SACS Forum Meeting Minutes, November 2012

Meeting held at the California Department of Education (CDE), Sacramento

Meeting Agenda

Information and Announcements

• Contacting our office – sacsinfo@cde.ca.gov

• 2011–12 unaudited actuals reviews – CDE follow up with local educational agencies (LEAs)

Accounting Issues

• 2011–12 unaudited actuals data review – preliminary observations

• Revised time accounting guidance

• California State Teachers’ Retirement System (CalSTRS) and California Public Employees’ Retirement System (CalPERS) penalties and interest coding

• Governmental Accounting Standards Board (GASB) 61 follow up – the financial reporting entity

• GASB 68 – pension accounting and financial reporting standards
  
  
• GASB 63 and 65 – implementation discussion
  
  
  • Financial statement reporting (GASB 63)
  • Items to be reported in the new classifications (GASB 65)

SACS Software Issues

• November validation table update

• SACS2013 software – discussion of proposed changes

Other Issues

• Due date – Special Education Maintenance of Effort (SEMOE) reports

• Next Meeting

Meeting Minutes

Information and Announcements

• Contacting our office – sacsinfo@cde.ca.gov
  
  Participants were reminded that the Financial Accountability and Information Services (FAIS) office maintains a general e-mail account to be used by LEA staff for accounting and SACS software questions. Using this centralized account, as opposed to contacting individual staff, ensures that questioned are directed to the appropriate staff and answered in a timely manner.
  
  LEA staff may also contact FAIS by telephone using the main number, 916-322-1770.

• 2011–12 unaudited actuals reviews – CDE follow up with LEAs
  
  FAIS staff are in the process of reviewing 2011–12 unaudited actuals data submissions. Again this year a focus of the review is the indirect cost rate calculation to ensure the rates are being calculated in accordance with the CDE’s delegation agreement with the United States Department of Education (ED). In addition, the CDE wants to ensure that the financial data reported is reliable, accurate, and prepared in accordance with generally accepted accounting principles as the data is available to the public and is used for several state and federal reports.
  
  FAIS staff may be contacting county office of education (COE) staff with questions regarding the indirect cost rate calculation or any other financial reporting questions, with the intent that COE staff follow up with school district staff as necessary. The CDE appreciates LEA staff assistance with these questions.

Accounting Issues

• 2011–12 unaudited actuals data review – preliminary observations
  

  During the first few weeks of the unaudited actuals data review a few accounting and coding observations have been noted.

  First, it was noted in several LEAs’ data that other postemployment benefits (OPEB) expenditures are not being allocated appropriately. Excerpts from California School Accounting Manual (CSAM) Procedure 785, Postemployment Benefits Other Than Pensions (OPEB), pages 785–11, 785–12 and 785–14 were distributed that describe how OPEB expenditures should be allocated. Also, it was discussed that this procedure provides detailed examples for charging OPEB expenditures.
  
  Second, it was noted that several LEAs were not using Function 7700, Centralized Data Processing. It appears that centralized data processing expenditures are probably being charged in one of the other general administrative functions. The majority of LEAs should have some centralized data processing expenditures, and they should be reported separately in Function 7700 rather than lumped in with other general administrative expenditures in the 7200 through 7600 function range. Function 7700 is not an optional code.
  
  
• Revised time accounting guidance
  
  On September 7, the ED issued new guidance on time accounting. This guidance is the result of the ED’s recent effort to find ways to lessen the burden of time-and-effort reporting while still meeting its objective, and is a welcome change. The guidance:
  
  
  • Reiterates existing definition of a "cost objective." Note that this represents no change to the current guidance in California School Accounting Manual (CSAM) Procedure 905, Documenting Salaries and Wages, regarding cost objectives.
    
    
  • Allows a new "substitute system" alternative to a monthly Personnel Activity Report (PAR), only for employees who work in multiple cost objectives but whose schedule is highly predetermined. For example: Every day from 8:45 to 9:15 employee supports Special Education; from 9:15 to 10:00 employee conducts small group reading; from 1:40 to 2:30 employee supports first grade Title I reading and math; et cetera. This employee could now prepare a semi-annual certification rather than a monthly PAR, using his predetermined written schedule as support.
    
