1. Systemwide Revenue Bonds (SRB) and Capital Projects Kathy Skara Year-End Legal Training May 2010

2. SRB (Systemwide Revenue Bonds) Audit Starts with FIRMS Legal data It is critical to ensure our legal data is consistently reported so that we have a smooth SRB audit. There should never be any SRB-related activity recorded in CSU Fund 461: TF-Associated Student Body Trust This CSU Fund is used to collect the ASB fee on behalf of the Associated Students auxiliary organization and transfers the funds to the auxiliary organization. Refer to RMP Implementation Guide #21 ASB Fee Document at http://www.calstate.edu/BF/rmp/ #21 ASB Fee Document http://www.calstate.edu/BF/rmp/ ASB Fees are different from Student Union Fees. Student Union Fees should be captured in CSU Fund 534. The two fees should not be co-mingled. May 20102Year-End Legal Training

3. SRB Audit Starts with FIRMS Legal data CSU Fund 534: TF Campus Union-Operations and Revenue Return of Surplus (ROS) Check(s) to the Auxiliary Student Unions should be recorded to object code 660045: Return of Surplus. Please email scanned copies of check(s) AND all backup to Terri M. Williams tmwilliams@calstate.edutmwilliams@calstate.edu Before year end close, compare the dollar amount recorded in object code 660045 with total checks issued. If the dollar amount doesn’t match, please adjust your books accordingly. The dollar amount in your general ledger for ROS should tie to your check copies plus any other AP disbursements like a wire. May 2010Year-End Legal Training3

4. SRB Audit Starts with FIRMS Legal data  CSU fund 537: TF Auxiliary Org.-Operations and Revenue is mainly for SRB related activity. If you have non-SRB transactions (Deposits held for an auxiliary org that is not a Campus Union) the PS fund need a special FNAT key, FNAT #127073 FNAT #128893 for SRB Transactions, which maps to Project SRB00 May 2010Year-End Legal Training4

5. Auxiliary Organizations (CSU Fund 537) For debt issued PRIOR to January, 2008 Principal payment: No lease receivable is established in legal; record payment to object code 580098 "auxiliary lease principle payment", mapped to GAAP account 723006. Interest payment: Record payment to object code 508001 "Income from external investments", mapped to GAAP account 723003. Please do NOT record May and June accrual of the Auxiliary Base Rental interest payment in legal. This will be a GAAP accrual. Capital leases May 2010Year-End Legal Training5

6. Auxiliary Organizations (CSU Fund 537) For debt issued AFTER to January, 2008 Senate Bill 855 provides the authority to issue bonds on behalf of auxiliaries Now a loan and no longer a capital lease Loan between the CO and the auxiliary directly; campus acts as an agency only and the receipt of auxiliary base rental payments should not have a P&L impact to campus books. Receipts of Auxiliary Base Rental Payments and Interest Payments should be credited to object code 250002, unclear collection (other current liability). When the payments are remitted to the CO, debit the object code 250002 (other current liability). Loans May 2010Year-End Legal Training6

7. Fund Balance Clearing Reminder: adjustments to FBC will cause your SAM99 to be out of balance For specific questions regarding this issue please contact: Brian Lee Lead Revenue Bond Accountant (562) 951-4399 or blee@calstate.edublee@calstate.edu May 2010Year-End Legal Training7

8. Spend Down of State Funds Continue to spend down 575: State College Dorm Bldg Maint. and Equip. Res. Fund. Terri M. Williams Revenue Bond Accounting and Financial Reporting Supervisor (562) 951-4386 or tmwilliams@calstate.edutmwilliams@calstate.edu Brian Lee: Lead Revenue Bond Accountant (562) 951-4399 or blee@calstate.edublee@calstate.edu May 2010Year-End Legal Training8

9. Capital Projects Funding Sources CSU Funds Capital Projects – Cash Transfer Letters (CTL), Allocation Orders (AO) and Claim Schedules Project Completed Outstanding Accounting Issue – purging old inactive funds Accounting Issues What’s New - BABs May 2010Year-End Legal Training9

10. Funding Sources A construction project, “Capital Projects”, must have separate and distinct “accounts” (sub funds) for each of the different funding sources: Bond Anticipation Notes (BAN)/Commercial Paper (CP) - Short-term debt issued usually to fund projects during construction period. Systemwide Revenue Bonds (SRB) - Long-term debt to fund construction projects. General Obligation (GO) Bonds - Legislation approved by voters. Also known as Higher Education Bonds Lease Revenue Bonds -Public Works Board Fee Revenue Funds Donor Funds 2-7 Form, which is the project budget, contains the funding sources May 2010Year-End Legal Training10

11. Capital Projects CSU Funds Dormitory Construction Fund (State fund 576) SRB Housing – 221 Parking – 222 Aux Facilities (Health) - 223 Student Union – 224 Donor – 225 Aux Organization – 228 Continuing Ed (CERF) - 229 May 2010Year-End Legal Training11 Active GO Bonds (Higher Education) 574-318 785-338 6028-319 6041-320 6048-321 Lease Revenue Bonds - Public Works Board 660 - 310

12. Capital Projects Our Finance & Treasury (F&T) Department requests Cash Management Office (CMO) to issue an allocation order granting spending authority to the campus. The Request for Allocation Order from the F&T Department, and the Cash Transfer Letter issued by our Systemwide Financial Accounting group, will be forwarded to the campus by the Cash Management Office. May 2010Year-End Legal Training12 Allocation Orders

