Advisory Committee on Financial Management

Advisory Committee on Financial Management, Accounting and Reporting

Approved Minutes – August 14, 2013

Members Attending: Jennifer Charles, Tracey Fiereck, Janet Halonen, Chuck Herdegen, Stella Johnson, Lorrie Larson, Heidi Miller, David Peterson, Sarah Slaby, Jeff Yeager

Members Absent: Tiffany Rodning, Dianna Groskreutz, Greg Hierlinger, Stella Johnson, Willie Larson, Nancy Schulzetenberg

MDE Staff Attending: Audrey Bomstad, David Day, Karen Dykoski, Sarah Miller

Guests: Jill Guhlke – Region V (in Dianna Groskreutz’s absence)

Call to Order: Chair Janet Halonen called the meeting to order at 12:00 p.m.

Agenda Approval: Tracey Fiereck made the motion to approve the agenda and Jeff Yeager seconded the motion.

Meeting Minutes: The committee approved the April 16, 2013 meeting minutes.

Staff Development – Deletion of Finance Codes 306, 307, 308 for FY 2014

The committee discussed the deletion of Staff Development Finance Codes 306, 307 and 308. Effective July 1, 2012 (2011 First Special Session Laws, Chapter 11, Article 1, section 35), school boards were no longer required to allocate a percentage of staff development funds in Finance Codes:

• 306 Staff Development – Fifty Percent Site
• 307 Staff Development – Twenty-Five Percent Exemplary Site Grants
• 308 Staff Development – Twenty-Five Percent District-Wide

The committee agreed that Finance Codes 306, 307 and 308 could be deleted in the FY 2014 UFARS Manual for state reporting purposes. These codes may still be used locally as needed and then cross-walked to Finance Code 316.

Affordable Care Act (ACA) Object Codes 896 and 897

Beginning January 2014, employers will be subject to a number of health insurance requirements and potential penalties. The committee discussed options to either revise the existing Object Code 896 – Taxes, Special Assessments and Interest Penalties or to create a new object code to record these new health care penalties. The general consensus was to create a new object code to identify statewide ACA penalties, if requested. Object Code 897 would be added to record Affordable Care Act (ACA) Penalties.

Request for Manual Changes to be denoted by Version

On behalf of Dianna Groskreutz, Jill Gulke (Region V) requested that the end of the UFARS chapters include dates for additions, changes and deletions as they occur in each published version of the UFARS Manual. The committee agreed and this will be an inclusion in the new FY 2014 UFARS Manual.

Budget Submission Update

Karen Dykoski reported that the budget submission process for school financial data would continue to be reviewed for future implementation. As previously discussed, a past UFARS grid had been set up to include the flags U=Unaudited, A=Audited, and B=Budget. The UFARS team will do some research to determine if approved software vendors have retained this information in their databases. This will be a future Advisory Committee agenda item for discussion. Audrey Bomstad suggested including the UFARS Redesign Committee into the process.

Early Childhood Scholarships

Karen Dykoski presented an overview and documentation on Minnesota Early Learning Scholarship Guidance. The scholarship program was created to increase access to high-quality early childhood programs for children prior to kindergarten with the highest need in order to improve school readiness of all young children. Beginning in 2014, approximately 23 million will be available to distribute to eligible 3-4 year olds in two programs – Pathway I and Pathway II. The new scholarship programs will affect approximately 9 percent of eligible 3-4 year olds in Minnesota who live in thirteen established geographic regions. The scholarships will be awarded to eligible children through an application process. Up to $5,000 per scholarship will be awarded for a 12-month period. MDE anticipates 4,000 scholarships awarded per year.

Early Childhood Scholarships and Proposed UFARS Coding

• Create separate finance codes for Pathway I and II
• Utilize Program Code 582 – School Readiness
• Revise Chapter 10 Grid to mirror School Readiness

Capital Subcommittee Recommendations

Tracey Fiereck presented an overview of the Capital Subcommittee’s recommendations. The subcommittee met on several occasions to review current UFARS operating capital language and how it related to current statutory language (Minn. Stat. § 126C.10, subd. 14). The subcommittee also assessed current federal guidelines from the National Center for Education Statistics (NCES). The Capital Subcommittee recommended the following revisions to the 400 Series (Supplies and Materials) and the 500 Series (Capital Expenditures):

1. Object Code Additions or Changes:
a. 316 Data Processing Service (Other Educational Agencies)
b. 401 Supplies and Materials – Non Instructional
c. 405 Non Instructional Computer Software and Software Licensing (NEW)
d. 430 Supplies and Materials – Non-Individualized Instructional
e. 433 Supplies and Materials – Individualized Instruction
f. 460 Textbooks and Workbooks
g. 555 Technology Equipment and Software
h. 556 Technology Equipment for Special Education Direct Instruction
i. 820 Dues, Memberships, Licenses and Certain Fees
2. Additional Program Codes:
a. 108 Administrative Technology Services
b. 630 Instructional-Related Technology

Major Recommended Changes

Chapter 4 Section Introductions

Revisions were made to both Introductions for the 400 Series – Supplies and Materials and the 500 Series – Capital Expenditures.

