WASBO ACCOUNTING CONFERENCE NEW ACCOUNTING STAFF TRACK BRIAN KAHL DPI SCHOOL FINANCE AUDITOR BRUCE ANDERSON DPI SCHOOL FINANCE CONSULTANT MARCH 2016 The Other Funds The Other Funds Funds 21, 38, 39, 41, 46, 49, 50, 60, 72, 73, 80, 91 and 99

How does DPI define a “Fund”? A fund is an accounting entity consisting of a self- balancing set of asset, liability, and equity accounts used to account for the district's financial transactions in accordance with laws, regulations, or restrictions. The Department of Public Instruction requires reporting of various revenues and expenditures within specified funds. A general description for each Fund can be found on pages 5-1 to 5-5 in the WUFUR "The Other Funds" - WASBO Acct Seminar March 2015

How does DPI define a “Fund”? Instructional Funds: Instructional funds are funds where elementary and secondary instruction are recorded (i.e. K - 12) activities [10, 21, 23, 27, 29, 91, 93, and 99] Debt Service Funds: These funds are used for recording transactions related to repayment of the following general obligation debt. [38 and 39] Capital Projects Funds: These funds are used to account for expenditures financed through the use of bonds, promissory notes... [41, 44, 45, 46, 48, and 49] 3 "The Other Funds" - WASBO Acct Seminar March 2015

How does DPI define a “Fund”? Food and Community Service Funds: These funds are used to account and report transactions of the district's food and community service activities. [50 and 80] Fund 60 Agency Fund: This fund is used primarily to account for assets held by the district for pupil organizations. Trust Funds: These funds are used to account for assets held by the district in a trustee capacity for individuals, private organizations, other governments and/or other funds. [72, 73, and 76] 4 "The Other Funds" - WASBO Acct Seminar March 2015

The “Other Funds”  21: Special Revenue Trust Fund  38:Non-Referendum Debt Service  39: Referendum Debt Service  41:Capital Expansion Fund  46:Long Term Capital Improvement Trust Fund  49:Capital Projects  50:Food Service  60: Agency Fund  72: Private Purpose Trust Fund  73: Employee Benefit Trust Fund  80: Community Service Fund  91: Packaged Services (CESA) Fund  99:Other Package & Coop Program Fund 5 "The Other Funds" - WASBO Acct Seminar March 2016

Fund 21 Account for trust funds that can be used for district operations Sources  Gifts  Donations from Private Parties Expended pursuant to donor specifications, if any May carry a fund balance 6 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 21 How to use this fund? District or staff controlled “activity” accounts Fundraising Targeted Donations Tournaments or Competitions 7 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 21 How to use this fund? District /Staff “activity” funds Activity groups where staff decides how to raise funds and how to appropriate them  Athletic Fundraisers  School Fundraiser (Example – Field Trips)  Band Uniforms  School Musical 8 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 21 Permanent Fund Should be used to report resources that are legally restricted to the extent that only earnings and not principal, may be used for purposes that support the district’s programs Resources should benefit the government Need to keep the corpus intact 9 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 21 Why would you use Fund 21 instead of Fund 10? Shared Cost (Deductible Receipt if in Fund 10) Carry balances from year to year Comply with donor wishes if any restrictions placed on use of funds 10 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 21 Accounting Transactions Ledger Accounts  Revenues  Expenditures Balance Sheet Accounts  Assets  Liabilities  Equity (Fund Balance) 11 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 21 More information: When to Use Fund 21 WIAA and Other Tournaments and Competitions 12 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 60 Agency Fund Used primarily to account for assets held by the district on behalf of pupil organizations Parent organization funds may be accounted for here  May not be a separate 501(c)(3) 13 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 60 Agency Fund  Only balance sheet accounts (assets & liabilities) are reported in Budget and Annual reports But…  Records of receipts and disbursements must be maintained locally and will be examined during audit 14 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 60 Pupil Organizations Funds are held by the district for the benefit of the student organizations  District has a fiduciary responsibility Students are the decision makers on how to raise money and how to spend it  Staff advisers only advise, do not decide 15 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 60 Pupil Organizations (Examples)  Student Council  Class of 20XX  National Honor Society  Yearbook  Drama Club  Foreign Language Club  Other Clubs 16 "The Other Funds" - WASBO Acct Seminar March 2015

