Revenue Bonds Legal Basis Accounting. 2 Enterprise Fund Operations in State Pre-Revenue Management...

Revenue Bonds Legal Basis Accounting

2

Enterprise Fund Operations in State

• Pre-Revenue Management Program.• Except for Dorm Construction Fund balance, now

only spend-down.• Campus collects fees for service provided,

deposits them to State Treasury bank account and remits to the State Controller’s Office (SCO).• To pay vendors, the campus cuts a check that

are initially backed by revolving fund resources. • A claim schedule must be issued and submitted

to the SCO to draw funds from remitted resources to replenish the revolving fund.

3

Enterprise Fund Operations in State

• The SCO maintains transactional detail by campus agency, but centralizes the trial balance. • The Chancellor’s Office picks up the net activity

by campus and any other central transactions to mimic the SCO structure.• To eliminate doubling up the reporting of

investment balances, the campuses reflect their balance in the state using fund balance clearing.• When the Chancellor’s Office picks up the net

activity, they mirror or show the opposite balance in the fund balance clearing account for each campus.

4

What is Fund Balance Clearing?

• Fund balance clearing is used to reflect the receipts and disbursements that flow through the State Controller’s Office. • In governmental or appropriated funds, the

change in equity or revenues/expenses for the year also close to fund balance clearing.

• However, in enterprise funds, it is only used to record receipts/disbursements.

• For all funds, period 1-12 activity in fund balance clearing must match the State’s postings to stay in synch with State’s ledgers. • Timing differences are okay until June 30.

5

Sample Enterprise Fund Activity

Chancellor’s Office CampusLegal Basis Ledgers

SCO Fund - Subf und - CSU Fund

0583-000-301

Account Description Debit Credit

101004 Cash in State Treasury 1,800

305022 Fund Balance Clearing 1,800

To Record Campus A Activity f or the Month

102001 Deposits in SMI F 1,700


To Record State Sweep f or I nvestment Activity

Legal Basis Ledgers


0583-000-301


101001 Cash 2,200

504003 Parking Permits 2,200

To Record Parking Fees Collected


101001 Cash 2,200

To Record Remittance

660003 Supplies & Services 400

101001 Cash 400

To Record Vendor I nvoice & Payment

101001 Cash 400

305022 Fund Balance Clearing 400

To Record Claim Schedule

6

Sample Enterprise Fund Trial Balance



0583-000-301


101004 Cash in State Treasury 100



1,800 1,800

Legal Basis Ledgers


0583-000-301





2,200 2,200

Legal Basis Ledgers


0583-000-301


101004 Cash in State Treasury 100




2,200 2,200

7

What is SRB?

• SRB – Systemwide Revenue Bond Program• It is a systemwide program that issues bonds to

provide funding for board approved construction projects.• Depending on timing, it uses temporary financing,

via Bond Anticipation Notes (BANs) or commercial paper. If used, the temporary financing is gathered into a Bond issuance that pays off the temporary funding and can include additional funds for the project.

• Revenue is pledged to pay the bond, so program is restricted to specific programs.

• Housing, Parking, CERF, Health Facility and Auxiliary

8

What makes SRB accounting activity unique?

• Pre-RMP: Nothing unique about Program Operations Funds• Housing, Parking, CERF and Health Facility

• Only Chancellor’s Office records the debt on Legal basis records.• Only Chancellor’s Office records activity in 0578 - Interest

& Redemption Fund• The State Treasurer is the trustee of the SRB proceeds.

0576 – Dorm Construction Fund holds proceeds• The Chancellor’s Office records the activity in cash &

investments• Campuses given an allocation or a budget to spend

against

9

How does the process start? - Summarized

• A project is identified by the campus. The campus works with Finance & Treasury (F&T) to develop a Financial Plan.• The plan will identify funding sources for the

project.• The non-financial paperwork is submitted to

CPDC. There are approvals that must be gained from F&T and CPDC for the project to move forward.• Once the project is initially approved by CPDC,

they request a project number.• Project is placed on the Board of Trustee’s

agenda for approval.

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Two Separate BOT Approvals

• It is important to understand that there are two separate approvals that must be gained from the Board of Trustee’s. • Until the second approval

has been granted all the costs of the project to that point are funded by the campus.• The F&T non-state bond

funded flowchart shows all of the steps.

11

Once the project is a go…

• The Chancellor’s Office will open accounts at the SCO for BAN or bond proceeds, revenue and transfer accounts, and project expense accounts• Once State accounts are established, FNAT keys

are created, project expense accounts will include project number.• F&T will execute the CP or bond sale.• Chancellor’s Office will remit and transfer funds.