Object Code Title or Description Changes:

• 316 Description revision “under construction”
• 401 Removed “computer software” references
• 405 New code specific to non-instructional computer software and licensing
• 430 Removed “computer software, periodicals, audio visual aids and computer supplies” references
• 433 Reorganized description structure
• 460 Removed “books on VCR tapes or CD-ROM” references and added new Laws 2013 statutory language “electronic substitutes, instructional software and related licensing costs”
• 555 Added “Software” to title and “software and related software licensing to the description. Deleted “classroom management technological equipment should be coded to an instructional program” and added reference to Object Code 405 for noncapital software and licensing.
• 556 Added “software and related software licensing” to the description. Deleted “classroom management technological equipment should be coded to an instructional program” and added reference to Object Code 405 for noncapital software and licensing.
• 820 Added “membership costs for joint powers organizations or cooperatives organized under education statutes”. Deleted reference to “Regional Management Information Centers (RMICs), other accounting software vendors, and service centers for membership costs (not including services)”.

Chapter 10 Grid – Table for Permitted Code Combinations for Expenditures from the Restricted/Reserved for Operating Capital (Fund Balance Code 424), in the General Fund

All table columns, “Activity”, “Equipment/ Finance 302” and” Facilities/Finance 302and Program 850 only” were reviewed and revised by the Capital Subcommittee. Audrey requested the table to also include statutory references.

The creation of two new program codes was discussed in length in regards to reporting indirect costs. The subcommittee mentioned that the two new program codes were technology related, but a very specific piece of technology – support. The subcommittee reported that the intent of the operating capital discussions and revisions to the UFARS Manual revolved around statute, federal guidelines and to simplify and clarify operating capital expenditures for reporting purposes. It was agreed that there would still be some review and revision involved in finalizing all recommended code changes.

OTHER BUSINESS:

NCES Codes for GASB 63, 67 and 68

Karen Dykoski discussed Governmental Accounting Standards Board (GASB) 63, 67 and 68 and how it may affect UFARS descriptions with the introduction of “deferred revenue” and “inflows/outflows” verbiage in the new GASB statements. The committee discussed implementation of new terminology and compliance issues for Financial Management to address when considering UFARS description revisions. As was presented by Darwin Vicker in the April 16, 2013 Advisory Committee meeting, “There are no significant changes to accounting for pensions in governmental funds; it will not impact UFARS but will affect entity-wide statements”. Karen would do further research in regards to GASB 63 and consideration of UFARS description revisions to reflect the new GASB Statements 63, 67 and 68 guidance.

MAFA Revision Update

David Day reported that the MAFA (Student Activity Accounting Manual) subcommittee had met to begin reviewing/revising the current documentation found in Chapter 14 of the UFARS Manual. Dianna Groskreutz had done some initial research to acquire copies of current student activity policies from Local Education Agencies (LEAs). Additional research and work on the manual would continue with a goal of completion by FY 2015.

Career and Technical Education Levy - Aid Component

With the addition of the Career and Technical Education aid component in the 2013 Legislation, the committee discussed necessary UFARS code revisions and reporting of the new aid component. The new aid component clarifies the expenditure calculations for career and technical programs offered jointly by school districts. The Special Education and Financial Management program areas discussed the revision of Object Code 396 for Career and Technical Education expenditure coding. Currently, Object Code 396 – Special Education Salary Purchased from Another District has been used exclusively by Special Education programs. The committee also discussed the inclusion and revision of the benefits Object Code 397 – Special Education Benefits Purchased from Another District. After further discussion, the committee agreed that benefits would not be an appropriate change; only the salary object code would apply. Revisions to Object Code 396 and Finance Code 830 – Career and Technical Aid and Levy would be implemented.

Call for October Agenda Items:

UFARS Redesign Committee

New descriptions for 130 and 630 – use NCES for program description

Budget Submission – consider implementation in FY 2015.

Other:

It was noted that the Summer Levy System may be available by the end of August. Minnesota Statute requires this system to be available by September 8, 2013

Adjournment:

Jeff Yeager made the motion to adjourn the meeting and Heidi Miller seconded the motion. The meeting was adjourned at 1:50 p.m.

The next Advisory Committee Meeting is scheduled for October 9, 2013.