SONOMA COUNTY OFFICE OF EDUCATION

SCOE BIZ

Business Services

Bulletin No. 18-03 August 2017

August 25, 2017

To: District/Charter Business Services

From: Judy Thomson, Director Fiscal Services

State of the State

The State Controller’s Office has reported that total July 2017 revenues of $6.09 billion exceeded State budget projections by $188.8 million, or 3.2 percent.

  • Personal income tax (PIT) ~ Personal income tax receipts of $4.74 billion in July were $77.3 million higher than 2017-18 Budget Act estimates, or approximately 1.6%.
  • Corporation tax receipts ~ July corporation tax receipts of $363.5 million were $18.9 million more than anticipated in the budget, or 5.5 percent.
  • Retail sales and use tax receipts ~ Use tax receipts of $899.5 million for July surged $84.6 million, or 10.4 percent, above budget estimates.

The statewide median home price in June increased to $555,150, up 7% from one year ago.

Instructional Materials Public Hearing Requirements for Fiscal Year 2017-18

Education Code Section 60119 requires that local governing boards hold an annual public hearing on or before the end of the eighth week from the first day pupils attend classes and adopt a resolution (example at http://www.cde.ca.gov/ci/cr/cf/doucments/reso60119lang.doc ) stating whether each pupil in the LEA has sufficient textbooks or instructional materials. This public hearing and resolution are required annually. LEAs should keep the resolution on file for the LEA’s annual audit.

EC Section 60119(c)(1) states that sufficient textbooks or instructional materials means, "each pupil, including English Learners, has a standards-aligned textbook or instructional materials, or both, to use in class and to take home. This paragraph does not require two sets of textbooks or instructional materials for each pupil." This specifically applies to four subject areas: reading/language arts, mathematics, science, and history-social science.

For more detailed information go to http://www.cde.ca.gov/ci/cr/cf/ and click on “Instructional Materials Frequently Asked Questions” for direct responses to realistic/practical questions.

See attached audit steps from the 2017-18 Guide for Annual Audits of K-12 Local Education Agencies.

Pension Stabilization Trusts

A program was established by Public Agency Retirement Serviced (PARS) to set money aside in a pension-related trust that can be used to pay future increases in CalSTRS and CalPERS employer contributions. Discussion ensued about how the trust should be accounted for. Although established as a trust, the balances and activities are treated as that of the employer, e.g., these are employer, not pension plan, assets and reported by the employer as restricted in the appropriate governmental fund. In most cases, the transaction will be a contribution of unrestricted cash in the county treasury (Object 9110) to cash with fiscal agent (Object 9135) in a locally-defined restricted resource code. There is no expenditure until the amounts are paid to CalSTRS or CalPERS. Also, amounts accumulated in this type of trust do not offset the employer’s net pension or other postemployment benefit liability. See www.pars.org for more information.

Refer to the Governmental Accounting Standards Board Implementation Guide No. 2017-1, Implementation Guidance Update—2017 issued in April 2017:

http://www.gasb.org/jsp/GASB/Document_C/DocumentPage?cid=1176168990840&acceptedDisclaimer=true

Education Protection Account (EPA) ~ Resolution to reflect language from Proposition 55

A board resolution is not required, but if used, should be updated. Updated EPA FAQs are available on the CDE’s EPA Web page at http://www.cde.ca.gov/fg/aa/pa/epa.asp to reflect the passage of Proposition 55. CDE refers to Section 36 of Article XIII of the California Constitution, rather than the proposition, so references to the law do not have to be changed in the event another proposition passes. Sample resolutions will be posted on the SCOE website under DBUG, August 25, 2017.

Bright Schools Program

The California Energy Commission’s Bright Schools Program offers services to help identify the most cost-effective energy saving opportunities for LEA facilities, including energy audits to identify cost-effective energy savings projects that may be eligible for Proposition 39 (K-12) Program funding. The Bright Schools Program’s technical assistance is a grant of service up to $20,000 at no cost to LEAs.

The Bright Schools Program is a continuously open program with no final filing date. However, it is recommended that an LEA submit their application by September 15 which would allow enough time to approve the application, conduct the energy audit, and assist the LEA with their Proposition 39 program application by the January 12, 2018 deadline. Pursuant to AB 99 enacted in June 2017, the deadline to encumber funds for Proposition 39 (California Clean Energy Jobs Act) is extended to June 30, 2019.

