School District Accounting Advisory Committee

SCHOOL DISTRICT ACCOUNTING ADVISORY COMMITTEE

Meeting Minutes

May 5, 2009

Members Present (17): Brian Aiken, Holly Burlingame, Ronic Lirio, Becky Montgomery, Jeff Phan, Kim Scott, Neil Sullivan, Chuck Hole, Marilyn Sollers, Bill Tilton, Jean Deming, Jody Hockaday, Rick Bonner, Cal Brodie, Pam Peppers, Daniel Lunghofer.

Members Absent (9): Susan Smith Leland, Patricia Luat, Doug Matson, Dave Rudy, Judy Ainslie, Amy Fleming, Kennesey Cavanah, Darrel Jensen, Mike Dooley.

Guests (6): Denise Wolff, ESD 113; John Molohon, ESD 113; Cory Plager, ESD 101; JoLynn Berge, OSPI; Kim Brodie, Puyallup School District; Marty Rose, Kennewick School District.

Minutes: Due to a hectic end-of-session schedule and preparations for the WASBO conference, minutes from the March 20 meeting were not posted online. Members and guests were given a printed copy of the minutes to read. A motion was made by Bill Tilton to accept the minutes as written, Marilyn Sollers seconded. The minutes were approved as written.

Other Items: Jeff Phan raised a question about whether districts charged any information technology expenditures to Activity 27. This lead to a discussion about whether anyone either did or was willing to take the time to break down the various costs and then track the expenditures in such a direct manner. Cal mentioned that it would be better to treat these expenditures as a cost center and then allocate out to the programs. Several members commented that if these charges are added to an indirect pool, they can’t be direct-charged out of that activity. Similarly, any costs that are directly charged out would have to be removed from the indirect cost pool to avoid any potential double-charging of expenditures. Marilyn Sollers pointed out that the description of Activity 72 supports a direct-charge method for handling these costs. Cal commented that the current accounting system lacks the capability of capturing this level of information.

Introductions: Introductions had been overlooked at the start of the meeting, and so all those who were in attendance introduced themselves.

Follow-Up Items: Cal Brodie opted to proceed with an update of several items from the previous meeting.

In March, a discussion had taken place surrounding the special education excess cost requirements. The general guidance is that a school district must spend at least as much per special education student as it does on each basic education student. The auditors have been working on these excess costs calculations during their annual audits of the school districts, but have not been issuing any findings this year. Because of the way in which Washington school districts receive special education funding, that is the students are recognized as being regular education students first, Cal indicated that it would be “inconceivable” that districts fail this test. After development of the model and discussions with the special education staff, Cal indicated that the final version of the model would be available on OSPI’s website soon after they return from WASBO.

The next update pertained to the new systems for OSPI. The F-203X system had been released for testing on Friday, May 1. Aside from one minor glitch pointed out by Brian Aiken, the system was looking ready to release to districts on May 15.

The F-195 system is approaching a new level of system testing, that of user acceptance testing. That testing will begin in earnest on Monday, May 11. The hope is to have the system out to districts by June 2. This will be released at the same time as the 08-09 F-200 system, which represents a mid-year conversion for that system.

American Recovery and Reinvestment Act of 2009 (ARRA)

The Washington Legislature decided, towards the end of budget negotiations, that State Fiscal Stabilization Fund (SFSF) money (a portion of the ARRA) would be used to backfill money paid to school districts as a part of I-728. However, because of the timing issues, it would be impossible to backfill I-728 money with SFSF money for the entire year.

Fortunately, the budget language was written to give OSPI authority to move around some allocations within the budget. The focus now will be on getting districts to pay for approximately 15 days of school using the SFSF money. SFSF money will be allocated in lieu of general apportionment for May and June. Districts will be able to pay for any earned salaries using this money. The number of school days available for moving payroll costs will vary from district to district. Districts will have a start date to record eligible expenditures of either the date their grant application is submitted on iGrants, or the Governor submits the state’s application. The latest date for recording earned salaries is the last day of school. Cal stressed the importance of understanding that while teachers may be paid on a twelve-month schedule, they only earn their salary while school is in session.

