School Accounting 101

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School Accounting 101

• Presented by
• Mary Kay Beer
• Chief, School Accounting Section
• LouAnn Caldarella
• Staff Accountant
• School Finance Division
• LECS Comptrollers Office

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Lets look at the numbers

• This year we had 707 reporting entities
• submitted by November 19
• 501 School Districts 285
• 29 Intermediate Units 18
• 102 Charter Schools 62
• 67 Vocational Technical Schools 42
• 8 Special Schools 7

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Back to Basics - Fund Reporting

• Entities that report using governmental
  accounting, must establish their records based on
  the fund accounting system.
• All financial activities that occur within your
  school must be accounted for in one of the 11
  governmental fund types.
• All funds for your LEA must be reported on the
  AFR.

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• A minimum number of funds should be maintained.
  Separate physical accounts do not require
  separate funds.
• It is required that all capital projects funds be
  folded into one fund and all debt service funds
  be folded into one fund for Commonwealth
  financial reporting purposes.

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• Student Activity funds are agency funds. Use
  fiduciary fund 81 on the AFR. Some examples of
  student activity funds are the
• ski club and drama club.
• Fiduciary funds The only type of Trust fund
  that is accounted for as a Fiduciary fund is one
  that holds money for someone other than the LEA.
  If this money is for your school, then it is not
  to be recorded as a fiduciary fund.

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Major Fund Criteria

• If the fund does not fit the criteria for a Major
  fund, then it must be classified as a Non-Major
  fund and reported on the fund statements in that
  column.
• To meet the qualification for "Major Fund" status
  under GASB Statement 34, any given fund element
  must exceed both the 5 and 10 thresholds.
• The General Fund and Food Service Funds are
  considered major funds.

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Revenue Recognition

• Payments received in July and August that were
  applicable to the prior year, should be accrued.
  One example would be transportation.
• Do not confuse these with payments actually for
  the new fiscal year.
• Social Security reconciliation revenue should be
  accrued to the prior year.

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Revenue Recognition contd

• The payment letters and form 2548 are tools for
  your use in determining where to properly account
  for revenues and deductions. These are checked
  on your AFR for accuracy of reporting.
• There are validations to ensure that your school
  report matches what is reported on the 2548.
• You will be contacted for discrepancies.

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Reconciliation Statements

• Crosswalk the fund financial statements to the
  entity-wide statements.
• We were very lenient up to this point in
  accepting the wording on these statements.
• LEAs need to explain why there are differences
  between these financial presentations.

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Sample Reconciliation Information for the
Statement of Activities

• Total net change in fund balances -
  governmental funds XXX,XXX
• Amounts reported for governmental activities in
  the statement of activities are different
  because
• Capital outlays are reported in governmental
  funds as expenditures. However, in the
  statement of activities, the cost of those assets
  is allocated over their estimated useful lives as
  depreciation expense. This is the amount by
  capital outlays exceeded depreciation in the
  current period.
• X,XXX,XXX

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• Some property taxes will not be collected for
  several months after the District's fiscal year
  ends, therefore they are not considered as
  "available" revenues and are deferred in the
  governmental funds. Deferred tax revenues
  increased by this amount this year.
• XX,XXX

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• Repayment of bond principal is an expenditure in
  the governmental funds, but the repayment reduces
  long-term liabilities in the statement of net
  assets. This is the amount by which proceeds
  exceeded repayments.
• XXX,XXX
• Change in net assets of governmental activities
• X,XXX,XXX

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Vocational Education

• Starting with fiscal year 04-05 reporting, there
  will no longer be an elementary column in
  function 1300.
• The only expenditures for a school entity other
  than a vo-tech in the 1300 function should be for
  PDE approved vo-tech programs.
• Refer to https//www.cats.ed.state.pa.us
• to see if your program is PDE approved.

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Why is AFR Accuracy Important?

