Glenda Rader Glenda Rader

MDEMDE

Northern MSBO March 16, Northern MSBO March 16, 20112011

FID Reporting FID Reporting

USDOE requiring more detail related to how USDOE requiring more detail related to how school districts expend fundsschool districts expend funds

The required Chart of Accounts includes a The required Chart of Accounts includes a dimension for keeping track of grant dimension for keeping track of grant expendituresexpenditures

Decision to utilize an edit in the State Code Decision to utilize an edit in the State Code dimension of the FIDdimension of the FID

School Meals Reporting to FIDSchool Meals Reporting to FID

Replaces SM4012 ReportingReplaces SM4012 Reporting Used to Distribute 31d and 31F School Meals fundsUsed to Distribute 31d and 31F School Meals funds 2011 FID will include a report option to create 2011 FID will include a report option to create

School Meals ReportSchool Meals Report Check to see that Commodities, Patron and Student Check to see that Commodities, Patron and Student

Meal revenue have commensurate expendituresMeal revenue have commensurate expenditures Indirect Costs Recovered from School Meals Indirect Costs Recovered from School Meals

programs should be transferred to the General programs should be transferred to the General Fund.Fund.

Account StructureAccount Structure

State Code (4 Positions)State Code (4 Positions)

The State Code is used to further describe expenditures The State Code is used to further describe expenditures by grant type.by grant type.

Beginning in 2010 FID – The State Code Beginning in 2010 FID – The State Code will be edited to the 3will be edited to the 3rdrd position. position.

FundFund TransTrans FunctionFunction ObjectObject ProgramProgram StateState

Facility/Facility/

SchoolSchool OtherOther

XXXX XX XXXXXX XXXXXXXX XXXXXX XXXXXXXX XXXXXXXXXX XXXXXXXX

Indirect Cost Recovery EntryIndirect Cost Recovery EntryEntry to charge indirect to Various Grants given an MDE approved 3% Restricted Indirect Cost Rate.Entry to charge indirect to Various Grants given an MDE approved 3% Restricted Indirect Cost Rate.

$500,000 x .03 = $15,000 $500,000 x .03 = $15,000 (See Section II, E.03 Accounting for the Recovery of Indirect)(See Section II, E.03 Accounting for the Recovery of Indirect)

FundFund FunctionFunction ObjectObject ProgProg StateState

FacilityFacility

/School/School OtherOther AmountAmount

1111 611611 99909990 000000 00000000 0000000000 00000000 ($15,000)($15,000)

1111 611611 99909990 000000 60106010 0000000000 00000000 $6,000$6,000

1111 611611 99909990 000000 80108010 0000000000 00000000 $7,000$7,000

1111 611611 99909990 000000 64106410 0000000000 00000000 $2,000$2,000

To Record Expenditure Distribution of General Fund Indirect Costs to Various GrantsTo Record Expenditure Distribution of General Fund Indirect Costs to Various Grants

Indirect Cost Recovery EntryIndirect Cost Recovery EntryEntry to charge indirect to the School Breakfast Program given an approved 12% Unrestricted Indirect Cost Rate.Entry to charge indirect to the School Breakfast Program given an approved 12% Unrestricted Indirect Cost Rate.

$19,848.75 x .12 = $2381.85$19,848.75 x .12 = $2381.85

FundFund FunctionFunction ObjectObject ProgProg StateState

FacilityFacility

/School/School OtherOther AmountAmount

2525 611611 99909990 000000 85008500 0000000000 00000000 $2381.85$2381.85

To Record Expenditure Distribution of Indirect Costs in School Meals Fund to Breakfast ProgramTo Record Expenditure Distribution of Indirect Costs in School Meals Fund to Breakfast Program

FundFund

MajorMajor

ClassClass SuffixSuffix StateState OtherOther AmountAmount

1111 625625 99909990 00000000 000000 0000000000 00000000 ($2381.85)($2381.85)

To Record Revenue for Indirect Costs Collected from the Breakfast ProgramTo Record Revenue for Indirect Costs Collected from the Breakfast Program

Indirect Cost Rate Indirect Cost Rate

Costs Excluded from Direct Cost Base:Costs Excluded from Direct Cost Base:Debt Service, Judgments, Fines and Penalties, Bad Debt Service, Judgments, Fines and Penalties, Bad

Debts, Election Expenses, Flow Through Grants,Debts, Election Expenses, Flow Through Grants, Food used in School Meals and other items Food used in School Meals and other items

for resalefor resale Purchased Service Contracts up to $25,000 Purchased Service Contracts up to $25,000

(Example ABC Contract for $30,000 - We may (Example ABC Contract for $30,000 - We may apply the indirect rate to $25,000 of the apply the indirect rate to $25,000 of the

contract. )contract. )

Indirect Cost Rate ApplicationIndirect Cost Rate Application

Each year districts may apply for Indirect Cost Rates Each year districts may apply for Indirect Cost Rates through the Michigan Department of Education.through the Michigan Department of Education.

