1. SCHOOL DISTRICT ACCOUNTING ISSUES

3. KEY ISSUES GASB 54 Net Position Accrued Sick Leave GASB 63/65 – deferred inflows and outflows Common errors

4. Susan Barkley Assistant Director, Division of District Support Kentucky Department of Education susan.barkley@education.ky.gov 502-564-3930

5. RESOURCES Fund balance template – Chart of Accounts page Entity-wide template, slides – financial audit page GFOA “blue book”

6. TRIAL BALANCE

7. EXPENSE ALLOCATION WORKSHEET

9. GASB 54 FUND BALANCES

10. NONSPENDABLE Stuff not in spendable form, like prepaids

11. RESTRICTED Funds restricted for expenditure by the grantor, legislation Examples: Federal grants Some donations SFCC funds

12. COMMITTED Funds committed to a specific purpose via board action Must be done by June 30 Takes board action to commit and to un-commit Example: what we used to call “board- designated”

13. ASSIGNED Designations made by management Can be done after June 30 Cannot create a negative balance in unassigned May include POs only in general fund

14. UNASSIGNED Can be a positive number only in general fund The only category that can ever be negative

15. DEFICITS IN OTHER FUNDS Audit contract Only general fund can have a deficit at June 30 Funds must be transferred from general fund to satisfy deficits in other funds

16. FUND BALANCE – FUND 2 Revenue and Expenditure accounts close to 8731 MUNIS auto closes POs to 8755 at year end and auto reverses that entry upon opening subsequent year Results in a negative (debit) balance in 8731 – restricted grants and a positive (credit) balance in 8755 – assigned 13 th month POs

17. FUND BALANCE – FUND 2 To accurately report fund balance at June 30, an adjustment needs to be made to zero those balances: Dr. 8755 – assigned POs, 13 th month Cr. 8731 – restricted, grants Reverse the entry in subsequent year

18. NET POSITION Funds 5X are different! Proprietary funds are full accrual They do not use fund balance codes Use net assets (net position) codes ONLY Invested in capital assets, net of related debt (8711) Restricted net assets (8739) Unrestricted net assets (8712) New edit check to help you in the future

19. SICK LEAVE ISSUES

20. SICK LEAVE - ESCROW KRS 157.420 (3)  May escrow up to 50% of max liability  Staff employed on September 15  Not to be used for any other purpose  Restricted fund balance 8732

21. SICK LEAVE - LIABILITY  Max liability on entity-wide statements  Recorded as of 6/30/YY  True-up liability annually  27 service years for KTRS

22. SICK LEAVE - PAYMENT KRS 161.155 (10) (a) (b)  Not to exceed 30% of daily salary  Included for KTRS calculation  Maximum 300 days

23. SICK LEAVE – CALCULATIONS TO DETERMINE LIABILITY BALANCE Maximum liability:  Total liability = daily rate * #of sick days * 30% Pro-rated for service years:  # years (step) ≥ 27 = total liability amount OR  # years (step) < 27 = liability/27 * # years (step)

24. TO DETERMINE MAXIMUM ESCROW Escrow:  Pro-rated liability * 50%.  Restricted fund balance – sick leave (8732) Use 9/15/yy data unless not materially different

25. FUND BALANCE SET ASIDES FOR SICK LEAVE Amounts set aside (escrow) pursuant to KRS 157.420 = restricted (8732) Other amounts set aside by board action = committed (8742) Amounts intended to be used for sick leave payments without board action = assigned (8757)

26. Total sick leave liability - Amount escrowed (8732) Remaining amount that could be set aside for Committed fund balance (8742) and/or Assigned fund balance (8757) NOTE: All fund balance set asides are OPTIONAL Up to the maximum allowed by law

28. SFCC OFFERS This is an even-numbered year so no escrows will be made at year end

29. DEBT SERVICE FUND For the accumulation of resources For principal and interest Required for bond payments Optional for capital lease payments

30. ON-BEHALF PAYMENTS Health benefits Districts reimburse KDE for federally-funded employees Retirement Technology Debt Service KISTA energy savings capital lease Guidance available at http://education.ky.gov/districts/FinRept/Pages/On-Behalf-Payments- Information.aspx

31. BUDGETING ON-BEHALF Optional, but encouraged Eliminates confusion Prevents actual variances from being camouflaged

32. GASB STATEMENT 63/65 Statement of Net Position Deferred outflows Deferred inflows

33. DEFERRED OUTFLOWS Listed after assets, used to be called assets A consumption of net assets that is applicable to a future reporting period Example: deferred amounts from debt refunding (debits)

34. DEFERRED INFLOWS Listed after liabilities, used to be called liabilities An acquisition of assets applicable to a future reporting period Examples: Grant revenue received before you are allowed to spend it “Unavailable revenue” (used to be deferred revenue) – receivables that won’t be collected within availability period Deferred amounts from debt refundings (credits)

35. DEBT ISSUANCE COSTS Also required by GASB 65 Used to be an asset Now an expense If material, prior period adjustment in year of adoption

37. COMMON ERRORS Failure to comply with GASB 54 On behalf debt service payments made by the state recorded as 3200 instead of 3900 On behalf debt service payments made by the feds not recorded as 4900 Bond principal and interest payments not recorded in fund 400 Failure to comply with GASB 63 Failure to comply with clarity standards

38. PROPOSED AUDIT ADJUSTMENTS Entries must balance Can’t make an entry to Fund 2 beginning balance – make entries to revenue/expenditure instead Fixed asset journal entries must be associated with specific fixed assets (tag numbers)