School Accounting 101

Presented by:

Mary Kay Beer

Chief, School Accounting Section

LouAnn CaldarellaStaff Accountant

School Finance Division

LECS Comptroller’s Office

Let’s look at the numbers

• This year we had 707 reporting entities submitted by November

19

– 501 School Districts 285– 29 Intermediate Units 18– 102 Charter Schools 62– 67 Vocational Technical Schools 42– 8 Special Schools 7

Back to Basics - Fund Reporting

• Entities that report using governmental accounting, must establish their records based on the fund accounting system.

• All financial activities that occur within your school must be accounted for in one of the 11 governmental fund types.

• All funds for your LEA must be reported on the AFR.

• A minimum number of funds should be maintained. Separate physical accounts do not require separate funds.

• It is required that all capital projects funds be folded into one fund and all debt service funds be folded into one fund for Commonwealth financial reporting purposes.

• Student Activity funds are agency funds. Use fiduciary fund 81 on the AFR. Some examples of student activity funds are the

ski club and drama club.

• Fiduciary funds – The only type of Trust fund that is accounted for as a Fiduciary fund is one that holds money for someone other than the LEA. If this money is for your school, then it is not to be recorded as a fiduciary fund.

Major Fund Criteria

• If the fund does not fit the criteria for a Major fund, then it must be classified as a Non-Major fund and reported on the fund statements in that column.

• To meet the qualification for "Major Fund" status under GASB Statement #34, any given fund element must exceed both the 5% and 10% thresholds.

• The General Fund and Food Service Funds are considered major funds.

Revenue Recognition

• Payments received in July and August that were applicable to the prior year, should be accrued. One example would be transportation.

• Do not confuse these with payments actually for the new fiscal year.

• Social Security reconciliation revenue should be accrued to the prior year.

Revenue Recognition cont’d

• The payment letters and form 2548 are tools for your use in determining where to properly account for revenues and deductions. These are checked on your AFR for accuracy of reporting.

• There are validations to ensure that your school report matches what is reported on the 2548.

• You will be contacted for discrepancies.

Reconciliation Statements

• Crosswalk the fund financial statements to the entity-wide statements.

• We were very lenient up to this point in accepting the wording on these statements.

• LEAs need to explain why there are differences between these financial presentations.

Sample Reconciliation Information

for the Statement of Activities

• Total net change in fund balances - governmental funds $ XXX,XXX

• Amounts reported for governmental activities in the statement of activities are different because:– Capital outlays are reported in governmental

funds as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by capital outlays exceeded depreciation in the current period.

X,XXX,XXX

– Some property taxes will not be collected for several months after the District's fiscal year ends, therefore they are not considered as "available" revenues and are deferred in the governmental funds. Deferred tax revenues increased by this amount this year.

XX,XXX

– Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. This is the amount by which proceeds exceeded repayments.

XXX,XXX

• Change in net assets of governmental activities

$ X,XXX,XXX

Vocational Education

• Starting with fiscal year 04-05 reporting, there will no longer be an elementary column in function 1300.

• The only expenditures for a school entity other than a vo-tech in the 1300 function should be for PDE approved vo-tech programs.

• Refer to https://www.cats.ed.state.pa.us to see if your program is PDE approved.

Why is AFR Accuracy Important?

• Title 1 money to PA• Actual Instructional Expense• Restricted Indirect Cost• Requests by taxpayers, other states, the

legislature, PSEA and PSBA• Tuition Rate – used to calculate

payments/deductions for Incarcerated Ed, PRRI, APS, 1305 & 1306 students

• Federal Reports– Use the information extracted from the

revenues, expenditures and statements.– Sent to the USDE and used in the

calculation for Title I money to PA.– Also used in a variety of reports comparing

spending and resources for our state versus the other 49 states.

AIE

• Combination of School Finance and Child Accounting responsibilities and uses.

• Defined by PA Public School Code, Section 2501, paragraph 11.1

• Based on AFR data (SF), WADM (weighted average daily membership) calculation(CA)

• To be used by AVTS’ and the Dept of Education for various calculations.

• Component used in the calculation of Secondary Voc Ed Subsidy.

Tuition Rate

• Pennsylvania School Code of 1949, Sections 2561 and 2562 is the legislative authority underlying the certification of the Tuition Rate Calculation.

• Rates are based on the school’s Annual Financial Report (AFR) PDE-2057.

• To be used by schools to calculate charges for nonresident students attending the school.

Details of Tuition Rate Form

• Tuition Rate is based on 2003-04 school year for use during the 2004-05 Fiscal Year.

• School Entity Share of Social Security (7810) and Retirement (7820).

• Broken down by Elementary (K-6) and Secondary (7-12).

