A CDE Overview: Current Issues in School Finance. California Association of School Business Officials 2017 Annual Conference April 14, 2017

Transcription

1 A CDE Overview: Current Issues in School Finance California Association of School Business Officials 2017 Annual Conference April 14, 2017

2 Presenters Peter Foggiato, Director Christine Davis, Administrator School Fiscal Services Division California Department of Education School Fiscal Services Division 2

3 School Fiscal Services Division Apportionments Principal Apportionment, State Categorical Programs, Federal Entitlement Programs (Title I, Title II, Title III, Title VI part B) LEA Accounting and Financial Reporting California School Accounting Manual, SACS Software, Unaudited Actuals Data Collection Audit Resolution K-12 Audit Guide, Resolve Apportionment Findings and Coordinate Resolution of Federal Findings Fiscal Oversight State AB 1200 duties, Oversight of COE Budgets, State Loan Districts School Fiscal Services Division 3

4 Agenda Federal Updates Accounting and Financial Reporting Updates State Apportionment Updates Audit Guide Updates Other Current Topics School Fiscal Services Division 4

5 ESSA Fiscal Updates Report School Level Expenditures in Local and State Report Cards Title I Supplement not Supplant ESSA Maintenance of Effort Funding Changes for Title I and Title II School Fiscal Services Division 5

6 ESSA Regulations REGULATION CURRENT STATUS Accountability, Data Reporting, and Submission of State Plans Published Rescinded by Congressional Review Act Assessment and Innovative Assessment Pilots Published Effective Title I Supplement Not Supplant Promulgated but never finalized Dormant for now Teacher Preparation Published Rescinded by Congressional Review Act School Fiscal Services Division 6

7 ESSA Regulations Congressional Review Act allows congress to repeal a regulation within 60 Legislative days of publishing the final regulations if signed by President Rescinds the regulation and prevents US Department of Education (ED) from ever issuing any regulations that are substantially similar School Fiscal Services Division 7

8 School-Level Expenditures The Law ESSA sections 1111(h)(1)(C) and 1111(h)(2)(C): Requires states and LEAs to annually report in their report cards Per-pupil personnel and non-personnel expenditures At LEA and School Level Disaggregated by source of funds; State, Federal and Local School Fiscal Services Division 8

9 School-Level Expenditures Rescinded Regulations Would have: Required States to develop a single, uniform statewide procedure to calculate LEA current expenditures per pupil and a single, uniform statewide procedure to calculate school-level current expenditures per pupil Established rules regarding pupils counts, Impact Aid, and defined local funds to exclude things like donations Clarified timing December 2018 Report card to reflect data State could request extension to December 2019 to reflect data School Fiscal Services Division 9

10 School-Level Expenditures Going Forward CDE must determine how to collect per-pupil expenditure data included in local report cards CDE s role in specifying how LEAs perform those calculations is not yet known School Fiscal Services Division 10

11 Title I, A Supplement Not Supplant Sec. 1118(b) Supplement Not Supplant The Law FEDERAL FUNDS TO SUPPLEMENT, NOT SUPPLANT, NONFEDERAL FUNDS. IN GENERAL. A State educational agency (SEA) or LEA shall use Federal funds received under this part only to supplement the funds that would, in the absence of such Federal funds, be made available from State and local sources for the education of students participating in programs assisted under this part, and not to supplant such funds. COMPLIANCE. To demonstrate compliance with paragraph (1), a LEA shall demonstrate that the methodology used to allocate State and local funds to each school receiving assistance under this part ensures that such school receives all of the State and local funds it would otherwise receive if it were not receiving assistance under this part. SPECIAL RULE. No LEA shall be required to: Identify that an individual cost or service supported under this part is supplemental. Provide services under this part through a particular instructional method or in a particular instructional setting in order to demonstrate such agency s compliance with paragraph (1). PROHIBITION. Nothing in this section shall be construed to authorize or permit the Secretary to prescribe the specific methodology a LEA uses to allocate State and local funds to each school receiving assistance under this part. School Fiscal Services Division 11

12 Congressional Intent Supplement Not Supplant The Law the bill allows States and LEAs to comply with SNS for title I, part A funds if they can document that the manner in which they allocate State and local resources to schools is Title I neutral, or that the methodology does not account for the Title I funds that schools will receive. Senate Committee on Health Education, Labor and Pensions Analysis School Fiscal Services Division 12

13 Supplement Not Supplant Dormant Regulations Three methodologies to demonstrate compliance: 1. Weighted Per-pupil Formula 2. Distribution Based on Personnel and Non-Personnel Resources 3. Equally rigorous, approved SEA established compliance test Special rules and exclusions, such as for single-school school districts School Fiscal Services Division 13

14 Sharp criticism from Congress. Supplement Not Supplant Dormant Regulations Nothing less than a brazen effort to deliberately ignore a law that passed the Senate 85 to 12, passed the House , and was signed by the president. Lamar Alexander State Superintendent Public Instruction and State Board of Education joint response: ED announced January 18, 2017 that it withdrew the regulations. School Fiscal Services Division 14

15 ESSA Maintenance of Effort (MOE) LEA is not subject to sanctions for failing to maintain 90% effort for one year (either combined fiscal per student or aggregate state and agency expenditures) provided it has not failed to meet MOE for one or more of the five immediately preceding fiscal years. (Sec. 8521). School Fiscal Services Division 15

