Understanding The NC Uniform Chart of Accounts Presented by Jennifer S. Bennett Finance Workshop I

Key Objectives Overview of the NC School Budget and Fiscal Control Act Understanding the Uniform Chart of Accounts Managing Budget Basic Ideas

NC Constitution, Article IX Section 2: “…General Assembly shall provide through taxation and otherwise for a general and uniform system of free public schools… wherein equal opportunities shall be provided for all students.” Section 5: “The State Board of Education shall supervise and administer the free public school system and the educational funds provided for its support.” Finance Workshop I

School Funding Responsibility School Machinery Act of 1931 & 1933 “State revenue sources the instructional expenses for current operations…” “…facilities requirements for a public education system will be met by county governments.” ---School Budget and Fiscal Control Act (1975) Finance Workshop I

Legislation into Action Legislation-115c-408(b):State Mandate-instructional expenses for current operations Action State Public School Fund (SPSF) Local Current Expense Fund (LCEF) Federal Grants Fund (FGF) Capital Outlay Fund (COF) Legislation related to the NC Charter schools is having an impact on the definition of Local Current Expense Fund above – related to local funds that must flow to the charter school students vs. stay within the LEA. Leandro case impacts continue to redefine the accountability for fair and equitable funding for public schools. The State Public School Fund (SPSF) The State Public School Fund shall include appropriations for current operating expenses of the public school system from moneys made available to the local school administrative unit by the State Board of Education. The Local Current Expense Fund -The local current expense fund shall include appropriations sufficient, when added to appropriations from the SPSF, for the current operating expenses of the public school system in conformity with the educational goals and policies of the State and the local board of education, within the financial resources and consistent with the fiscal policies of the board of county commissioners. Finance Workshop I

The State Public School Fund (SPSF) The State Public School Fund shall include appropriations for current operating expenses of the public school system from moneys made available to the local school administrative unit by the State Board of Education. Finance Workshop I

The Local Current Expense Fund The local current expense fund shall include appropriations sufficient, when added to appropriations from the SPSF, for the current operating expenses of the public school system in conformity with the educational goals and policies of the State and the local board of education, within the financial resources and consistent with the fiscal policies of the board of county commissioners. Finance Workshop I

Local Boards Role in Budgeting G.S. 115C-105-25 (a): “Consistent with improving student performance, a local board shall provide maximum flexibility to schools in the use of funds to enable the schools to accomplish their goals.” G.S. 115C-451: Local Boards will comply with the School Budget and Fiscal Control Act… related to the proper use of funds.

Importance of LEA Information Used by: Legislature Governor Federal Government Media Parents DPI Fiscal Research Governor’s Report Card ESEA (Title I) Compliance Analysis concerning Legal issues (LEANDRO, Charter Schools) Finance Workshop I

Uniform Education Reporting System (UERS) Began FY 1989-90 Requirements “to provide timely, accurate, and complete fiscal and personnel information, including payroll information” Requires LEA’s to comply with UERS G.S. 115C-12 (18)(a) G.S. 115C-12 (18)(b) Why we have a state-wide Uniform Chart of Accounts (COA) UERS G.S. 115C-12 (18)(a): requires local school units “to provide timely, accurate, and complete fiscal and personnel information, including payroll information” to the State Board beginning in FY 1987-88. G.S. 115C-12 (18)(b): requires local school units to comply with the Uniform Education Reporting System (fiscal, personnel, and student data) beginning in FY 1989-90. Provides the Legislature, general public, and other agencies with consistent reporting of how public education funds are used by the Local Education Agencies and Charter Schools. Defines State and Local obligations General Assembly enacted law in 1975 requiring a uniform system for all local school units, effective July 1, 1976. Provides for a Uniform Budget to include: State Public School Fund Local Current Expense Fund Capital Outlay Fund Sections on Fiscal Control and Accounting System, etc. Finance Workshop I

Uniform Chart of Accounts (COA) Defined by the State. Provides the Structure for how expenditures and Financial Statements and the Budget are reported to the state. Helps standardize reporting for school systems across North Carolina. Codes we use for supplies, teachers, etc are the same for every LEA. Enables the state to compare and analyze across LEAs. Gives the State a LOT of control over how things happen in a school district. We do have some areas where we can define codes to help categorize expenditures to best meet our district’s unique needs.

The Budget Breakdown or Budget Code The budget code is defined by the NC Department of Public Instruction under UERS General Statutes. LEAs can define the last 5 digits only of the budget code. Purpose Object Department 1-5330-061-411-XXX-RCC-YY FUND PRC Location Use The PRC and Object codes tell you funding pot & type of expenditure. Most Board of Education’s Budget Resolution during the fiscal year is at the Fund-Purpose Code level of the Budget Code. Finance Workshop I

FUND CODE – SOURCE of the Money 1 = State Public School Funds (SPSF) These are the funds allocated by the General Assembly for the School Districts. 2 = Local Current Expense Funds (County Appropriation) These are the funds allocated by the County Commissioners to the local school district. 3 = Federal Funds These are the funds allocated by the Federal Government under various legislated Titles – Title I, Title III, IDEA – Title VI-B, etc. 4 = Capital Funds (can be only used for capital needs) These funds come from State and County sources primarily 5 = Child Nutrition Funds 6/7 = Enterprise Funds (self-funded like Child Care Services) 8 = Other Local Funds (grants and other specific funds)