Tuition Calculation: Example 1

1100@ 1200

1300144214902110212021402150219022502360 ##23802600 (A)

TOTAL

------------SUBFUNCTIONS 100,220,230 300,600 EXPENDITURES

1,124,105.54 18,815,831.95

TOTAL

0.00 0.00 0.00

------------------- -------------------- -------------------

3,954,478.42 73,984.23 4,028,462.6517,691,726.41

0.00 0.00 0.000.00 0.00 0.00

598,432.21 598,432.21248,180.99 248,180.99

0.00 0.00295,840.30 295,840.30

725,644.63 725,644.630.00 0.00

1,633,702.89 1,633,702.89 0.00 0.00

ANNUAL TUITION CHARGE PER PUPIL 6,555.37

251,049.38251,049.38

1,846.97OVERHEAD COST PER PUPIL IN ADM

RENTAL CHARGE PER PUPIL 8.00

1,449,139.1525,148,005.85 26,597,145.00

5,658.481

4,700.40INSTRUCTION COST PER PUPIL IN ADM

EQUIVALENT FULL-TIME ADM

Tuition Calculation: Example 2

1100@ 1200

1300144214902110212021402150219022502360 ##23802600 (A)

TOTAL

RENTAL CHARGE PER PUPIL 8.00

1,883,521.9725,148,005.85 27,031,527.82

5,658.481

4,777.17INSTRUCTION COST PER PUPIL IN ADM

EQUIVALENT FULL-TIME ADM

251,049.38251,049.38

ANNUAL TUITION CHARGE PER PUPIL 6,632.14

725,644.63 725,644.63

1,633,702.89 1,633,702.89 0.00 0.00

0.00 0.000.00 0.00

295,840.30 295,840.30598,432.21 598,432.21248,180.99 248,180.99

0.00 0.00 0.000.00 0.00 0.000.00 0.00 0.00

------------------- -------------------- -------------------

3,954,478.42 508,367.05 4,462,845.4717,691,726.41 1,124,105.54 18,815,831.95

TOTAL

1,846.97OVERHEAD COST PER PUPIL IN ADM

SUBFUNCTIONS 100,220,230 300,600 EXPENDITURES------------

1100120013001400160021002200230024002500260027002800290030004000

220 SS TOT EXPLESS FED EXPNET 220 SS EXP

7810 SS REVENUE 7820 RETIRE REVDIVIDED BY NET SS DIVIDE BY 230 RETPA SHARE OF SS PA RETIRE SHARE

ONE ONELESS PA SHARE LESS PA SHARE* SCH ENTITY SS SHARE ** SCH ENTITY RETIRE SHARE 0.5133

1.00000.5323

1.00000.4867

230 RET TOT EXP

179,000.00367,797.62

0.4867

221,187.49----------------

0.0014,051.5510,567.1923,903.10

----------------828,237.24 537.04

---------------

8,949.1440,802.99 166.9985,094.14

70,998.900.00 0.00

86,497.90

5,370.4625,667.00

9,110.9036,206.73 414.7340,120.90

8,558.509,326.33

0.0020,685.48

824.250.00

0.00134,729.00 0.0014,432.00

40,637.603,755.00

0.00

0.0015,172.19 26.40

0.003,949.15

0.00

---------------- ----------------367,797.62

----------------TOTAL >> 1,414,398.65 96,829.66

0.4677

220 SS FED EXP220 SS TOT EXP

0.000.00

0.006,614.08 6,614.082,434.00

11.48103,372.00

FUNCTIONS-------------

1,317,568.990.5323

1,414,398.6596,829.66

1,317,568.99

701,401.79

Receiving the PDE-2061 and PDE-2058

• Tuition Rate and AIE are sent by mail around June of each year.

• Request for Information Form must be filed with LECS Comptroller’s Office if Tuition Rate/AIE are misplaced. Reports will be faxed or surface mailed (not available by email).

• For information purposes, all school Elementary and Secondary Tuition Rates are posted to the School Finance Website as an excel file.This is not the certified form, it is an FYI only.

Points to Remember

• Use care when completing the detailed expenditure section of the AFR.

• Tuition Rates will NOT be revised once certified.

• Verification procedures for Tuition Rate and AIE on located on School Finance’s

website www.pde.state.pa.us/school_acct• Federal Expenditures are NOT included in the

tuition rate calculation.

Restricted Indirect Cost Schedule

• 2300 – only include the cost of the general audit of the school; and, if recorded in 2310, the salary of the business manager if they also serve as the board secretary.

• 2500 – there is a formula to limit this number• 2830 – only include non federal costs• 2840 – only include non federal costs• Unallowable costs will be deleted from the

schedule.

Is this proper Accounting?

• Netting down revenues and expenditures

• Long term liability for rental reimbursement. The Commonwealth does not recognize this as a payable, so you should not recognize this as a receivable.

Common Errors

• Not accruing revenues when applicable.• Recording expenditures in incorrect functions

or objects. Refer to the instructions on the payment letters or the audit confirmation for correct coding.

• Only recording the General fund on your fund financial statements.

• Recording AG findings for payments/deductions before these transactions are processed by PDE.

More Common Errors

• Waiting until you have completed your MD&A to submit your AFR

• Not sending in your required paperwork• Sending in your data file with validation

errors• Getting frustrated with your AFR

validations and not contacting the School Finance Division for help

Issues We are Reviewing

• Alternative education – recording of expenditures.

• GASB Statement #45 – new codes?

• Revised chapters of the Accounting Manual

Questions• Contact information:

Mary Kay Beerphone: (717) 783-9001email: mbeer@state.pa.us

LouAnn Caldarellaphone: (717) 783-9003email: lcaldare@state.pa.us

School Finance email: schlfin@state.pa.usLECS Comptroller’s website:

www.pde.state.pa.us/school_acct