Business Manager and CFO Roundtable Discussion July 27, 2016 Hank Johnson Consultant

Agenda Introductions Upcoming Events Updates on Recent TEA Correspondence Current News and Updates/Reminders Small Group Discussions Discussion for Future Meetings Questions and Comments

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Upcoming Events October 11 th - Public Funds Investment Training The ESC Region 11 Business Center is hosting a Public Funds Investment Training presented by guest speaker Patrick Shinkle, Associate Director for the Center for Public Management at the University of North Texas. CPAs will receive 5 hours of CPE credit.

Recent TEA Correspondence: Indirect Cost Rates Available for School Year 2016–2017 Approved indirect cost rates open-enrollment charter schools, independent school districts, and education service centers. Effective July 1, 2016, through June 30, Restricted and Unrestricted Indirect Cost Rates Restricted rate is used for grant programs covered by a supplement, not supplant provision Unrestricted rate is used for grant programs without such a provision.

Recent TEA Correspondence: 2014– 2015 Final IDEA-B LEA MOE Compliance Reviews Results are in the GFFC Reports and Data Collections TEASE or TEAL TEASETEAL Compliant, or Noncompliant LEAs Will receive instructions on how to refund the amount due Separate letter from TEA

Recent TEA Correspondence: Jobs and Education for Texans (JET) Grant Program Texas Workforce Commission (TWC) announced the availability of $10 million in job-training funding biennium. For the purchase of equipment needed for use in career and technical programs Prepare students for high-demand jobs in Texas. Independent school districts are now eligible If the district has entered into a partnership with a public junior college or public technical institute. Competitive grant

Recent TEA Correspondence: 2015–16 Reporting Requirements for Community and Student Engagement Reminder that Texas Education Code, § , Requires each district and charter school to annually evaluate its performance and the performance of each of its campuses in the area of community and student engagement Each district and charter must assign a performance rating: exemplary, recognized, acceptable, or unacceptable to itself and to each of its campuses.

Recent TEA Correspondence: 2016 Tax Information Survey Submit tax collection data opened for data submission June 1, 2016 closes at midnight on August 31, 2016 Not applicable to charter schools Important More accurate calculation of 2015–2016 near-final Summary of Finances (SOF) estimates – September 2016 Otherwise: Tax collection data implemented from J1 schedule as part of its annual financial and compliance report -2015–2016 SOF until April 2017

Recent TEA Correspondence: Adjustment to the Compressed Tax Rate Eligibility Criteria: CTR must be below $1.00. Current year M&O tax rate must be higher than your current CTR plus $0.06. For the 2015–2016 and 2016–2017 school years Must request that the Texas Education Agency (TEA) make this adjustment.

Recent TEA Correspondence: Adjustment to the Compressed Tax Rate Effect of Adjustment to the CTR: Shifts tax effort out of Tier 2 into Tier 1 Increase the adjusted allotment used to calculate the Tier I entitlement Increase the local share of Tier I Reduce overall recapture Reduce the allotment under Additional State Aid for Tax Reduction (ASATR)

Recent TEA Correspondence: Adjustment to the Compressed Tax Rate Shift From $31.95 per WADA per penny of tax effort To $51.40 (adjusted) per penny of tax effort

Recent TEA Correspondence: Risk assessment level for school year 2016– 2017 TEA is required to evaluate each sub-recipient’s (ISD and Open Enrollment Charters) risk of noncompliance with federal statutes, regulations, and the terms and conditions of the sub-award To determine the appropriate sub-recipient monitoring Access your risk level through TEASE or TEALTEASETEAL

Recent TEA Correspondence: New Campus Charter Schools Established by ISD – Start-Up Grant Funding School districts planning to open a charter campus as early as the 2017 school year, May be eligible for up to $800, in federal funding to assist with initial start-up costs Eligible to apply for funding under the CSP Start-Up Grant a district must: Amend local district policies for authorizing campus or campus program charters: to ensure that they meet Absolute Priorities 1 and 2 of the 2015 CSP Grant, as well as the requirements of Texas Education Code (TEC) Chapter 12, Subchapter C; and Submit amended policies to the TEA for review by August 31, 2016.