12

BAN Sale- Remit Proceeds & Transfer



0576-200-227


101004 Cash in State Treasury 4,307,000

190012 Amount to be Provided 4,307,000

201005 Note Payable 4,307,000

509002 Proceeds f rom Bonds 4,307,000

To Record Proceeds f rom BAN Sale & Debt

680026 Transf er Out 4,307,000


To Record Transf er Out to Upf ront Accounts

0576-700-222



506026 Transf er I n 4,307,000

To Record Transf er I n f rom Clearing Accounts

Legal Basis Ledgers



13

Issue Allocation Order

• Chancellor’s Office will issue an Allocation Order to establish Budget or spending authority in campus project expense account.

14

Pay Vendors and Cash Transfer Letters



0576-700-222


680026 Transf er Out 853,520


To Record Transf er Out to Project Accounts

0576-000-222


6070xx Construction Expense 22,637


To Record Bond or Central Expense


506026 Transf er I n 853,520

To Record Transf er f rom Upf ront Accounts



To Record Campus Activity in Project Account

Legal Basis Ledgers


0576-000-222




To Record Vendor Payment

15

Bond Sale

• A sources and uses schedule is prepared by bond counsel. This nails down all of the details of the transaction.

16

Bond Sale- Remit Proceeds & Transfer



0576-201-227



509002 Proceeds f rom Bonds 23,956,418

To Record Proceeds f rom Bond Sale

680011 Transf er Out DI RF 1,746,532


To Record Transf er of Capitalized I nterest to DI RF

680026 Transf er Out 22,209,886


To Record Transf er Out to Upf ront Accounts

0576-300-222



506026 Transf er I n 22,209,886

Legal Basis Ledgers



17

Bond Sale- Remit Proceeds & Transfer



0948-000-472



262003 Bond Payable 23,730,000

To Record Bond Payable

0578-000-246



506010 Transf er I n - DCF 1,746,532

To Record Receipt Capitalized I ntrest f rom Bond Proceeds

Legal Basis Ledgers



18

Issue Allocation Order for the Bond

• Chancellor’s Office will issue an Allocation Order to establish Budget or spending authority in campus project expense account.

19

Move Project Expenses from BAN to Bond



0576-700-222



506026 Transf er I n 1,457,262

To Record Transf er I n f rom Project Accounts

0576-000-222


101004 Transf er I n 1,457,262

To Record Transf er to Upf ront Accounts



607xxx Construction Expense 61,376

To Record Clearing of BAN Project Account

0576-300-222

680026 Transf er Out 1,457,262


To Record Transf er I n f rom Project Accounts

0576-600-222


506026 Transf er I n 1,457,262


305022 Fund Balance Clearing 1,395,886

607xxx Construction Expense 61,376



Legal Basis Ledgers


0576-000-222



607xxx Construction Expenses 1,395,886

To Record Clear Out of Expenses in BAN Account

0576-600-222

607xxx Construction Expenses 1,395,886


To Record BAN Expenses in Bond Project Account

20

Issue De-Allocation Order for the BAN

• Chancellor’s Office will issue an De-Allocation Order to removing the Budget or spending authority in campus project expense account.

21

Pay Off BAN



0576-700-222


680026 Transf er Out 4,350,161


To Record Transf er Out to Pay Off Debt

0576-200-227



506026 Transf er I n 4,350,161


660006 I nterest Expense 39,278

660007 Principal 4,310,883


To Record BAN Pay Off

201005 Note Payable 4,350,161


To Remove BAN Debt

Legal Basis Ledgers



22

Pay Vendors and Cash Transfer Letters



0576-300-222


680026 Transf er Out 3,182,454


To Record Transf er Out to Project Accounts

0576-600-222




To Record Bond or Central Expense


506026 Transf er I n 3,182,454





Legal Basis Ledgers


0576-600-222


6070xx Construction Expense 3,138,137


To Record Vendor Payment

23

Transfer Debt Service



0948-000-472


108090 I nvestments 1,559,733

571000 I nteragency Transf er I n 1,559,733

To Record Campus Debt Service Transf er

680011 Transf er Out to 0578 1,559,733

108090 I nvestments 1,559,733

To Record Debt Service Transf er to 0578

0578-000-246



506025 Transf er I n f rom 0948 1,559,733

To Record Transf er f rom 0948 and Remittance

Legal Basis Ledgers


0948-000-472


671000 I nteragency Transf er Out 1,559,733

108090 I nvestments 1,559,733

To Record Debt Service Transf er

24

Debt Service Payment



0578-000-246


660006 I nterest Expense 1,064,733

660007 Principal on Debt 495,000


To Record Debt Service Payment

0948-000-472


262003 Bond Payable 495,000

190012 Amount to be Provided 495,000

To Reduce Bond Payable f or Principal Payment

Legal Basis Ledgers



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Revenue Bonds Legal Basis Accounting. 2 Enterprise Fund Operations in State Pre-Revenue Management...

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