1 school finance expenditures for the novice iasbo annual conference may 19, 2010 susan husselbee,...

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School Finance Expenditures for the

NoviceIASBO Annual Conference

May 19, 2010

Susan Husselbee, Dir. of Fiscal Services, Niles H.S. Dist. 219

847.626.3974 sushus@niles219.org

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Expenditures Incurred Via Payroll

Employees are hired by the Board of Education as recommended by Human Resources/Superintendent

Substitute pay & overtime is authorized by the appropriate dept. administrator & forwarded to Payroll in the Business Office

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Payroll Processing

Contracts are set up for employees with annual & hourly rates

Payroll maintenance is performed (e.g., change deductions)

Contract gross pay is balanced with prior payroll

Timesheets entered & balanced Gross pay is balanced (contracts +

timesheets) Paychecks are processed & distributed

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Exp. Incurred Via Purchasing (Site Based) Staff member wants to purchase an item Supervising administrator verifies available

budget balance, and that purchase is allowed (e.g., no bidding required)

Purchase requisition is prepared by dept. Business Office converts requisition to a

purchase order (PO) & sends PO to vendor After invoice is received and Accounts

Payable is notified of goods being received, checks are processed

Checks are held pending Board of Education approval, then mailed to vendor

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How Expenditures Are Coded

IL Program Accounting Manual (IPAM) for Local Education Agencies (LEAs) www.isbe.net

Exp. coded on ISBE AFR & budget by: Fund Function Object

Your acct. structure may also include location, program, source of funds

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Definition of Funds

Independent accounting entity with a self-balancing set of accounts including its own assets, liabilities & fund balance

Within each fundDebits = credits

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Fund Descriptions

#10 - Educational Largest fund Instructional exp. & support costs such as

food service, social workers, librarians#20 - Operations and Maintenance

Maintaining, improving or repairing buildings and grounds

Includes custodial/maintenance staff & utilities #30 – Debt Service

Bond principal and interest payments

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Funds (cont.)

#40 - Transportation Pupil transportation costs for any purpose

such as bus purchases, payments to bus transportation vendors, taxi, van & airfare

#50 - IMRF/FICA Board’s share of social security and

Medicare taxes and IMRF obligations

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Funds (cont.)

#60 – Capital Projects Bond proceeds for construction are placed

here Construction project costs, land purchase

#70 - Working Cash Property tax is levied or bonds sold for this

purpose Loans and transfers of interest to other

funds that levy taxes The District’s “savings” account

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Funds (cont.)

#80 Tort Workers’ compensation, unemployment

insurance, property insurance Legal services, risk management exp.

#90 - Fire Prevention & Safety (Life/Safety) Fire prevention, safety, energy conservation &

school security County only can levy property taxes for this

purpose if your architect submits certified plans to the Regional Office of Education (ROE) & ISBE (IL State Board of Education)

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Function Definition and Examples

Action or purpose for which person or thing is used

Instruction (#1000) Teaching of pupils or the interaction

between teacher and pupils (includes aides that assist in instructional process)

Regular programs, special education, vocational, interscholastic, summer school, gifted, bilingual

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Functions (cont.)

Support services (#2000) Services which provide administrative,

technical & logistical support to facilitate & enhance instruction

Transportation, food service, library/media services, social work/psychological services, nursing services, guidance/counselors, improvement of instruction, superintendent & business offices, office of principal, O & M, data processing

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Functions (cont.)

Community services (#3000) Services provided by LEA for community in

part or whole Public forums, child care centers, welfare

activities (stipends for school attendance) Nonprogrammed charges (#4000)

All payments to other LEAs (e.g., special education tuition)

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Functions (cont.)

Debt services (#5000) Principal & interest payments

Provisions for contingencies (#6000) Used only for budgeting purposes Actual exp. recorded in proper account

Other financing uses (#8000) Operating transfers to other funds Example: Working Cash Fund interest

transferred to Educational Fund

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Object Definition and Examples

Describes service or commodity obtained Salaries (#100)

Amounts paid to permanent, temporary or substitute employees on the district’s payroll

Types: Regular, temporary & overtime

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Objects (cont.)

Employee benefits (#200) Amounts paid by the district on behalf of

the employee Not paid directly to the employee or

included in gross salary Payroll related benefits

TRS, IMRF, FICA & Medicare

Health, dental & life insurance

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Objects (cont.)

Purchased services (#300) Services rendered by personnel who are

not on the District’s payroll Audit & legal services Telephone & water utilities

Supplies & materials (#400) Items consumable in nature

Paper, periodicals, gasoline Natural gas & electricity

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Objects (cont.)

