1. SDASBO 2016 COMPLIANCE AND OTHER MATTERS Rod Fortin—Director of Local Gov’t Assistance Department of Legislative Audit 300 S. Sycamore Avenue, Suite 102 Sioux Falls, SD 57110-1323 ph. (605) 367-5810 rod.fortin@state.sd.us http://legislativeaudit.sd.gov/ 1

2. OUTLINE  UPDATE ON DLA PROJECTS  AUDITS  BUDGETS  SURPLUS PROPERTY  BID LIMITS  COMPLIANCE CHECKLIST 2

3. DLA Projects  Changes to School Accounting Manual Effective July 1, 2016 (FY2017) Updates to Section I and II  http://legislativeaudit.sd.gov/resources/schools/accoun tingmanual/accountingmanual.aspx http://legislativeaudit.sd.gov/resources/schools/accoun tingmanual/accountingmanual.aspx  GASB 68 Pension for Employers calculation for year ending June 30, 2016 Implemented in FY15 Second year calculation 3

4. 4 Audits  Audit timetable – Governing board selects an audit firm  Not required to bid services Engagement letter sent to DLA for approval Auditor performs audit Audit report draft sent to DLA for approval Final payment may be made to audit firm

5. 5 Audits  Most schools have annual audits but you may elect to have a two year audit  Entities subject to Single Audit requirements must have audit completed within 9 months  Engage your services early so that a timely audit may occur  DLA maintains a “Locate an Auditor” function on its website

6. Audit Requirements  Uniform Guidance for Federal Awards: New Single Audit Rules. Audit Requirements effective for fiscal years beginning on or after 12/26/14 (FY2016) Auditors may have to test some awards subject to the “old” requirements and some the “new” requirements. 6

7. Audit Requirements  Key differences from current requirements Increases Single Audit threshold from $500,000 to $750,000. Type A/B threshold-minimum increases from $300,000 to $750,000. Loan/Loan guarantee treatment in major program determination High risk Type A program criteria High risk Type B program criteria Percentage of coverage from 50/25% to 40/20% 7

8. Audit Requirements  Key differences from current requirements Low Risk auditee criteria Schedule of expenditures of federal awards changes  Provide cluster of programs total.  Total amount provided to subrecipients from each federal program.  For loans and loan guarantees, identify in the notes to the SEFA loan balances outstanding at the end of the audit period. 8

9. Audit Requirements  Key differences from current requirements Include in the notes to SEFA whether or not non-federal entity elected to use 10% de minimis cost rate Audit findings (threshold from $10,000 to $25,000). 9

10. Uniform Rules-Federal Awards  Procurement standards under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Rules”)  Codified at 2 C.F.R. §§200.317 through 200.326, which supersedes the procurement regulations formerly found at 44 C.F.R. pt. 13 (State, Local, and Tribal Governments), and 2 C.F.R. pt. 215 (Private Nonprofit Organizations) 10

11. Uniform Rules—Federal Awards  Local Governments---Must follow its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in 2 C.F.R.§§200.318 through 326 11

12. Budgets  The Budget is one of the most IMPORTANT documents governing financial transactions of any government as it represents the Master Financial Plan of the school district.  It is the governing board’s responsibility to adopt a budget for all funds except trust and agency funds. 12

13. Budgets  STATUTORY DATES Proposed Budget—Regular Meeting in May Published—Not later than July 15 th / with Notice of Budget Hearing held before Aug 1 st Approve Budget before October 1 st By “resolution” adopt levies Changes from proposed to final budget shall be published in minute within 30 days of adopting final budget 13

14. Budgets  Subsequent to final adoption of the budget, resolution required to amend budget. (SDCL 13-11-3.2) 14

15. 15 Surplus Property  Auction – Declare surplus Two notices, first notice 10 days prior auction An appraisal is not required Hold the auction Governing board members may buy at an auction

16. 16 Surplus Property  Sealed bid process – Declare surplus Appraisal by three property tax payers $500 or less -  Public or private sale without notice Over $500  Two notices  May award to highest bidder

17. 17 Surplus Property  Proceeds of a sale may be placed into the General Fund, the CO Fund or if it is a food service item, into that fund  Real estate may also be sold through a realtor  Governing board has the right to accept or reject any sale

18. Bid Booklet  South Dakota Local Government Guide for Acquisitions, Disposals, and Exchanges (Bid Booklet) DLA Website  General Resources http://legislativeaudit.sd.gov/docs/Bid%20 Booklet%202013.pdf http://legislativeaudit.sd.gov/docs/Bid%20 Booklet%202013.pdf 18

19. 19 Bid Laws  Current Laws: SDCL 5-18A General SDCL 5-18B Public Improvements SDCL 5-18C Local Laws SDCL 5-18D State Agency

20. 20 Bid - Limits $25,000 for supplies or services $50,000 for any public improvement

