Enhancing Your Financial Management Skills Joann Gilman-Auricchio, School Business Administrator, Morris Hills Regional District Robin Tedesco, School Business Administrator, Mount Arlington School District Kathryn L. Mantell, Partner, Nisivoccia, LLP

 Budget Preparation and Maintenance  Preparation of Monthly Financial Reports  Estimating Year-end Results/Surplus  Estimating Year-end Excess Surplus  Preparation for Annual Audit  Preparation for ASSA/DRTRS Financial Management Responsibilities

 Salaries - Position Control Roster  Health, Tuition & Other Contractual Benefits  PERS  Tuition to Other Schools  Operations and Maintenance  Transportation  Capital Outlay  Budgeted Withdrawals from Reserves  Withdrawals from Capital Reserve for Local Amount of School Facilities Projects:  Withdrawals for referendum authorized school facilities projects may be made if the capital reserve use and amount is identified in the approved referendum question  Withdrawals for a non-referendum school facilities project may be made, by board resolution, up to 110% of the local share less excess costs. Withdrawals must be transferred to the capital projects fund and accounted for separately with the corresponding SCC/SDA grant. Budget Preparation

 Budgeted Withdrawals from Reserves  Withdrawals from Capital Reserve for Excess Costs or Other Capital Projects:  Upon voter, board of school estimate, or capital project board approval, withdrawals may be made to fund excess costs of a school facilities project or other capital project (need a separate Statement of Purpose in the advertised budget).  Withdrawals for referendum approved other capital projects may be made if the capital reserve use and specific amount is identified in the approved question.  Withdrawals for additional funds for a referendum-approved project may be made if voter approved through the original budget certified for taxes which must include a Statement of Purpose which includes the amount of excess costs to be withdrawn, the date of the referendum, the amount of the local share in the approved referendum, and the reason needed to exceed the original approved amount. Budget Preparation

 Budgeted Withdrawals from Reserves  Withdrawals from Capital Reserve for Debt Service:  A district, by board resolution, may withdraw and transfer funds to the debt service fund to offset principal and interest payments for bonded projects in the LRFP.  Withdrawals from Emergency Reserve require the approval of the commissioner unless the withdrawal is necessary to meet an increase in total health care costs in excess of 4%.  Upon certification of rates in the third year following the contract year, full appropriation of the applicable year’s Tuition Reserve must be liquidated and any remaining balance related to that year must be reserved and budgeted for tax relief.  “Recapitulation of Balances”  Line 17 – Additional Balance to be Appropriated after February 1  Line 18 – Additional Balance Anticipated after February 1 Budget Preparation

 Make sure all positions are listed as well as the number of full time employees(FTE’s) for each position.  During the school year, compare PCR with the actual staff and positions currently held.  Adjust this document throughout the year - as staff is added or as staff leave.  Update around budget time to have a more complete picture of the staff needed for the upcoming school year, as long as program needs have not changed. Budget Preparation – Position Control Roster (“PCR”)

 Transfers to administrative cost line items that cumulatively exceed 10% of the original budget require County approval (prepare spreadsheet to track)  Transfers to Capital Outlay (excluding equipment) require County approval and can only be used to supplement budgeted projects for an emergent circumstance  Transfers from advertised appropriations require 2/3 affirmative vote of Board membership  Transfers from advertised appropriations which cumulatively exceed 10% of the original budget require County approval Budget Maintenance – Line-item Transfers

 Cannot transfer from Fund 10 to Fund 40 unless transfer from capital reserve  Cannot transfer from Fund 10 to Fund 20 except for share of preschool education  Can transfer from Fund 10 to Fund 30 if specifically approved by the voters or Commissioner  Can transfer unexpended project funds in Fund 30 to Fund 40 for principal on related outstanding bonds Budget Maintenance – Transfers to Other Funds

 Most common:  Additional State Aid  Tuition (excludes sending/receiving)  Transportation  Restricted miscellaneous local revenue  Federal revenue  Any revenue amount excluded from excess surplus in the previous year (Extraordinary and Nonpublic Transportation Aid) Budget Maintenance – Additional Revenue/Appropriation