Capital outlay (#500) Fixed assets (more permanent in nature)

Building improvements, equipment, vehicles Other objects (#600)

Principal & interest payments Tuition Dues & fees Transfers between funds

Interest earned in one fund may be transferred to another fund (some limitations)

Reported as other financing use not exp.

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Objects (cont.)

#700: Non-capitalized equipment Items that would be classified as capital

assets except that they cost less than the capitalization threshold but more than the $500 minimum value established for purposes of calculating per capita cost

#800 Termination benefits Payments made to terminated or retiring

employees as compensation for unused sick or vacation days

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Coding Expenditures

The function & object codes can be as detailed as you want

Determine how much detail is necessary & beneficial Example: #41000 General Supplies and

#41400 Instructional Materials Is it beneficial or redundant to have multiple

supply accounts within each instructional budget (e.g., math)?

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Development of ISBE Budget Form

Need reports that summarize/sub-total all exp. accounts by fund, function & object

Review which areas need your direct input Example: Public vendor contracts

Many parts of the budget have formulas that will carry forward totals to the summary pages

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Budget Form Sections

Cover page requiring BOE signatures Summary of revenue, exp., other financing

sources/uses & fund balances by fund Estimated cash balances by fund

Can’t have negative cash balances Revenue by fund and source Exp. by fund, function & object

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Budget Due Dates

Budget must be BOE approved within 90 days of fiscal year end Sept. 30 for most school districts

Certified copy (including revenues) must be filed with the county clerk within 30 days of adoption per Property Tax Code (35 ILCS 200/18-50) They’re verifying deficit budget summary &

reduction plan and public vendor contracts are included.

File electronically with ISBE within 30 days of adoption

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Post Budget on District Website

Must be done if your district has a website Annual budget with itemized receipts &

exp. (most use ISBE form) Must inform parents of its posting & provide

web address May use any means of communication Consider adding notice to your student

handbook that parents receive

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Deficit Budget Summary

Compares the total excess/(deficiency) of direct revenues over direct expenditures with the June 30, 2010 estimated fund balances

Funds used in calculation: Educational, O & M, Transportation & Working

Cash

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Deficit Reduction Plan

Required if budget is not balanced Rev. & exp. summaries for 4 yrs. Narratives regarding background & key

assumptions Foundation levels for general state aid Equalized assessed valuation & tax rates Salaries & benefits Short & long-term borrowing Educational impact

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Plan Ahead

Budget Reduction Plans Involve your superintendent & Board of

Education Needs BOE approval Financial projections will assist you in

determining which year you may need to comply

Limitation of administrative costs Est. FY 10 actual & compare to FY 11

budget Within allowable 5% increase?

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Reporting of Public Vendor Contracts of $1,000 or More Part of budget form Report prior year actual activity “All contracts & agreements that pertain to

goods & services that were intended to generate additional revenue & other remunerations in excess of $1,000.”

List vendor, product/service provided, net revenue, non-monetary remuneration & how distributed and purpose of proceeds

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Public Vendor Contracts (cont.)

Includes without limitation: Vending machine contracts Sports & other attire Class rings Photographic services

Contracts need BOE approval What about fundraisers & activity accounts?

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Public Vendors Clarified

Student fundraisers are excluded from reporting as long as the fundraiser benefits student activity accounts (e.g., student clubs), & the Board does not control the spending of the funds

Do report vending machine commissions even if being deposited in activity accounts ISBE views this as principals/administrators

(i.e., Board of Ed.) control how funds are spent

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Common Mistakes

Departments use account codes where they have money not where the item should be charged per ISBE

Instructional & support service exp. being misstated in financial system which carries errors forward to the annual financial report (AFR) & ISBE school report card

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Common Mistakes (cont.)

Charging an employee’s pay to purchased service instead of salary Total salary exp. won’t agree with 941s &

W-2s Coding capital outlay as supplies

The operating exp. per pupil will be overstated as capital is backed out of this calculation. This calculation appears in the AFR & school report card.

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Other Comments

Local Government Prompt Payment Act 50 ILCS 505/1-9 Approved bills shall be paid within 30 days, not

10 as some vendors require See if your financial system can lock out certain

object codes from certain Business Office functions Allows Payroll to input only salary codes Allows Purchasing to input only non-salary

codes Reviewing/changing account codes takes time

due to the large volume of accounts utilized by districts

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Other Resources

http://www.iasbo.org http://www.asbointl.org (internat’l) http://www.gfoa.org (Government Finance

Officers Assoc.) http://www.gasb.org (Governmental

Accounting Standards Board) IASBO, IASB, IASA publications Legislative updates Contact your colleagues!

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Questions?