Term 719

Lines of Credit–Long Term 720

Other Non-Voted Debt 729Non-Voted Notes Not Recorded as Debt: This line item is being removed from the Schedule of Long-Term Liabilities.


Long-Term Debt Account Group◦ G/L 719 Anticipation Notes Payable–Long Term is being

debated. ◦ Anticipation Notes (TANs, RANs, and BANs) are always

considered short-term and must be recorded as a fund liability.

G/L 606 Anticipation Notes Payable (Short Term) is the applicable account code.


Long-Term Debt Account Group

◦ Non-Voted Notes not Recorded as Debt Currently a line item on the SLTL. This is no longer applicable. Line item will be deleted.


Alignment to the Schedule of Long-Term LiabilitiesDescription New G/L #

Net Pension Liabilities TRS 1 741

Net Pension Liabilities TRS 2/3 742

Net Pension Liabilities SERS 2/3 743

Net Pension Liabilities PERS 1 744

Questions on the Schedule of Long-Term Liabilities?


Legislated transparency for local levy resources◦ The Levy Sub-Fund & SB5023

Link specific revenues to expenditures◦ A two-digit Fund segment

Transparency by the type of expenditure◦ Introducing the Type Code segment

Building Level Reporting◦ Fiscal reporting to the Location Code segment


SDAACmodel for potential changes to the account code structure.

New Sub-Fund Accounting, Type Code, and Location Codes

Fund GL Code Program Revenue Activity Object

Type Code

Location 4444 5555

FD XXX PPXX RR AA OBBB TTT LOCX 4444 5555

Current, Required Reporting Elements to OSPI

1 530 PP AA O

1 960 PP RR

Proposed, Required Reporting Elements to OSPI

2 530 PP AA O 3 3 or 4?

2 960 PP RR


The Expenditure Type Code is being developed. Detailed and segregated payroll and benefit information. Uniformed identification of specific types of MSOC. Alignment with Federal NCES reporting objectives.

When implemented, the Type Codes will be a mandatory reporting segment to OSPI.


The Expenditure Type Code categories 100 – Personal Services – Employee Salaries 200 – Personal Services – Employee Benefits 300 – Purchased Services – Professional and Technical 400 – Purchased Services – Property 500 – Other Purchased Services 600 – Supplies 700 – Property 800 – Debt Service and Miscellaneous 900 – Other Items


Location Codes become a mandatory reporting element to OSPI. Design Discussions Continue… ◦ 4-Digit CEDARS school building codes Customizes codes for non-instructional locations. Generic codes for budgeting purposes when a new CEDARS code is

not available. ◦ 3-digit code currently used at the local level. Requires districts to provide OSPI with an annual crosswalk to specific

level of instruction.

Questions about the Account Code Restructuring?


GASBS 75: Accounting and Financial Reporting for Other Post Employment Benefits (OPEB) Effective for 2017–2018. Reporting requirements are similar to pensions. OSPI will not be able to create an OPEB reporting tool because

OPEB plans are not centrally administered.


GASBS 75: OPEB Reporting 2017–18 No single actuarial valuation. Many Districts which provide OPEB will need to arrange for their

own actuarial valuations. Workgroup with HCA, SOA, SAO, OSPI, and local governments to

identify implementation resources and resolve implementation issues.

Question on GASBS 75?


Revenue 5500, Federal Forest Federal Forest was not a deductible revenue in the previous

2015–17 biennium budget. Waiting for the Legislature.

We may have to revert back to the previous guidance prior to the prior biennium allowance.


A host district of a cooperative skill center must maintain a separate minor repair and maintenance capital account for facilities constructed or renovated with state funding. Participating school districts must make annual deposits into the account to pay for future minor repair and maintenance costs of those facilities. The host district has authority to collect those deposits by charging participating districts an annual per-pupil facility fee.

Passed the Senate 96 to 0…


The “minor repair and maintenance capital account” clause is an oxymoron.◦ “Minor repair and maintenance” is categorized as general fund

expenditures.◦ “Capital Account” refers to CPF expenditures.

If the funds are used in the General Fund – there is no way to track supplement verses supplant.


The indirect rate percentage is ◦ “Pool over Base equals Rate” (P/B=R).

DOE Audit of LEA Indirect Rates (and methodology). Additional substantiation may be required for audit.◦ Distorting Items deducted from the Base◦ Indirects added to the Pool

Enhanced F-196 review of section.

Any other questions?2017 Annual Conference, Spokane WA 51

Questions and comments are always welcome and appreciated. Whenever possible, emailing your question is beneficial in assuring that OSPI understands the question and allows a “paper trail” for OSPI and the district if the question should arise again.


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