 Prior to April 1  2/3 vote of Board members and Commissioner approval – for an emergent circumstance  Between April 1 and June 30  2/3 vote of Board members and County approval – to achieve the thoroughness standards Budget Maintenance – Additional Appropriation of Surplus

 Treasurer’s Report  Verify cash balances to Board Secretary’s Report  Review reconciling items  Board Secretary’s Report  Verify cash balances to Treasurer’s Report  Verify and analyze each balance sheet account Monthly Financial Reports

 Board Secretary’s Report  Review and verify revenue report – amount budgeted, realized, and over/under  Review and verify expenditure report – amount budgeted, expended, outstanding and available  Review and verify recapitulation of balances  Verify adjustment for prior year encumbrances  “Bottom line” should be budgeted surplus plus any additional amounts authorized during the year Monthly Financial Reports

 Review Account:  Verify beginning balance plus any audit adjustments to prior year audit  Deduct any additional appropriations authorized during the year  Deduct prior year encumbrances  Deduct amount budgeted during current fiscal year  Deduct transfers from capital reserve  Add/subtract current year excess/shortfall in revenue  Add unexpended (amount available)from current year appropriations Estimating Year End Results/Surplus

Revenue Projection - General Fund September 30, 2015 Original Revenues AnticipatedRecognizedUnrealizedExpected Under/ (Over) Anticipated Budgeted Fund Balance 733, Taxes 54,322, Tuition 127, ,774 15,692 76,256 (60,564) Summer School tuition 42,500 24,200 18,300 Interest capital reserve Miscellaneous revenue Interest 8,980 1,485 7,495 (0) Use of Facilities 15, ,270 - refund prior yr payments 20,000 36,127 (16,127) Miscellaneous 45,683 1,571 44,112 0 E rate 45, ,129 (0) Adult High School Fees 22,675 11,539 11,136 - Subtotal Miscellaneous revenue 158,548 51, , ,142 (16,128) State Aid Extraordinary Aid 533,518 - Transportation 278, Special Education Aid 1,787, Security Aid 49, Equalization Aid 3,682, School Choice 1,765, PARCC aid 57, Adult Aid 43,694 NP Transportation - 20,000 (20,000) Subtotal State Aid 8,155,657 7,665, , ,518 (20,000) Semi 35,133 Grand Total 63,575,263 62,909, , ,116 (43,259)

Fund Balance Projection - General Fund September 30, Original Budget Revised Budget Expended Encumbered Unexpended Balance Salaries 37,920,464 37,950,347 4,936,646 30,418,995 2,594,706 Benefits 10,001,667 9,872,795 2,218,639 6,558,022 1,096,134 Supplies & Expenses 15,837,672 15,936,661 3,378,921 7,698,259 4,859,481 Total Budget 63,759,803 10,534,206 44,675,276 8,550,321 Less additional expenses through June : Salary expenses 1,102,000 Benefit expenses 1,863,000 Non salary expenses 1,730,000 Projected unexpended balance June 30, ,855,321 Add: Prior year AR canceled 2,023 Revenue (excess) / shortfall - Projected reduction / (addition) to surplus at June 30, ,853,298 Surplus balance July 1, ,228 Amount to be transferred to Capital Reserve June ,100,000 Amount to be transferred to Maintenance Reserve June ,000 Amount appropriated in budget 533,000 Surplus balance July 1, ,614,526 2% allowable 1,275,196 Excess 339,330

Less additional expenses through June : New hires projected 300,000 Physicians 10,000 Aftershool program salaries 20,000 Staff Development stipends 56,000 Overtime for plant operations 111,000 Bus driver salaries for field trips 95,000 Substitutes 320,000 Home Instruction 20,000 June retirement payouts , ,000 Subtotal salary expenses 1,102,000 Tuition 98,000 PERS payment 890,000 Other reimbursements 100,000 Social Security payments 775,000 Subtotal benefit expenses 1,863,000 Maintenance supllies 440,000 Transportation supplies 750,000 School supplies 540,000 Subtotal non salary expenses 1,730,000