Purpose Code – WHY the Expense The First Digit of the next 4 digits in the account code is called the Purpose Code - Xyyy (the next 4). 5000 series = Instructional Services 6000 series = Administrative/System-Wide Support 7000 series = Ancillary Services (think Child Nutrition) 8000 series = Non-programmed Charges 9000 series = Capital Outlay School related = 5000 series Central Office related = 6000 series

Function Code – WHO needs the expense The 2nd digit of the Purpose Code is called the FUNCTION code. This further defines the type of purpose for the expense and the WHY for the expenditure. This helps explain WHO or what Department needs the expense or money. 5100 = regular instruction vs. 5200 for special needs 5400 = school administration vs. 5800 for support services 6600 = finance/HR services vs. 6500 for operations Important to be able to answer WHO is responsible for the expenditure and find the correct Purpose/Function Code.

PRC – Program - Pot of Money The middle 3 digits are the Program Report Code (PRC) This further defines the various “Pots of Money” or CATEGORIES of funding provided by the SOURCES of funds. These funds provide definitions as to how the funds may be used for primary programs. Classroom Teachers is 001 At-Risk Students is 069 Classroom Materials is 061 Low-wealth Funds are 031 These codes “RESTRICT” the use of funds in those pots of money and provide RULES on the use of the funds.

Object Code = WHAT is the Expense This area of the code defines the TYPE or the WHAT of the expenditure. The first digit gives the broad type of expense (100 = salary, 200 = benefits, 300 = services, 400 = supplies, 500 = capital, etc.) The last 2-digits define the What within those categories These are defined by the State.

Location/Department Codes School numbers or 000 for Central Services Then within Central Services we have Department Numbers Funds that the Schools control directly will have a SCH-SCH combination. Funds that are for the Schools but controlled by a central office department will have a SCH-DEPT code combination. Funds controlled by Central Services could also carry a 000-SCH/DEPT code combination depending on type of expenditure.

Use or Tail – Last 2 Digits (Category) These last 2 digits are defined locally and are used to help categorize expenditures by locally defined programs. They can be used to help capture the costs for major initiatives such as our 1-on-1 Laptop project (17), choral expenses (18), etc. Most of these codes will be used and defined centrally and cannot be individually defined. If a department thinks they need these codes then they should meet with the Finance Officer to discuss.

The Budget Breakdown or Budget Code The budget code is defined by the NC Department of Public Instruction under UERS General Statutes. LEAs can define the last 5 digits only of the budget code. Purpose Object Department 1-5330-061-411-XXX-RCC-YY FUND PRC Location Use The PRC and Object codes tell you funding pot & type of expenditure. Most Board of Education’s Budget Resolution during the fiscal year is at the Fund-Purpose Code level of the Budget Code. Finance Workshop I

Annually ask are people deployed appropriately? Managing The Budget Finance, Personnel, Schools, and Program Areas MUST work TOGETHER to ensure that the LEA and Schools are maximizing the # 1 Resource: PERSONNEL Remember over 80% of the funds are typical spent on Salaries and Benefits. Annually ask are people deployed appropriately?

Know What You Want To Do! Schools should do a data-driven problem analysis to determine how to focus on school reform. Then they should make sure that all options are laid out in the school improvement plan and how all the funding and staffing will work together. Lay out the contingencies… ex: what to do with vacancies – replace, save the dollars, use for something different? Know WHY? Include options in the plan so that the school is able to react effectively as the year unfolds and take advantage of situations to maximize resources. (ex: you get an extra allotment of $8,000 in March and have 2 weeks to effect the PO.. Ask what would you do?) Finance Workshop I

Financial Flexibility School Goals What Are Your School Goals? Have schools do a data-driven problem analysis to determine how to focus on school reform. The local board and central office must be the school's biggest supporters. School Improvement Plan Financial Flexibility Finance Workshop I

Resource Management A resource management model helps guide schools and departments in their spending targets for the year. This helps reinforce that “this year’s funds are for this year’s students”. Helps in the projection models during the year and fund balance/budget forecasting. Helps keep programs and costs planned and helps the district react earlier to changing revenues and other budget pressures.

Program Budgeting Budget documents should be aligned with Superintendent’s and Board of Education’s goals. Projects and programs have a more direct budgetary link in the system. Will help to provide cost/benefit analysis along with the student performance aspect of program evaluations. This aspect of School Finance accounting has yet to be achieved to the degree necessary and with enough consistency to effectively evaluate true “cost-benefit” program returns to assess the quality of educational programs.

Funding Gaps in Needs School Improvement Plan and data should be reviewed annually at the school level. There has to be a willingness to redirect existing resources including personnel and target those resources based on the current data … (not because it’s what we’ve always done). Program evaluations will help identify gaps, however, Funding Sustainability must also be evaluated before adding New Positions or other Recurring resources.

Thank you for your time and attention.