Not Fund 60 Activities where staff make the decisions are District Activities and accounted for elsewhere  Examples:  Athletics  Musical  Band Uniforms  Field Trips  Shop Class  Sunshine Club / Coffee Fund* Should NOT appear anywhere on the district’s books. These are not district funds. 17 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 60 Accounting Transactions Assets  : Cash  : Investments Liabilities  : Due to Student Organizations Equity  None 18 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 60 Parent Organizations District may establish agency funds for parent organizations  Bank accounts in the name of the district  Same policies/procedures as for student organizations Liability Acct : Due to Parent Organizations Parent organizations may not use the district’s tax ID number Parent organizations may not be a separate 501(c)(3) Check for a Board Policy on parent organizations. 19 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 60 More information: Agency Fund Guidelines document Audit Program for Pupil Activity Accounts 20 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 38 & Fund 39 These funds are used for recording transactions related to repayment of general obligation debt (bonds, state trust fund loans, promissory notes)  Fund 38 - used to account for transactions for debt issues that were incurred without referendum approval  Fund 39 - used to account for transactions for debt issues that were incurred with referendum approval Sub-funds 31 through 37 maybe used as necessary  Reported in Fund 38 and 39 as appropriate in the DPI budget and annual reports More information:   "The Other Funds" - WASBO Acct Seminar March 2015

Fund 41 Capital Expansion Fund Projects financed with a tax levy per Wis. Stats (10m)  Levy is within the Revenue Limit Restricted to capital expenditures related to buildings and sites  Not equipment  Not furnishings Requires approval at Annual Meeting 22 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 41 Eligible expenditures defined: For acquiring and remodeling buildings and sites, and Maintenance or repair expenditures that Extend or enhance the service life of building, building components, sites and site components 23 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 41 Why use Fund 41? Allows for depreciation of expenses over length of time In year of spending - reduces shared costs in aid formula  Can reduce the impact of negative tertiary aid for districts in that position  Smoothes out aid for positively aided districts. Disadvantage Restricts use of limited revenues to qualifying capital expansion projects  Cannot be redirected to use for general operations or routine maintenance Creates additional accounting / reporting requirements 24 "The Other Funds" - WASBO Acct Seminar March 2015