Note: Participation in the Bright Schools Program does not affect the qualified award amount from the California Clean Energy Jobs /Proposition 39. In most cases, there is no cost to participate in the program.

More detail information can be found at:

http://www.energy.ca.gov/efficiency/brightschools

Mandate Block Grant

The 2017–18 web-based application for the Mandate Block Grant is now available to school districts and charter schools. The Mandate Block Grant application link is located at: http://www.cde.ca.gov/fg/aa/ca/mandatebg.asp Applications must be submitted by August 30, 2017, in order to receive 2017-18 MBG funding.

Funds are allocated using average daily attendance (ADA) calculated as of the 2016–17 Second Principal Apportionment. Rates are as follows:

Districts receive $30.34 per ADA for students in grades K thru 8, and $58.25 per ADA for students in grades 9 thru 12. Charters receive $15.90 per ADA for students in grades K thru 8, and $44.04 per ADA for students in grades 9 thru 12.

Fraudulent Activity

Please be advised that we have had an attempt made to pay a fraudulent invoice. This was done by someone hacking into a supervisor's e-mail, pretending to be the supervisor, and then requesting the SCOE employee to make a wire transfer for the amount due. We are seeing more and more of this kind of activity, so please be cautious and follow all internal control policies and procedures, use requisitions whenever possible, and if something seems out of the ordinary, ask questions.

Local School Wellness Policy requirements

The final rule (FR) for local school wellness policy (LSWP) requires all LEAs that participate in the National School Lunch Program (NSLP) and the School Breakfast Program (SBP) to meet expanded LSWP requirements. The FR strengthens the nutrition guidelines foods provided outside the meal programs and further strengthen requirements for assessments and requires full compliance by June 30, 2017. Please see the attached Comparison chart which highlighting changes and CDE recommendations.

Administrative reviews (AR) conducted during SY 2016-17 evaluated LSWP requirements prior to the LSWP FR.

ARs conducted during school year 2017-18 will evaluate LSWP requirements included in the LSWP FR.

REMINDERS:

General Obligation (GO) Bonds and Proposition 39 (55% Local Vote Bonds)

Traditional GO Bonds require 2/3 vote of the registered voters voting in the election. Under Proposition 39, which was enacted in November 2000, schools can authorize GO Bonds with 55% voter approval. Proposition 39 bond issuances include additional accountability requirements such as, including certain types of audits, provisions for conducting elections, and establishing a Citizens Oversight Committee. Some requirements are listed below:

  • Following a bond election, the County Registrar of Voters will provide the school district calling the election with the formal results in the form of a Certificate of Election Results. The governing board of the school district is to enter the results of such election into its minutes and to certify such proceedings to the County Superintendent of Schools, usually done in the form of a resolution. This action is normally taken at the next regular meeting of the governing board of the school district after the certification is received. This action must occur before the issuance and sale of the authorized bonds.
  • Ed Code Section 15278(a) requires that bond measures passed pursuant to Proposition 39 establish a Citizens Oversight Committee (Committee). The initial members of the Committee must be established within 60 days after the date that the governing board of the school district enters the results of the bond election on its minutes. The governing board of the school district may also adopt policies, guidelines and procedures to be applicable to the Committee once it is established. It is recommended that policies, guidelines and procedures be adopted before members of the Committee are selected. The Committee shall consist of at least seven (7) members to serve for a term of two (2) years, without compensation, and for no more than two (2) consecutive terms. The Committee may not include any employer or official of the school district or any vendor, contract, or consultant of the school district and must include certain member types from the community.
  • Ed Code Section 15278 (b) requires certain documents relating to the Committee be made available on an internet website maintained by the school district.

AB 2274 added reporting requirements to debt from bonds already approved by voters. It requires agencies to notify CDIAC of any proposed debt issuance, which would include refinancing and other secondary issuances. Prior to AB 2274, LEAs were only required to notify CDIAC of any new debt issuance. CDIAC can now require any information about the debt issuance “it considers appropriate” as part of the notification rather than limiting it to the sale date, the name of the issuer, the type of debt, and the estimated principal. In addition, the bill reduces the timeframe in which agencies shall notify CDIAC of a final debt sale from 45 days to 21 days after the sale or issuance. The aforementioned CDIAC reporting requirements are applicable to any issuance of debt after January 1, 2015.