Capital Reserve Account Ending Balance June 30, 2015 Audit Exhibit C1 2,097,818 Appropriated in budget (184,540) Opening Balance July 1, ,913,278 Withdrawals 08/01/15 1,478,473 09/15/15 270,000 Total Transfer Out (1,748,473) Projected Balance June 1, ,805 Deposits June ,100,000 Balance July 1, 2016 before FY 17 appropriation 2,264,805

Maintenance Reserve Account Ending Balance June 30, 2015 Audit Exhibit C1 257,329 Appropriated in budget (110,000) Opening Balance July 1, ,329 Withdrawals 8/1/ ,000 9/15/ ,000 Total Transfer Out (104,000) Projected Balance June 1, ,329 Deposits June ,000 Balance July 1, 2016 before FY 15 appropriation 293,329

 MHRD Excess Surplus.pdf MHRD Excess Surplus.pdf  Based upon total expenditures (excludes year-end encumbrances)  Increase by all transfers to and from other funds (capital projects fund)  (Will not have to) decrease by on-behalf pension and social security and capital leases (which are not included in the District’s records) Estimating Excess Surplus

 Capital Reserve  Limited to the total local share of projects in the District’s LRFP  Maintenance Reserve  Limited to 4% of the replacement cost of the District’s current year school facilities budget  Emergency Reserve  Limited to the greater of $250,000 or 1% of General Fund budget (up to $1,000,000)  Tuition Reserve  Limited to 10% of the estimated tuition cost for the current fiscal year  Debt Service Reserve  Proceeds from the sale of District property may be reserved in the Debt Service Fund if the District has outstanding debt associated with the property; otherwise, must be used for tax relief Transfers to Reserve Accounts

 Review Treasurer’s report –  Deposits in transit, outstanding checks and any other reconciling items and investigate or cancel any items over 6 months old  Analyze transactions and document ending balances for all receivables –  State, Federal, Misc. (Tuition and Use of Facilities)  Review open purchase orders –  Liquidate, record as accounts payable, or roll forward  Analyze transactions and document ending balances  Due from/to Other Fund s  Analyze transactions and document ending balances for all other liabilities and reserves –  Health/Worker’s Compensation benefit claims  Capital Reserve  Maintenance Reserve Preparing for the Annual Audit - General Fund

 Review Treasurer’s report –  Verify cash balances for all grants  Analyze transactions and document ending balances for all receivables –  State, Federal, Misc. (Local grants)  Review open purchase orders –  Liquidate, record as accounts payable, or roll forward  Analyze transactions and document ending balances for all other liabilities  Deferred Revenue, Due to Grantors, Etc. Preparing for the Annual Audit - Special Revenue Fund

 Appropriations must mirror detailed approved grant budgets for Federal, State and Local Grants  Ensure that approval is obtained for line-item transfers which exceed 10% of line item  Request Federal grant reimbursements throughout the year (monthly or quarterly)  Communicate with grant administrators to verify ongoing expenditures and balances  Communicate with outside vendor (Educational Services Commission) regarding expenditures of Nonpublic grants  Ensure that project completion reports will be prepared from/agree with the central accounting records Preparing for the Annual Audit - Special Revenue Fund

 Review Treasurer’s report –  Review reconciling items and verify cash balances for all projects  Analyze transactions/document all ending receivable balances –  SDA Grants, Amounts Due from Other Funds  Review open purchase orders –  Liquidate, record as accounts payable, or roll forward  Analyze transactions/document ending balances for any other liabilities  Ensure that project revenues are budgeted and realized - Bonds, SDA Grants, Transfers - Capital Reserve/Capital Outlay  Ensure that project appropriations are established, budgeted and expended for each authorized project –  Unexpended funds must agree with the “F” Exhibits in your CAFR and be rolled or entered into budget for subsequent year Preparing for the Annual Audit - Capital Projects Fund