YrLevyExpend.Amortized Expenditures Total Amount 1$105,000$100,000 2$105,000$100,000$50,000 3$105,000$100,000$50,000$33,333$83,333 4$105,000$100,000$33,333$25,000$58,333 5$105,000$100,000$33,334$25,000$20,000$78,333 6$0$25,000 $20,000$5,000$50,000 7$0 $25,000$20,000$5,000$50,000 8$0 $20,000$5,000$25,000 9$0 $20,000$5,000$25,000 10$0 $5,000 T$525,000 $100,000 $25,000$525,000 Fund 41 Amortizing Expenditures Over Time 25 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 41 A Capital Expansion document and PowerPoint can be found on the finance team page in the WUFAR link: Under Resources click on: Accounting Issues and Coding Examples Accounting Issues and Coding Examples On this website scroll down to “Funds 41, 46 and 49 - Capital Projects Funds ”  Capital Expansion Fund - Fund 41 – word document Capital Expansion Fund - Fund 41  Capital Expansion Fund - Fund 41 – PowerPoint Capital Expansion Fund - Fund 4 26 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 46 Long-term Capital Improvement Trust Fund (Fund 46) A school board may establish a “trust” to fund capital improvement projects per their ten year long-term capital improvement plan REQUIREMENTS - Getting Started 1.Board approved 10 year capital improvement plan. 2.Board resolution to establish a trust. 3.Creation of a segregated bank account. 27 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 46 REQUIREMENTS and RESTRICTIONS ● Funds may only be accessed five years after the establishment of the “trust” fund. ●—Funds must be physically deposited and held in a segregated bank/investment (separate and distinct from other district accounts) until they are expended for capital improvement projects per the district’s plan. ●—Funds invested as per sec , Wis. Stats. 28 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 46 REQUIREMENTS and REPORTING The following must be reported to DPI: 1.Official Board minutes approving the long-term capital improvement plan. 2.Signed resolution creating the Long-term Capital Improvement Trust Fund or official minutes documenting the creation of the fund. 3.Documentation that confirms the existence of a segregated bank/investment account. mprovement%20Trust%20Fund%2046.docx 29 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 49 Other Capital Projects Fund Primarily Funded with Borrowing Proceeds  Bonds, Promissory Notes, State Trust Fund Loans Capital projects funded through other sources of revenue such as donations and sale of capital objects may be accounted for in Fund 49 Sub-funds 42, 43, 44, 45, and 47 maybe used as necessary  Reported in Fund 49 in the DPI budget and annual reports 30 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 50 All revenues and expenditures related to the district’s food service activities are recorded in this fund  A fund balance in the Food Service Fund is permitted  A deficit in the food service fund must be eliminated with an operating transfer from the general fund (Fund 10). More Information:  issues-examples issues-examples 31 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 72 Private Purpose Trust Fund Account for gifts and donations specified for the benefit of private individuals and organizations not under the control of the school board  Board acts as Trustee of account  Example: Scholarship Fund  Expenditures are made pursuant to donor specifications 32 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 73 Employee Benefit Trust Fund Used to account for resources held in trust for formally established defined benefit plans, defined contribution plans, or employee benefit plans Must be legally established in accordance with state statutes, federal law, and IRS requirements Legally irrevocable trust Created as a mechanism for districts to fund post- employment benefit obligations 33 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 73 Employee Benefit Trust Fund Districts not required to use this  May opt to “pay as you go,” however, that does not help reduce the long-term liability Requires actuarial study to determine funding levels District makes payments to the trust from the governmental funds (Funds 10, 27, 50, and 80) to fund annual obligations. Fund 73 pays the retiree benefits 34 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 73 Why use Fund 73? To reduce the district’s long-term unfunded obligations. Costs to Special Education Fund are aidable up to the ARC if one of the three criteria are met. 35 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 73 More Employee Benefit Trust Fund information:  Accounting Issues and Coding Examples” Website: issues-examples issues-examples  Fund 73 - Account Descriptions and OPEB Sample Entries Fund 73 - Account Descriptions and OPEB Sample Entries  Fund 73 - Sample of Activity Fund 73 - Sample of Activity  Employee Benefit Trust Fund Webpage trust-fund trust-fund 36 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 80 Community Programs and Service Fund website Statutory authority: (19) C OMMUNITY PROGRAMS AND SERVICES. General Outline of Community Service Activities: Access to Community Service Fund activities cannot be limited to pupils enrolled in the district's K-12 educational programs. Other funds, such as the General Fund and Special Projects Fund, carry out the day to day K-12 educational operations of the district. All activities associated with a well-rounded curriculum (curricular and extra-curricular activities) are to be accounted for in these funds (General Fund and Special Projects Fund)and the Pupil Activity Fund (Fund 60). 37 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 80 The levy for Fund 80 was removed from revenue limit control starting in the school year [s (2m)(e)1.] The levy for Fund 80 was removed from revenue limit control starting in the school year [s (2m)(e)1.] As a result, the Fund 80 levy is completely funded by local taxpayers. It has never been a factor in the equalization aid calculation. It has never been a factor in the equalization aid calculation. Chapter PI 80 Community Programs and Services This permanent rule creates Chapter PI 80, as required by 2013 Wisconsin Act 306. Under 2013 Wisconsin Act 306, the department must define ineligible costs related to community programs and services. Effective Date: May 1, "The Other Funds" - WASBO Acct Seminar March 2015

Fund 80 Chapter PI 80 PI Purpose Under s (19), Stats., the school board of a common or union high school district, a unified school district, or a 1st class city school district may establish and maintain community education, training, recreational, cultural or athletic programs and services, outside of its regular curricular and extracurricular programs for pupils. The purpose of this chapter is to define which costs are ineligible under s (19), Stats. 39 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 80 Chapter PI 80 PI Ineligible Costs [four basic defining requirements] A school board may not expend moneys on ineligible costs for community programs and services. The following are ineligible costs: [1] Costs for any program or service that is limited to only school district pupils. [2] Costs for any program or service whose schedule presents a significant barrier for age-appropriate school district residents to participate in the program or service. [3] Costs that are not the actual, additional cost to operate community programs and services under s (19), Stats. [4] Costs that would be incurred by the school district if the community programs and services were not provided by the school district. 40 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 80 New Rule What does “actual” and “additional” costs mean to a school district? A cost, that if the ability to operate the Community Service Fund (Fund 80) ended; a school district, would not have to move those costs to the General Fund (Fund 10) to continue the regular curricular and extracurricular programs for its students. A few examples:  Before school and after school childcare open to any district resident.  Adult technology classes held at the local public library.  Adult literacy classes held at a township hall within the school district. 41 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 80 New Rule What does “actual” and “additional” costs mean to a school district? A more complex example: The summer baseball program for all interested resident students uses the school district’s ball diamond for games, after the high school season is over.  District employees do the mowing, mark the field, and clean up after the game. The field does not have lights and the concession stand is not operating.  Each District employee logs their time related to this program and based on past records the total hours/game are determined and charged to Fund 80.  The related costs for mower fuel and field paint is based on past years records and are charged to Fund "The Other Funds" - WASBO Acct Seminar March 2015