    
  • Is retroactive for LEAs to July 1, 2012.
    
    
  • Requires the CDE to have a role in establishing the system.
    
    The CDE is working swiftly to determine the extent of their required involvement and to establish any related processes. The CDE will disseminate the outcomes as soon as possible.
    
    
• CalSTRS and CalPERS penalties and interest coding
  
  LEAs should record CalSTRS and CalPERS penalties and interest to Function 7100, Object 5800. Although these amounts are included in the pool of funds used to pay benefits, they are not allowable costs under federal cost principles and should not be charged directly to programs or indirectly through the indirect cost rate.
  
  
• GASB 61 follow up – the financial reporting entity
  
  The CDE reiterated that it will not be issuing guidance on GASB 61, The Financial Reporting Entity. Central to developing guidance is defining whether a charter school is a separate legal entity that would meet the definition of a component unit. This would require a legal opinion that would not be finalized in a timely manner.
  
  LEAs should use the information that is most reasonable in their circumstances in order to determine whether a charter school is a component unit and if so how that component unit should be reported in the financial statements.

• GASB 68 – pension accounting and financial reporting standards
  
  GASB 68 was issued in June 2012. Implementation is required beginning 2014–15. As discussed in prior meetings, the CDE expects that the CalPERS and CalSTRS will be the agencies primarily responsible for implementing the standard and providing the necessary information to LEAs. The CDE expects minimal impact on SACS financial reporting forms and accounting. The CDE will issue accounting guidance and work with CalSTRS in a liaison capacity, per their request, if and when necessary. More information will be forthcoming over the next several months to a year.

• GASB 63 and 65 – implementation discussion
  
  
  • Financial statement reporting (GASB 63)
    

    An updated recap (Attachment A to the SACS Forum Meeting minutes for November 6, 2012) of GASB 63 was provided and discussed.

    In conjunction with the implementation of the new financial statement elements, the CDE is proposing the following revised balance sheet object code ranges and codes:
    

    CURRENT	PROPOSED
    9100–9499  Assets 9400–9499  Capital Assets	9100–9489  Assets 9400–9489  Capital Assets 9490–9499  Deferred Outflows of Resources 9490  Deferred Outflows of Resources
    9500–9699  Liabilities 9660–9669  Long-Term Liabilities	9500–9689  Liabilities 9660–9669  Long-Term Liabilities 9690–9699  Deferred Inflows of Resources 9690  Deferred Inflows of Resources

    
    Participants were asked to provide feedback to the CDE if the new ranges or object codes would cause any problems with LEA financial systems.
    
    
  • Items to be reported in the new classifications (GASB 65)
    
    A recap (Attachment B to the SACS Forum meeting minutes for November 6, 2012) of GASB 65 was provided and discussed. In addition a list (Attachment C to the SACS Forum meeting minutes for November 6, 2012) of items that LEAs may currently be reporting as assets or liabilities that would need to be reclassified as deferred outflows of resources or deferred inflows of resources was provided.

SACS Software Issues

• November validation table update
  
  A validation table update will be released sometime the first week of November. The update primarily consists of resource codes for which an end date has been added.

• SACS2013 software – discussion of proposed changes
  
  Proposed changes to be incorporated into the SACS2013 software budget release, as listed in Attachment D to the SACS Forum meeting minutes for November 6, 2012, were discussed. Participants did not have any questions or concerns with any of the proposed changes.

Other Issues

• Due date – SEMOE reports
  
  The new due date for the LEA-level SEMOE and Table 8 reports is November 15. An e-mail was sent from CDE to special education local plan area directors on September 28.

• Next meeting
  
  It was discussed that the next SACS Forum meeting would be held in January, 2013. However, the meeting has actually been scheduled for February 5, 2013.