21. 21 Bid Definitions  Public Improvement – the process of building, altering, repairing, improving or demolishing any public infrastructure facility, including any structure, building, or other improvements of any kind to real property  Supplies – any property, including equipment, materials, and printing;

22. SB118 of 2016 Session  Threshold for “equipment” will increase to $50,000 for all public subdivisions. The threshold for supplies and services other than equipment would remain at $25,000.  Effective July 1, 2016. 22

23. 23 Bid Definitions  Competitive Sealed Bid – Standard notices Opened publicly – witnesses Bid specs shall set forth the evaluation criteria Bids may be modified by fax, price not disclosed If you have a tie bid then you may  Award bid by lottery  Or rebid

24. 24 Bid Definitions 3X  A contract may be entered into by competitive sealed proposals if the purchasing agency determines in writing that the use of competitive sealed bids is either not practicable or not advantageous.

25. 25 Bid Definitions  Competitive Sealed Proposal Con’t– Solicited through an RFP, state relative importance of price and other factors, Standard notices are required Register of bidders shall be maintained, open to public after contract award Each proposal shall be opened so as to avoid disclosure of contents to competing offerors during the process of negotiation

26. 26 Bid Definition  Competitive Sealed Proposal Con’t- A discussion may be conducted with the offeror to assure a full understanding Revisions may be permitted after submission and prior to an award There can be no disclosure of info derived from any proposal submitted by a competing offeror Award to most advantageous

27. Other Public Improvement Contracts  Design Build Need to become familiar with SDCL 5-18B-20 through 5-18B-38  Construction Manager Construction Manager-Agent Construction Manger-at-Risk SDCL 5-18B-39 through 5-18B-44 27

28. 28 Bid Applications  Multiple purchases – Aggregate for FY  Installment payments – focus on contract  Trade-in ---value of what you are acquiring  Piecemeal – value of the “whole” project

29. 29 Bid - Emergency  When there is a threat to public health, welfare or safety or for other urgent or compelling reason  Bid notices are not required  Consider rentals  Declaration in minutes  Procurement must be made with such competition as practicable

30. 30 Bid Exemptions  ANY purchase of supplies or services, other than professional services, by purchasing agencies from ANY active contract that has been awarded by ANY government entity by competitive sealed bids or competitive sealed proposals or from ANY contract that was competitively solicited and awarded within the previous twelve months; 5-18A-22 (3)

31. Bid Exemptions  A purchase utilizing another entity’s bid has to mirror a purchase from a contract that was “awarded” by the original bidding entity. It is not enough that such contract was “bid” by the original entity, it must have been “awarded”. 31

32. Bid Exemptions  Contracts may be utilized form any government entity, including those that are out-of-state, however, care must be taken to ensure that payment is made to the original vendor and that the contract was awarded by competitive sealed bids or competitive sealed proposals as defined in SDCL 5-18A-1 (27), 5-18A-5 and 5-18A-7. 32

33. 33 Bid Exemptions  When buying off of another entity’s bid, make sure it is not a trade-in bid, and you are encouraged to secure (from the original entity) the following items: Minutes approving contract Specs Affidavit of publication All the bid proposals submitted

34. 34 Bid Exemptions  Federal surplus property  Purchases from another government (6-5-1)  From the state price list  Local vendor matching the state price list  Real estate and auction services  Legal, audit, architectural, insurance

35. 35 Bid Exemptions  Computer software  Communication technologies, computers, peripheral equipment and related connectivity  May buy off of GSA contracts

36. 36 Bid Exemption  Change orders: Unit prices Extra work not reasonably foreseeable Sliding scale

37. Purchasing Agreements SDCL 5-18A-37 Cooperation and agreements with other state and federal purchasing agencies. Any purchasing agency may enter into agreements with purchasing agents in this or any other state or the United States government under which any of the parties may agree to participate in, administer, sponsor, or conduct purchasing transactions under a joint agreement or contract for the purchase of supplies or contractual services. A purchasing agency may cooperate with purchasing agencies and other interested parties in any other state or the United States government to develop uniform purchasing specifications on a regional or national level to facilitate cooperative interstate purchasing transactions. 37

38. 38 Bid Advertisement  Two notices  First notice at least 10 days prior to opening  Second notice may be in any legal newspaper

39. 39 Bid Advertisement  Centralized Bid Exchange – Provide greater notice to bidders List all state and local bids May charge a fee

40. 40 Bid - Bonding  Bid bond – 5% cashiers or certified check or 10% bid bond ---provided by each bidder  Performance bond – in the amount of the contract----provided by the winning bidder  Bonding is only “required” for construction of a public improvement contracts

41. SB6 of 2016 Session  Chapter 5-21 be amended by adding a new section to read: The requirement of a performance security may be waived by a public corporation if the procurement meets the requirements established pursuant to SDCL 5-18A-9 (Emergency Procurement). 41