13. Capital Projects SFO records allocation orders in Agency 6620. The CO Capital Projects fund accountant sets up and adjusts the budget in the expenditure account (bond sub-fund) for the amount allocated to the campus. Campus posts the allocation order as an authority to spend. May 2010Year-End Legal Training13 Note: This process is repeated throughout the construction phase as new AOs are requested and approved. Allocation Orders

14. Entries for Allocation Orders Pending - All Funds Allocation orders pending are to be journalized in the appropriate General Ledger using the following account controls: FIRMS Object 404001 Allocation Orders - Pending FIRMS Object 404002 Reserve for Allocation Orders - Pending If the SCO expenditure allotment is UNDER (less than) campus expenditure allotment, there will be a CREDIT balance in FIRMS Object 404001. If the SCO revenue allotment is UNDER (less than) campus revenue allotment, there will be a DEBIT balance in FIRMS Object 404001. An allocation order pending is a required year-end report. These entries must be reversed July 1. 14

15. Capital Projects For GO (Higher Education) Bonds All Cash Transfer Letters (CTL) are available on the CO website. CPDC assigns the specific CTL based on the project’s funding source. http://www.calstate.edu/sfo/Cash_Transfer_Forms/index.shtml http://www.calstate.edu/sfo/Cash_Transfer_Forms/index.shtml A claim schedule must have a certification letter from CPDC and a CTL. For Dormitory Construction Fund 576 The Campus will receive the Allocation Order with the CTL attached. May 2010Year-End Legal Training Cash Transfer Letters (CTL) 15

16. Capital Projects Need a CTL for Bond funds and Commercial Paper (BAN) To Claim schedule funds To Abate funds To PFA funds Or any transaction that moves money between funds No CTL for Fee Revenue funds or Donor funds Cash Transfer Letters (CTL) May 2010Year-End Legal Training16

17. CTL Web Site for Higher Education Bonds http://www.calstate.edu/sfo/Cash_Transfer_Forms/index.shtml May 2010Year-End Legal Training17

18. CTL Forms for Higher Education Bonds/GO FundSub FundsFunding Source 0574 302October 2009 Tax Exempt 317GO Bond Proceeds (BL 09-09) 372BABs (Build America Bonds, BL 09-15) 0785306October 2009 Tax Exempt 6028 301October 2009 Tax Exempt 311GO Bond Proceeds (BL 09-09) 371BABs (Build America Bonds, BL 09-15) 6041 308GO Bond Proceeds (BL 09-09) 312October 2009 Tax Exempt 316November 2009 Tax Exempt 372BABs (Build America Bonds, BL 09-15) 382October 2009 BABs (Build America Bonds) 6048 304October 2009 Tax Exempt 311GO Bond Proceeds (BL 09-09) 372BABs (Build America Bonds, BL 09-15) 382October 2009 BABs (Build America Bonds May 2010Year-End Legal Training Cash Transfer Letter Forms 18

19. Capital Projects When filing a claim against a BAN or Bond funding source, a CTL must be included or the claim will be rejected. Campus must not file a claim against a BAN funding source when the BAN account has been closed to a Bond account, or the claim will be returned. May 2010Year-End Legal Training19 Claims

20. Capital Project When a project is completed, a “Notice of Completion” will be filed; then, the campus needs to notify F&T. Once claims and encumbrances have been satisfied, balances will be de-allocated. Bond funds will be transferred to Dormitory Interest & Redemption Fund (DIRF) and fees and donor funds will be returned to campus revenue. May 2010Year-End Legal Training20 Project Completed

21. Outstanding Issue Closing out Trial Balance - Fund Balance Clearing CO Capital Projects group will work with campuses on the proper JE to purge inactive funds. Contact Bill Pittman Capital Projects Lead Accountant (562) 951-4612 or bpittman@calstate.edubpittman@calstate.edu May 2010Year-End Legal Training21

22. Accounting Issues Campuses often use the incorrect year for revenue accounts on cash transfer letters (CTL) submitted to the state. This requires the Chancellor’s Capital Projects Accounting group to make a correct journal entry to each instance. Campuses sometimes use the incorrect CTL Choosing the wrong CTL from the web for Higher Education Funds Not using the CTL provided with the AO for Fund 576 Make sure the right people are on the distribution list to receive the CTL with the allocation order in order to ensure the campus is using the right one. May 2010Year-End Legal Training22

23. CTL – Using the Correct Fiscal Year CFY For Example CFY = 2009 For period July 1, 2009 through June 30, 2010 May 2010Year-End Legal Training23

24. What’s New – BUILD AMERICA BONDS American Recovery & Reinvestment Act of 2009(ARRA) created Build America Bonds (BABs). With the 2010B SRB, the CSU issued BABs - taxable debt whereby the CSU will receive a 35% tax credit subsidy of interest expense payments (bi-annual) from the Federal Government. Campuses will receive the subsidy via a CPO from the CO the same day that the CO receives the subsidy. Campuses will continue to be charged the full taxable interest expense amount by the CO through the centrally paid direct costs process. Very Important - When the campuses receive the CPO for the subsidy, they will be book it to “other federal non operating grants revenue” – object code 503112. Classified as “other operating revenue” in SRB Financial Statements. BABS Year-End Legal TrainingMay 201024

25. 2010B SRB Issuance It is important to remember that BABs proceeds can’t be used to pay indirect costs, only capital project direct costs incurred after March 1, 2009. All costs both direct and indirect incurred prior to March 1, 2009 must be paid out of non-BABs (2010A series) proceeds. BABS May 2010Year-End Legal Training25

26. www.calstate.edu May 201026Year-End Legal Training