"New School Facilities Audit Guidelines: What Does it Mean for You?"

Transcription

1 "New School Facilities Audit Guidelines: What Does it Mean for You?" FAC23 The views and opinions expressed in this presentation are those of the authors and do not necessarily reflect those of CASBO.

2 Sara Slater, Assistant Director Facilities Accounting, Long Beach USD Tom Duffy, Legislative Director for CASH and Partner, Murdoch, Walrath and Holmes; Lettie Boggs, CEO, Colbi Technologies, Inc.; Tina Henton, CPA, Principal, Clifton Larson Allen LLP; Royce Townsend, Parter, VTD; The views and opinions expressed in this presentation are those of the authors and do not necessarily reflect those of CASBO.

3 Governor s Budget Message January 2017 Governor s Promise to Sell Bonds Actions of the State Allocation Board (SAB) Altering the Established Process of the School Facility Program (SFP)

4 Office of Public School Construction (OPSC) OPSC brought three options to the Board in June 2017: 1. Process all projects in date order except require new construction projects to reestablish eligibility 1. Process all projects in date order as past practice 1. Send all projects back to district applicants CASH and CASBO argued for option two as being consistent with state law The board adopted option one on a 6-4 Vote

5 Actions of the SAB in Support of the School Facility Program (SFP) Out with the Old.. Unfunded List (Beyond Bond Authority) aka True Unfunded List Acknowledged List In with the New.. Workload List Unfunded List (Lack of AB 55 Loans) Apportionment List SAB directed OPSC to move forward to fund the True Unfunded List of $370b The True Unfunded List action anticipated the fall bond sale Treasurer sold $356,119,969 in state bonds late September Fall bond sale estimated $238,000,000 FY 18/19 Governor proposed budget of $640m in bond sales

6 When Will I Receive Funding??? Receipt of funding is dependent on State Bond sales Over $3.4 Billion in project backlog Cash flow projections based on Governor s 2017/18 State Budget Approximately $600M in bond sales per fiscal year

7 What the SAB s Action Means Current existing law: the district s eligibility is established at the time it applies for a project The SAB s actions are contrary to statute The intent of the action is that districts establish eligibility a second time when OPSC processes the project OPSC will be processing the $2b in projects over the next three/four years, depending upon the speed of review Example: a project filed in 2015 could have its eligibility reviewed potentially in 2019!

8 What the SAB s Action Means Continued Districts may need to alter projects or receive less funding than expected due to declining enrollment This new practice, not supported by statute, will be particularly difficult for small school districts

9 What s New? What s Not? What Stays the Same? All of the SAB processes and submittals (50-01 through 50-06) still apply Annual submittal of SAB with Detailed Listing of Project Expenditures Will be used for validation of Substantial Progress

10 What s New? Trailer Bill AB99 established Ed Code establishes new audit process No expenditure audit by OPSC shifts to district independent auditors Repayment of audit findings (ineligible expenditures) to the state

11 What s New? SAB Established new Grant Agreement Applies retroactive to all except projects on the true unfunded list Listing of Eligible Expenditures finite Listing of Ineligible Expenditures ambiguous Things previously normal may now be ineligible equipping labs, custodial carts, utility vehicles

12 Upfront Grant Agreement Redefines Allowable Expenditures State share and match share have to meet new agreement requirements Also, savings and interest generated by state share Prior authorization by OPSC required for some project expenditures not addressed in Grant Agreement through Advisory Letter process Items reported, but not allowed, will be subject to repayment to the State through audit findings process Shift of Costs to District/COE

13 Considerations for Prop 51 Funds Shift in Thinking: A-Z Funding Account Code Internal Procedures Communication Educate Review

14 Shift in Thinking: A-Z Planner Construction/Project Manager Contractor Facilities Accounting District Accounting Purchasing/Contracts Office Staff Chief Business Officer Bond Citizens Oversight Committee Superintendent Auditors

15 Funding: Leave No Stone Unturned General Fund Local Control Accountability Plan (LCAP) Routine Restricted Maintenance (RRM) Apply for a Grant Career Technical Education Incentive Grant (CTEIG) Funds Perkins Developer Fees Donations Proposition 39 Proposition 51 Local Bond Funds

16 New Construction: Sato Academy

17 Case Study:What Has Long Beach Done with CTEIG Funds? Jordan High School Major Renovation $108,000,000 Bond Funds $5,700,000 State Funds $800,000 CTEIG Career Technical Education Incentive Grant

18 Local Bond Accounting Consideration

19 Example of LBUSD Account Code Structure Standardized Account Code Structure Fund - Resource - Project Year- Goal - Function - Object - School Site Fund = Funding Source Measure E Resource = Type of Project Modernization Project Year = Eligibility Differentiation 2 = Ineligible expenditure Goal = Indicates the Project Lakewood HS HVAC Function = Facilities Acquisition and Construction (Capitalized) 8500 Object = Classification of expenditure type 6490 equipment over $5,000 Site = School site number 653 Lakewood High School

20 What Object Codes Are the Auditors Most Likely to Review? Books and Supplies 4310 Materials or Supplies < $ Non-Capitalized Equipment >$500 <$5, Equipment > $5, Services and Other Operating Expenditures

21 LBUSD Internal Prop 51 Procedure Manual

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23 Review Embed Review in your reconciliation process Review in April External Auditor Review yearly (added cost) Review process internally with staff Review cash flow

24 District Timeline Idea to construct New Elementary Design DSA Approval Construction Beneficial Occupancy Notice of Completion Jan 2018 July 2019 August 2021 November 2021

25 State Agency Timeline CEQA CDE OPSC DSA Design DSA Approval OPSC Submit Project Construction OPSC Approve Submit 50/05 Grant Agreement Receive Funds Jan 2018 July 2019 August 2021 July 2023 Sept 2023

26 Audit Timeline Review Expenditures Review Expenditures Review Expenditures Review Expenditures Review Expenditures District Review with External Auditor Final July 1st 2017 June 30 th 2018 June 30 th 2019 June 30 th 2020 June 30 th 2021 June 30 th 2022 June 30 th 2023 Oct June 30 th 2024

27 Local Level Audit of State School Facilities Program Informal Audit Guide Advisory Committee has met at the Controller s office The committee is not new The Advisory Committee will offer input as to how the new audits should work A new K-12 Audit Guide will be written and published in spring 2018 Including the new OPSC program audit

28 Local Audit Review What s in the new Audit Guideline document? What will Auditors be looking for? How will the Auditors embed in current district audits? When does the new Audit Guideline start? What advice should districts be asking from the Auditors right now?

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30 Sara Slater, Long Beach USD Tom Duffy, Legislative Director for CASH and Partner, Murdoch, Walrath and Holmes Lettie Boggs, CEO, Colbi Technologies, Inc.; Tina Henton, CPA, Principal, Clifton Larson Allen LLP; Royce Townsend, Parter, VTD;