Because of these time constraints, several OSPI staff had hoped that the Legislature would keep all stimulus money out of the supplemental budget, but it was included in the final budget. To help districts get their applications submitted in a timely manner, the grant will be set up to be as simple as possible.

Several attendees commented that an official message needs to go out to all of the superintendents, stating that the SFSF money is not extra money, but merely a “replacement” of one funding source with another.

The reporting requirements for the ARRA money were discussed. One of the goals of the ARRA program is to report how many jobs were either saved or created by use of the funds. A complication is that the teachers are under contract, and so jobs created or lost is not an easy thing to measure. In addition, districts will be required to report a per-pupil amount of state and local moneys spent by building, a level of detail some districts may not be able to provide. In those cases, a “best guess” estimate will have to be used.

Special Education funding came up several times. With the ARRA-related increase to Special Education funding, the Maintenance of Effort calculations will allow districts to reduce their state and local expenditures for Special Ed. OSPI’s Special Education staff have indicated their preference to release all of the ARRA Special Ed funding at once. Cal stated there may be a semantic difference between “allocated” and “awarded,” as a number of districts do not want the entire award at once. In addition, this will affect Safety Net applications – districts will have, in essence, double the award level, they will have a harder time showing need for Safety Net. The belief is that districts may have to “replace” their Safety Net awards with ARRA Special Ed awards to help compensate for this increase.

The new determination status for Special Ed was also discussed. Each district is categorized from Level 1-4, depending on whether they Meet Requirements for IDEA (Level 1) or Needs Substantial Intervention (Level 4). The original intent was to have this determination status be for reference, but the ARRA language indicates that it must be used. Only districts that are Level 1 (“Meets Requirements”) will be able to reduce their Special Ed Maintenance of Effort requirement by 50% of the increase in IDEA allocations. This will have an obvious impact on several districts. There will be a need to get information out to districts in a timely manner regarding the determination status and Maintenance of Effort.

Accounting Manual Work for Summer 2009

The committee decided to break down each item on the proposed project list into various subcommittees. Three subcommittees were formed: a GASB/Footnotes committee, a Capital Projects/Transportation Vehicle Fund committee, and an Accounting Manual Maintenance subcommittee. Nominations were held for the chairs for each of these committees. Neil Sullivan volunteered to lead the GASB subcommittee, Holly Burlingame volunteered to lead the CPF/TVF subcommittee, and Jeff Phan volunteered to lead the Maintenance subcommittee.

A continued discussion about the SDAAC working on a proposal for Proprietary Funds (Enterprise and Internal Service) arose. Doug Matson joined the committee meeting briefly (on a break from the WASBO Board meeting), to express his discontent with doing work for Proprietary Funds when the Legislature has not given school districts authority to create them. In addition, the potential new data requirements from HB 2261 (the Basic Ed bill) raised similar issues. The heart of the questions raised were members wanting to know to what extent the SDAAC would be involved, how deep will these requirements go, and how much will it cost to gather the information requested in 2261.

The meeting dates for the summer subcommittee meetings were decided based on the availability of the subcommittee chairs. The subcommittee meetings will be Thursday June 25, Friday July 24, and Friday August 21. The locations will be announced later. (Ed. Note: June 25 will be at Puget Sound ESD, July 24 will be at Highline School District, and August 21 will be at Renton School District.)

The SDAAC Working Materials website will be used extensively during the subcommittee work this summer. Each subcommittee will work on their items during the meetings, and then share the draft work for other members to review in between meetings. The hope is to promote increased communication and sharing of ideas between the subcommittees this year.

Construction Account Code

Cal brought up an item for discussion. One of the uses for the SFSF money, if districts select it, will be Impact Aid, which allows construction projects to be funded. Currently, there is no account code (Program or Activity) established to capture construction in the General Fund. Object 9 (Capital Outlay) is always available – but could a district be able to compare between, for example, the purchase of a portable for a program versus the construction of a small building for a program?

Cal asked if, at the risk of opening a “Pandora’s Box,” a new Activity code should be opened up for Construction in the General Fund. The consensus was that such a code would not be necessary. Use of the Capital Outlay object was determined to be sufficient.

ADJOURN

The meeting was adjourned at 4:30 PM.