42. 42 Bid Opening  No bids – if no bids are received, may negotiate a contract for the most advantageous price, if the specs of the original bid are met – even for public improvements

43. 43 Bid - Opening  Bids may not be faxed – must be sealed  Bids received “late” should not be considered  Board has 30 days to accept or reject all bids

44. 44 Bid - Fuel  Gas, diesel, fuel oil, coal, propane, natural gas, etc.  Not required to publish two notices  Secure 3 quotes  May include a procedure for adjusting prices to meet changing market conditions not within the control of the vendor  SDCL 5-18C-6

45. Compliance Checklist  Did the governing board publish a complete list of all the officers and employees' salaries with the proceedings of the first meeting of the year, or within 30 days thereafter, or in the minutes of the first meeting following the completion of salary negotiations? (6-1-10)  Did the school board cause a full account of the unapproved proceedings of each board meeting to be published within 20 days after the meeting? (13-8- 35) 45

46. Compliance Checklist  Did the publication of proceedings include a detailed statement of expenditures including (a) names of payees, (b) the services rendered or goods furnished, and, (c) details of the reimbursement of any imprest incidental account, except for trust and agency funds which may be published in total? (13-8-35, 13-18- 17)  Did the publication of proceedings include a detailed statement of receipts and balances on hand, except for trust and agency funds which may be published in total? (13-8-35) 46

47. Compliance Checklist  Did the school board prescribe policies and procedures governing the stewardship of trust and agency funds consistent with SDCL Title 13? (13- 16-19)  Did the employee designated to be in charge of each trust and agency fund submit monthly and annual reports to the school board? (13-16-21)  If the board established an incidental imprest account, was a detailed account of the expenditures from this account presented to the board at least monthly? (13-18-17) 47

48. Compliance Checklist  Did the school board designate by resolution official depositories, within the state, for school funds? (13- 16-15, 13-16-15.1, 13-16-18.1)  Did the school board refrain from transferring any money (exclusive of federal funds) from the General Fund to the Capital Outlay Fund, Bond Redemption Fund, or capital project funds? (13-16-26.2) 48

49. Compliance Checklist  Was any installment purchase, lease purchase, or use of capital outlay certificates with principal exceeding 1-1/2 percent of taxable valuation of taxable property preceded by a public hearing? (13-16-6.3)  If a public hearing was held on installment purchase contract, lease purchases, or capital outlay certificates, was notice of the hearing published twice in the official newspaper at least ten days prior to the hearing? (13-16-6.3) 49

50. Compliance Checklist  If the school board borrowed money other than by issuing bonds, was a promissory note issued? (13- 19-1)  Did promissory notes issued not exceed 24 consecutive months? (13-19-1) Also, did the amount borrowed not exceed 95% of the amount of taxes levied or proposed to be levied for the current and next fiscal year for the fund in which the money is being borrowed plus any receivables of the fund? (13-19-2) 50

51. Compliance Checklist  If bonds were issued, was the proposition approved by 60 percent of the voters voting in an election? (6-8B-2)  Except those issued by designated custodian of trust and agency funds, was each check or warrant approved by the board prior to its issue? (13-16-20, 13-8-26)  Except those issued by designated custodians of trust and agency funds, was each check or warrant drawn and signed by the business manager and countersigned by the president of the school board? (13-16-20, 13-8-26, 13- 18-2) 51

52. Compliance Checklist  If the school district used the Capital Outlay Fund for payment on construction of new facilities or construction of additions to facilities and if the cost required advertising for bids, did the school district have a public hearing at least ten days prior to the advertisement of any contract specifications and was such public hearing advertised in the legal newspaper? (13-16-9.3) 52

53. Compliance Checklist  Did the employee designated to be in charge of each trust and agency fund (a) keep accurate records of receipts, expenditures and balances, (b) issue receipts in duplicate for all money received except money received from the sale of printed serially numbered admission tickets, (c) approve expenditures, (d) pay all claims upon presentation of an itemized certified claim, and (e) keep a memorandum record of the sale of all serially numbered tickets by event? (13-16-20) 53

54. Compliance Checklist  Was each check or warrant documented with an itemized invoice, verified by the appropriate school official and filed in the business manager's office? (13-18-3)  Did the school board refrain from entering into any contract for labor, services, materials, supplies or equipment with any officer except as allowed by SDCL 6-1-2? (6-1-1 13-20-2.1) 54

55. Compliance Checklist  Did the school board refrain from entering into any contract for labor, services, materials, supplies or equipment with employee? (13- 20-2.1)  Were board members only paid travel allowances consistent with state rates? (13-8- 38 & ARSD 05:01) 55

56. Compliance Checklist  Were Special Education Fund capital purchases or leases of assistive technology directly related to a student's individualized education plan? (13-37-16) 56