Recent TEA Correspondence: Teacher Shortage Areas and Loan Forgiveness Programs The approved shortage areas for the school year are: Bilingual/English as a Second Language – Elementary and Secondary Levels Career and Technical Education Computer Science/Technology Applications Mathematics Science Special Education – Elementary and Secondary Levels

Update: Summary of Finances Summary of Finances Near-Final – September 2016 Student attendance Tax collection – if survey is completed by August 31 Final April 2017 Tax Collections reported in annual financial report

Update: SOF Template New Template June 24, 2016 Correction to M&O hold harmless calculation Increase per capita to $388

Update: Review Estimates Projections: Compare actual tax collections to estimates Compare annual attendance Recalculate state funding Recalculate recapture

Update: 2015 Preliminary Property Values 2015 preliminary property values Property values - Possibly overstated or understated Work with appraisal district to verify accuracy Overstated – consider property value audit Understated – consider leave “as is”

Update: Budget Projections: Students Enrollment – Compare to final Attendance – Compare to final Weighted Average Daily Attendance

Update: Budget Projections: Revenue Property values - Certified Roll due July 25 Tax revenue calculations - Revisit State funding - Recalculate ASATR Recapture

Update: EDGAR FAQs Clarifications: 6.4 Clarification on travel or registration fees for employees of member LEAs of the SSA. 9.8 Record retention – clarifies conflicting information stating that required retention is 5 years, not 3 years.

Update: EDGAR FAQs New FAQs: 2.4 Audit procedures when the single audit is not required: Auditor will follow the required testing procedures regardless of single audit status Test a sample of all LEA transactions including federal grant transactions Auditor will not select and test specific federal grant transactions 3.8 Adds clarity to the timing of payments and the drawdowns for those payments. 3.9 Schedule of Expenditures of Federal Awards (SEFA) source documentation: Information may be included in the SEFA and not necessarily expected to be reflected in the general ledger, but location of source documentation must be described in local policy.

Update: EDGAR FAQs New FAQs: 3.10 Which areas or functions of grant management must have internal control procedures? All areas of grant management including administrative, fiscal, and programmatic functions must have internal controls How does an LEA document to its auditor or TEA that the LEA has appropriate internal controls in place? The primary documentation for internal controls is written policies and procedures and verification that the policies and procedures are actually implemented and reviewed on a periodic basis.

Update: EDGAR FAQs New FAQs: 5.8 Documentation of allowable travel expense: Supported by travel policies and procedures Include roles and responsibilities Description on how travel is relevant to the grant program 7.36, 7.37, 7.38, 7.39 and 7.40 New FAQs covering LEA purchasing guidelines including: Use of purchasing cooperatives, compliance certification The use of a federal grant share as a micro-purchase: TEA advises instead to follow local policy on total procurement standards Purchase orders are not an appropriate mechanism for determining the procurement method Vendor approval

Update: New Overtime Rules Final Regulations released May 18, 2016 Changes Fair Labor Standards Act Exempt vs Non-Exempt Increase annual salary threshold from $23,660 to $50,440 $47,476 Weekly threshold from $455 to $970 $913 Overtime

Update: New Overtime Rules Final Rule Effective December 1, 2016 Identify employees affected by new rule Plan for implementation Timekeeping Overtime budget

Update: New Overtime Rules Teachers 187 days or 38 weeks X $913 = $34,694 Central Office 226 day or 46 weeks X $913 = $41,998 Certified Support Part-Time professionals

Update: New Overtime Rules The Protecting Workplace Advancement and Opportunity Act (S and H.R. 4773) bills: Pending in U.S. Congress If passed may nullify this rule

Update: Proposed Changes to Financial Accountability Rating System Released June 22, 2016 Indicator 5 revision Adds pension expense and net pension liability (NPL) instead of subtracting the variable from the calculation. Indicators 6, 9, and 10 revision Removes the pension expense and NPL from the calculation since these amounts are not applicable to these indicators. Indicator 10 would be revised to adds function code 81 - capital outlay to make the indicator more uniform for all districts. The proposed changes would be effective for the rating year and subsequent years.

Current News Courts issued opinion on current funding system: meets constitutional requirements: Governor Greg Abbott called it “a victory for Texas taxpayers and the Texas Constitution” House Speaker has called for an interim study of components of the system Courts Opinion - Our Byzantine school funding ‘system’ is undeniably imperfect, with immense room for improvement. But it satisfies minimum constitutional requirements What is next?

Small Group Discussion Budget and Planning After court finding Expectations from 2017 legislative session What does multi-year planning now look like TREs? Status Quo?

Discussion for Future Meetings Future Topics Dates for Future Meetings

Questions and Comments