AB 2551 enhanced transparency requirements for local bond elections, including Proposition 39 (2000) and two-thirds vote general obligation bonds. The bill requires LEAs attempting to pass local bonds to submit to their local elections office the total estimated debt service, including principal and interest, if all bonds are issued, as part of the Tax Rate Statement required pursuant to Elections Code Sections 9400-9401. The aforementioned reporting requirements are applicable to any issuance of debt after January 1, 2015.

It is recommended that districts that have recently passed GO Bonds discuss regulatory requirements with their bond or legal counsel. For more detailed information, please see the California Debt Advisory Investment Committee (CDIAC) website (http://www.treasurer.ca.gov/cdiac/) and California’s Coalition for Adequate School Housing (C.A.S.H.) website (http://www.cashnet.org/).

Non-Voter Approved Debt disclosure form and requirements

Education Code Section 17150 requires school districts to notify the County Superintendent of Schools and County Auditor at least 30 days prior to the governing boards’ approval of the issuance of certificates of participation (COPs) or other non-voter-approved debt secured by real property such as: Lease purchases (LP) secured by real property; Qualified Zone Academy Bonds (QZABs) secured by real property; Revenue bonds; Energy Loans or Bond Anticipation Notes (BANs). The law requires the district provide repayment schedules, evidence of the ability to repay, and costs of issuance as well as information necessary to assess the anticipated effect of the debt issuance. Within 15 days of the receipt of the information, the County Superintendent of Schools and the County Auditor are authorized to comment publicly regarding the district’s capacity to repay the debt obligation, based on the information provided.

The Disclosure of Non-Voter Approved Debt form is located at https://fb.scoe.org/default.asp?W81 . Please complete, supply supporting documentation, and submit in accordance to the above.

Cash Transaction limits at the County

The County Treasury requires 5 days advance notice anytime $1 million or more is paid out to a single vendor. This requirement is in place giving the Treasury time to ensure there are sufficient funds for such a large outflow of cash. The Treasury invests our funds in the County Pool, receiving interest income. In the case of a large outflow of $1 million or more, the funds cannot be invested the entire time the check is outstanding, eliminating the ability to invest and receive interest income. Wire Transfers (5 day advance notice for transfer requests $1 million or more; 2 day advance notice for transfer request over $90k, but less than $1 million), on the other hand, are an immediate payment. In order to both accommodate Treasury's 5 days advance notice requirement and maximize our interest income, SCOE implemented the following protocol:

Districts anticipating a payment over $1 million to a single vendor, please use the wire transfer process in lieu of running payment through Escape's APY. Likewise, these should originate from the district's Chief Business Official.

The instructions (Wire Transfer Procedures for Districts) and form (Wire Transfer Request Form, Rev. 12/22/16) are located at: https://fb.scoe.org/default.asp?W81.

School and College Legal Services of California (SCLS) Workshops

SCLS provides numerous workshops on current issues and useful topics for minimal fees. Please go to http://www.sclscal.org/ and click on the Workshops tab. Also note that recent SCLS Legal Updates can be found at the aforementioned web address under the Legal Updates tab.

Dates to Remember:

09/04/2017 Holiday ~ Labor Day

09/15/2017 Open Lab

09/21/2017 DBUG

09/22/2017 Use Tax Workshop – presented by Board of Equalization

10/12/2017 School Wise User Group

10/17/2017 The Fiscal Aspect of Negotiations – presented by School Services of California (SSC)

10/17/2017 CALPADS information meeting

10/19/2017 CALPADS Fall 1 for Advanced

10/20/2017 Interim Workshop

10/24/2017 Accounts Payable Workshop – presented by CASBO

10/24/2017 CALPADS for Administrators

10/26/2017 CALPADS in Aeries for Advances

11/02/2017 1099 Workshop – presented by CASBO

11/16/2017 Special Education – Both Sides of the Equation – presented by SSC

12/06/2017 Advanced Collective Bargaining – presented by SSC

NOTE: Documents presented at DBUG may be fou nd at dp.scoe.org website under the "DBUG/SCOE Bulletins" tab.