 Review Treasurer’s report –  Verify cash balances  Analyze transactions/document all ending receivable balances–  District Taxes, Amounts Due from Other Funds  Ensure that revenues are budgeted and realized -  District Taxes, State Aid, and Transfers from Other Funds (Unexpended Balance of Capital Projects)  Ensure that appropriations are for payment of –  Bond Principal, Temporary Note Principal, Interest on Bonds  Capital and Ground Leases are budgeted in Fund 10  Interest on Temporary Notes is budgeted in Fund 10  Ensure that (Budgeted) Transfers from Other Funds are recorded together with cash transfer from Fund 30 (Capital Projects Account) to Fund 40 (Operating Account) Preparing for the Annual Audit - Debt Service Fund

 Review Treasurer’s report or bank reconciliations –  Review reconciling items and verify cash balances  Analyze transactions/document all ending receivable balances  Federal & State Subsidies, Special Events & Due from Other Funds Obtain inventory reports from FSMC Obtain capital asset and depreciation records Verify and record any accounts payable balances  Ensure that revenues and expenses are reconciled with the FSMC’s monthly operating statements  Obtain FSMC’s supporting payroll and expense records  Ensure that free and reduced lunch applications on file Preparing for the Annual Audit - Food Service Fund

 Student Activities  Review Treasurer’s report or bank reconciliations –  Review reconciling items and verify cash balances for each school  Obtain documentation for any accounts receivable and payable  Generate a report of the (transactions and) balances of the individual groups or activities for each school  Other  Update Capital Asset Inventory  Update Compensated Absences Payable Preparing for the Annual Audit - Student Activities Funds/Other

 Update Transmittal Letter  Profile of School System:  Population, structure, type/level of services provided  Budget process  Legal level of budgetary control  Scope of instructional activities  Number of students  Types of programs offered  Economic Condition of School System:  Local economy & economic outlook  Long-term financial planning  Relevant financial policies  Major Initiatives  Projected enrollment  Age of school buildings  Major Initiatives Preparing for the Annual Audit - Other

 Update/Prepare MD&A  Financial Highlights  Financial Analysis of District as a Whole  Tables of Net Position, Changes in Net Position, Revenue, Expenditures (including Business-type Activities), Gross and Net Governmental Expenditures, Capital Assets, and Long- Term Debt  Discussion of Governmental Activities  Discussion of Business-type Activities  Financial Analysis of the District’s Funds  Analysis of significant balances and transactions of individual major funds  General Fund Budgetary Highlights  Analysis of significant budgetary variations (both original budget versus final amended budget and final amended budget versus actual)  Factors Bearing on the District’s Future Preparing for the Annual Audit - Other

 On October 15, generate all reports from your student software and retain paper or electronic files  Verify Vocational and Charter School enrollments  ASSA - Language English Proficiency(LEP) or English as a Second Language(ESL) For students receiving LEP or ESL, retain the placement test scores - WIDA, W-APT, CELL, ACCESS, MACII, IPT, or LAS  Document which score place students in the program and which score places them out of the program (for proper inclusion in ASSA)  If the student tests out of the program, documentation must be maintained by the LEP or ESL teacher in the student’s file to support the decision to keep the student in the program Application for State School Aid “ASSA”

 DRTRS report is filed in “Homeroom”  Save a copy of the summary and final DRTRS excel sheet (for easier sorting) (see following slide)  Obtain B7T (Request for Payment of Transportation Aid) completed by student’s parents or legal guardians  Obtain B7T for non-public school students whose parents or legal guardians receive aid-in-lieu of transportation  Obtain B8T certifications (generated and received from private schools) for students enrolled in a non-public school – must be able to verify that the sending District received them for the first and second semester in order to confirm student enrollment and attendance at the non-public school District Report of Transported Resident Students “DRTRS”

 Low Income Students:  Maintain and use the Master Eligibility Lists, Direct Certification List, and On-Roll registers as of October 15.  Free & Reduced Lunch Applications – Income is sometimes calculated incorrectly due to the use of the incorrect pay period. Verify whether income is earned every two weeks or twice per month. Details as to how to calculate income are on the bottom of the application.  Private School Students:  Maintain a list of students attending private schools including the schools attended.  This avoids confusion between Private School and Charter School students and helps to verify Private School students to the ASSA report and the DRTRS report. ASSA/DRTRS