Fund 80 New Rule What does “actual” and “additional” costs mean to a school district? An example of an expense not meeting this standard: An adult ballroom dance class is held one night a week for 6 weeks in the middle school gym. It has the facility for a 3 hour period of time. The class instructor or a participant sweeps the floor before the class starts. The custodial staff do not clean the gym or restrooms in this part of the building until after everyone from the class has left the school. There can be no custodial time or related costs charged to Fund 80 for this class as there was no actual or additional cost incurred. 43 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 80 New Rule 2013 Act 306 requires that Fund 80 expenditures be audited by the school district’s auditor. NOTE: Current law already directs DPI to exclude from Shared Costs (for General Aid purposes) any CPS expenditures.  If a CPS expenditure audit determines that a district had inappropriately coded CPS expenditures to Fund 10, those expenditures would have to be removed from Fund 10 and would decrease the district’s Shared Costs for General Aid purposes. 44 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 80 New Rule 2013 Act 306 requires DPI to determine if ineligible CPS expenditures exist  If so, DPI must reduce the district’s allowable revenue limit authority the following year by the amount of the ineligible CPS expenditures; structured as a negative exemption rather than a reduction to the district’s base. This first applies to the Revenue Limit calculation for the school year, based on expenditures.  The audit process is more detailed than it was for school year.  After the Legislature finalized PI 80, the school auditors were given formal procedures updated April 24, "The Other Funds" - WASBO Acct Seminar March 2015

Fund 80 New Rule Preparing for an CPS audit; Each program or service will need to be documented within the district’s accounting system.  Supporting documentation will be part of the audit process. Wisconsin Uniform Financial Accounting Requirements (WUFAR) will assist each district in this process Community Service Fund Information service/overview web page provides the most recent information regarding Fund service/overview  Question and Answers  Complete Fund 80 PowerPoint 46 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 90 Package and Cooperative Program Fund Used to account for expenditures made by a host district for programs and services offered to other districts  Fund 91: Through a CESA  Fund 99: Others 47 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 91 Host District CESA acts as fiscal agent for the districts in the cooperative  Other districts pay CESA their share  Host district pays CESA for its share  Expenditure to F-10  CESA reimburses host district for all program expenditures  No fund balance allowed 48 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 99 Fiscal Agent District District that acts as the fiscal agent for the districts in the cooperative  Other districts pay host district their share  Host district transfers from F-10 its share of costs  Revenue to F-99  Expenditure to F-10  Pays all expenditures for program  No fund balance allowed 49 "The Other Funds" - WASBO Acct Seminar March 2015

Fund 99 Examples of Cooperative Services Hockey Co-op Swim Team Co-op Transportation Services Business Education Program REQUIRES completion of a “66:30 Agreement” Wis. Stats "The Other Funds" - WASBO Acct Seminar March 2015

Fund 90 Package & Cooperative Services NOTE: Shared Special Education services are recorded in F-27 not in F-90. More information: Cooperative Service Agreement information can be found on this webpage. cooperative-funds cooperative-funds 51 "The Other Funds" - WASBO Acct Seminar March 2015

Questions? 52 " The Other Funds" - WASBO Acct Seminar March 2015

THANK YOU! Contact Information (Area Code: 608)  Bruce Anderson, Consultant  Carey Bradley, Consultant  Dan Bush, Consultant  Karen Kucharz, Consultant  Victoria Chung, Accountant  Brian Kahl, Auditor  Gene Fornecker, Auditor  Vacant, Auditor  Debi Towns, Assistant Director  Bob Soldner, Director  School Financial Services 53 "The Other Funds" - WASBO Acct Seminar March 2015