To be consistent with charging the programs/grants for To be consistent with charging the programs/grants for indirect; indirect;

Individual contracts that are part of the direct costs, should Individual contracts that are part of the direct costs, should only be included in the rate calculation for individual only be included in the rate calculation for individual contract amounts up to the $25,000. That improves the contract amounts up to the $25,000. That improves the district’s indirect cost rate as the rate is calculated by district’s indirect cost rate as the rate is calculated by dividing Indirect Costs by the Direct Cost Base. dividing Indirect Costs by the Direct Cost Base.

Any costs for business services, payroll, or operations and Any costs for business services, payroll, or operations and maintenance that maintenance that are direct billed to a program/grantare direct billed to a program/grant, , WILL also be moved from the indirect pool to the direct WILL also be moved from the indirect pool to the direct pool for calculating the rate.pool for calculating the rate.

School Districts in Michigan are required to follow School Districts in Michigan are required to follow Governmental Fund Accounting. The School Meals Fund Governmental Fund Accounting. The School Meals Fund is considered a governmental fund. Therefore, within the is considered a governmental fund. Therefore, within the fund there is NO Depreciation. All equipment/capital fund there is NO Depreciation. All equipment/capital outlay become an expenditure in the year the item is outlay become an expenditure in the year the item is purchased. purchased.

In the District wide financial statements, the district will In the District wide financial statements, the district will maintain a record with all of its capital assets and maintain a record with all of its capital assets and associated depreciation (fund 91)associated depreciation (fund 91)

DepreciationDepreciation

Sales TaxSales Tax

Sales Tax is NOT Revenue to the DistrictSales Tax is NOT Revenue to the DistrictThe district merely collects the tax on behalf of the state and The district merely collects the tax on behalf of the state and

then remits it to the state on a regular basis.then remits it to the state on a regular basis.

When the district collects the tax, it should keep balance When the district collects the tax, it should keep balance sheet records to show the amount of tax collected and the sheet records to show the amount of tax collected and the amount remitted.amount remitted.

There are balance sheet accounts in the Chart of Accounts There are balance sheet accounts in the Chart of Accounts to keep track of funds “due to another governmental unit.”to keep track of funds “due to another governmental unit.”

Sales TaxSales Tax

Sample Accounting Transaction for School Meals lunch Sample Accounting Transaction for School Meals lunch sale:sale:

Debit Debit Cash 25-101-0000-$2.65Cash 25-101-0000-$2.65

CreditCreditBalance Sheet “Due to Government Agency” 25-421-0000 $.15Balance Sheet “Due to Government Agency” 25-421-0000 $.15Revenue Food Sales to Patrons 25-162-0110-0000 $2.50Revenue Food Sales to Patrons 25-162-0110-0000 $2.50

Section II- Various Updates to take effect with the implementation of GASB #54

(Fiscal Year 2010-11)• B.02 Revised Description of Special Revenue

Funds• E.04 and E.05 New Fund Balance

Classifications

Michigan Public School Accounting Michigan Public School Accounting ManualManual

GASB # 54 also requires that districts GASB # 54 also requires that districts classify fund balances “that comprise a classify fund balances “that comprise a hierarchy based primarily on the extent hierarchy based primarily on the extent

to which the government is bound to to which the government is bound to honor constraints on the specific honor constraints on the specific

purpose for which amounts in those purpose for which amounts in those funds can be spent.”funds can be spent.”

The new classifications are as follow:The new classifications are as follow:– Non-spendable (MC 71x) Non-spendable (MC 71x) (Inventory and (Inventory and

Prepays)Prepays)

– Restricted (MC 72x) Restricted (MC 72x) (Specific Millage, School (Specific Millage, School Meals)Meals)

– Committed (MC 73x) Committed (MC 73x) (Board Resolutions)(Board Resolutions)

– Assigned (MC 74x) Assigned (MC 74x) (Budgeted Fund Balance)(Budgeted Fund Balance)

– Unassigned (MC 75x) Unassigned (MC 75x) (Whatever is left – or a (Whatever is left – or a deficit)deficit)

Michigan Public School Accounting Michigan Public School Accounting ManualManual

Districts that chose to the to develop a Districts that chose to the to develop a Service Consolidation Plan in 2009-10 Service Consolidation Plan in 2009-10 were required to submit a report on the were required to submit a report on the status of that plan by February 1, 2011.status of that plan by February 1, 2011.

Service Consolidation Plan in Service Consolidation Plan in Accordance with MCL 388.1611d:Accordance with MCL 388.1611d:

Section II- E15 – Charging Federal Funds Section II- E15 – Charging Federal Funds for Unemploymentfor Unemployment

Michigan Public School Accounting Michigan Public School Accounting ManualManual

State School Aid ActState School Aid Act Monthly State Aid Reports and UpdatesMonthly State Aid Reports and Updates Taxable Value InformationTaxable Value Information Deficit FormsDeficit Forms Maintenance of Effort InformationMaintenance of Effort Information Account Codes for Recording State School Account Codes for Recording State School

Aid RevenuesAid Revenues Lots More….Lots More….

SASF WebsiteSASF Website

Questions?Questions?

MDE Contact InformationMDE Contact Information

Glenda RaderGlenda Rader

Office of State Aid and School FinanceOffice of State Aid and School Finance

Phone: (517)335-0524Phone: (517)335-0524

Email: raderg@michigan.govEmail: raderg@michigan.gov