1. Essentials of Fund 73 WASBO Accounting Seminar March, 2008 Presented by: Kathy Guralski, School Finance Auditor Wisconsin Department of Public Instruction

2. Agenda 1) 1)Overview of statewide postemployment activity 2) 2)Frequently asked questions 3) 3)NEW State categorical aid eligibility requirements effective 2007-08 4) 4)Summary of trust activity 5) 5)Proper accounting of trust activity for aid eligibility

3. Overview of Statewide Postemployment Activity Number of trusts established Number of districts that early implemented GASB 45 for financial reporting Range of ARC Contribution compared to ARC How districts are addressing OPEB

4. Frequently Asked Questions GASB versus DPI requirements General overview What types of funded benefits may be accounted for in fund 73 DPI required timing of valuation Who is included in membership When is study put into use Significant changes in benefit provisions Can a district make a contribution to build the trust and continue to pay current retiree benefits from district funds? “Pay as you go” OR “accrual”

5. NEW State categorical aid eligibility requirements Eligibility for state categorical aid How eligibility is calculated by DPI How to use eligibility worksheet http://www.dpi.wi.gov/sfs/xls/TestOfCategoric alContribution.xls How ARC for determining state aid eligibility is determined Benefits paid from trust in the initial year of a trust

6. Other NEW aid eligibility requirements http://www.dpi.wi.gov/sfs/doc/EBFReq uirementSummary.doc Benefits paid from trust in the initial year of a trust

7. Trust Activity Establishment of a trust Budget for contribution amount to trust Deposit retiree paid portion of insurance premiums in trust Physical payment of contribution from district to trust Can be made anytime during the fiscal year but MUST be physically made before or on June 30 th Pay retiree benefits from trust

8. Proper Accounting of Trust Activity for Aid Eligibility Handout http://www.dpi.wi.gov/sfs/emp_benefit_tru st_fund.html http://www.dpi.wi.gov/sfs/emp_benefit_tru st_fund.html

9. Steps for entries: 1) 1)Budget a district contribution Exhibit A 2) 2)If Applicable, allocation of contribution Exhibit C 3) 3)Account for contribution made in applicable funds Exhibit B 4) 4)Account for contribution received in fund 73 Exhibit B 5) 5)Account for receipt of retiree paid portion of insurance premiums Exhibit D 6) 6)Account for payment to insurance providers Exhibit E 7) 7)Account for payment from trust for implicit rate subsidy Exhibit E

10. Budget Your Contribution Exhibit A 1) Is your District planning to contribute the ARC amount? 2) If not, what amount less than the ARC can your district afford? a) Determine what your District needs to contribute to be able to pay current year retiree benefits b) What is your District planning to contribute in addition to the amount determined in a?

11. Allocation of contribution Will the contribution amount meet the criteria to be eligible for state categorical aid? When contribution amount exceeds ARC amount, only the ARC amount may be allocated to appropriate functions for federal/state grants and state categorical aid eligibility Any amount in excess of ARC is to be accounted for in fund 10, function 299000, object 218. (see Exhibit B, entry 2A)

12. Allocation of contribution Exhibit C Determine who your employees are that are eligible for the benefit (ALL not just special education) Determine either the salary OR FTE of the eligible employees Allocate total contribution to appropriate functions of eligible employees in the plan

13. Account for Contribution Made in Applicable Funds Contribution may be made anytime during the fiscal year but must be made on or prior to June 30 th. Contribution may be set up to run through the payroll system offsetting a liability account or as a journal entry at year end Exhibit B, 2B

14. Account for Contribution Received in Fund 73 Exhibit B, 2B(c) Account for Receipt of Retiree Paid Portion of Insurance Premiums Exhibit D

15. Account for Payment to Insurance Providers District pays premiums on retirees in combination with active employees Exhibit E, B Direct retiree payment from trust to insurance provider Exhibit E, A

16. Account for Payment from Trust for Implicit Rate Subsidy Exhibit E, C

17. QUESTIONS? Kathy Guralski School Finance Auditor 608-266-3862 kathryn.guralski@dpi.state.wi.us