• Title 1 money to PA
• Actual Instructional Expense
• Restricted Indirect Cost
• Requests by taxpayers, other states, the
  legislature, PSEA and PSBA
• Tuition Rate used to calculate
  payments/deductions for Incarcerated Ed, PRRI,
  APS, 1305 1306 students

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• Federal Reports
• Use the information extracted from the revenues,
  expenditures and statements.
• Sent to the USDE and used in the calculation for
  Title I money to PA.
• Also used in a variety of reports comparing
  spending and resources for our state versus the
  other 49 states.

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AIE

• Combination of School Finance and Child
  Accounting responsibilities and uses.
• Defined by PA Public School Code, Section 2501,
  paragraph 11.1
• Based on AFR data (SF), WADM (weighted average
  daily membership) calculation(CA)
• To be used by AVTS and the Dept of Education for
  various calculations.
• Component used in the calculation of Secondary
  Voc Ed Subsidy.

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Tuition Rate

• Pennsylvania School Code of 1949, Sections 2561
  and 2562 is the legislative authority underlying
  the certification of the Tuition Rate
  Calculation.
• Rates are based on the schools Annual Financial
  Report (AFR) PDE-2057.
• To be used by schools to calculate charges for
  nonresident students attending the school.

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Details of Tuition Rate Form

• Tuition Rate is based on 2003-04 school year for
  use during the 2004-05 Fiscal Year.
• School Entity Share of Social Security (7810) and
  Retirement (7820).
• Broken down by Elementary (K-6) and Secondary
  (7-12).

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Tuition Calculation Example 1
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Tuition Calculation Example 2
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Receiving the PDE-2061 and PDE-2058

• Tuition Rate and AIE are sent by mail around June
  of each year.
• Request for Information Form must be filed with
  LECS Comptrollers Office if Tuition Rate/AIE are
  misplaced. Reports will be faxed or surface
  mailed (not available by email).
• For information purposes, all school Elementary
  and Secondary Tuition Rates are posted to the
  School Finance Website as an excel file.This is
  not the certified form, it is an FYI only.

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Points to Remember

• Use care when completing the detailed expenditure
  section of the AFR.
• Tuition Rates will NOT be revised once certified.
• Verification procedures for Tuition Rate
• and AIE on located on School Finances website
  www.pde.state.pa.us/school_acct
• Federal Expenditures are NOT included in the
  tuition rate calculation.

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Restricted Indirect Cost Schedule

• 2300 only include the cost of the general audit
  of the school and, if recorded in 2310, the
  salary of the business manager if they also serve
  as the board secretary.
• 2500 there is a formula to limit this number
• 2830 only include non federal costs
• 2840 only include non federal costs
• Unallowable costs will be deleted from the
  schedule.

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Is this proper Accounting?

• Netting down revenues and expenditures
• Long term liability for rental reimbursement. The
  Commonwealth does not recognize this as a
  payable, so you should not recognize this as a
  receivable.

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Common Errors

• Not accruing revenues when applicable.
• Recording expenditures in incorrect functions or
  objects. Refer to the instructions on the payment
  letters or the audit confirmation for correct
  coding.
• Only recording the General fund on your fund
  financial statements.
• Recording AG findings for payments/deductions
  before these transactions are processed by PDE.

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More Common Errors

• Waiting until you have completed your MDA to
  submit your AFR
• Not sending in your required paperwork
• Sending in your data file with validation errors
• Getting frustrated with your AFR validations and
  not contacting the School Finance Division for
  help

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Issues We are Reviewing

• Alternative education recording of
  expenditures.
• GASB Statement 45 new codes?
• Revised chapters of the Accounting Manual

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Questions

• Contact information
• Mary Kay Beer
• phone [phone]
• email mbeer_at_state.pa.us
• LouAnn Caldarella
• phone [phone]
• email lcaldare_at_state.pa.us
• School Finance email schlfin_at_state.pa.us
• LECS Comptrollers website www.pde.state.pa.us/sc
  hool_acct