16 Title I, Part A Funding ESSA maintains the same funding formula as No Child Left Behind (NCLB). A new school improvement set-aside will reduce each LEA allocation 7%. For , the ED advises LEAs to plan to receive a minimum of their ESSA section 1122(c) hold-harmless rate less the 7% school improvement set-aside. Hold-harmless rates under 1122(c) are based on the LEA s poverty rate as measured by US Census Bureau. Hold-harmless rates are 85, 90, or 95 percent of the prior year allocation depending upon the LEA s poverty rate. After applying the 1122(c) hold-harmless rate and the 7% set-aside, LEAs can plan to receive 78, 83, or 88 percent of its prior-year allocation. School Fiscal Services Division 16

17 Title I, Part A Funding Beginning , the ESSA section 1003(h) school improvement setaside shall not decrease the amount an LEA receives below their prior year allocation. More information is available from Census: _appname=saipe&map_yearselector=2015&map_geoselector=sa_eusd &s_measures=sa_sd&s_state=06. School Fiscal Services Division 17

18 Title II, Part A Funding The Title II hold-harmless provision, based on the amount of funds an LEA received for 2001 under the former Eisenhower Professional Development and Class-Size Reduction programs, is eliminated. Starting , LEA allocations will be based solely on the Census poverty and population counts. LEAs with little to no hold-harmless amount may see significant increases in their allocation amount. LEAs with large hold-harmless amounts may see significant decreases. More information is available at: School Fiscal Services Division 18

19 Title III English Learner (EL) and Immigrant Funding ESSA maintains the same funding formula as NCLB. Changes in allocation amounts will be primarily due to changes in the California Longitudinal Pupil Achievement Data System EL and Immigrant counts, compared to prior year counts. School Fiscal Services Division 19

20 ESSA Allocations ED expects to receive final appropriation amounts for ESSA programs by the time the Continuing Resolution expires April 28. If so, we will probably receive preliminary state-level information in May. Preliminary grant information from ED lacks a significant amount of information; however, we will calculate very tentative preliminary allocations to share with County Offices of Education (COEs) in May/June. The final grant will probably be received from ED in June. We will recalculate preliminary allocations and post them on the Web in July/August. School Fiscal Services Division 20

21 President s Skinny Budget Proposal Recommendation for Congress for 2018, which begins October 1. Program National Reduction California Reduction IDEA, Child Nutrition, Head Start, Child Care Development Block Grant School Choice Expansion $1.4 billion (national). $0 $0 Title II $2.25 billion $241 million 21 st Century Learning $1 billion $132 million $168 million Charter School Grant, $250 million private school choice program, $1 billion Title I portability. School Fiscal Services Division 21

22 Did You Know Federal Update Did you know that the CDE publishes a federal update on its Web site at School Fiscal Services Division 22

23 Indirect Cost Rate Plan Renewal Current delegation agreement with the U.S. Department of Education (ED) expires June 30, 2017 (includes a two-year extension). New agreement proposal submitted to ED October Negotiations are in progress. New five-year plan will be effective beginning School Fiscal Services Division 23

24 Indirect Cost Rate Plan Renewal On ED s agenda: Food costs are considered distorting remove from base costs. Heads of Components move from indirect cost pool to base costs. One level below the superintendent, e.g. assistant and associate superintendents, CBOs. Includes immediate offices of that level. School Fiscal Services Division 24

25 Indirect Cost Rate Plan Renewal NEW: CDE is proposing to calculate unrestricted indirect cost rates. Allowable for programs not subject to supplement not supplant rules. e.g., Child Nutrition programs. Board and superintendent, maintenance and operations costs can be included in pool of indirect costs. Need to consider consistent cost treatment issues. Costs incurred for the same purpose, in like circumstances, are treated consistently and may not be charged to a federal award as a direct cost and then again via the indirect cost rate. School Fiscal Services Division 25

26 On-Behalf Contributions to CalSTRS On-behalf contribution rate CDE has historically calculated and provided an on-behalf contribution rate as a courtesy to LEAs and their auditors for calculating the LEA s share of the state contribution to CalSTRS. Recently CDE and CalSTRS agreed that this information is best provided by CalSTRS, since they administer the accounts to which the on-behalf contributions are made. Information for calculating the LEA s on-behalf contribution amount is available on the CalSTRS GASB Frequently Asked Questions Web page, under On-Behalf Contributions : School Fiscal Services Division 26

27 On-Behalf Contributions to CalSTRS Reporting the on-behalf contribution July 2, 2015, CDE letter New Financial Reporting Requirements for Pensions provided updated guidance regarding financial reporting for on-behalf contributions to CalSTRS. Beginning , LEAs should recognize the on-behalf contributions in their fund financial statements. CDE developed an optional spreadsheet to assist LEAs in recognizing the state s onbehalf contribution that calculates and creates the necessary journal entries by fund, goal and function. It is available on the CDE Accounting Correspondence Web page, with the letter referenced above: School Fiscal Services Division 27

28 Restricted Maintenance Account Requirements Passage of Proposition 51 impacts the restricted maintenance account (RMA) (Resource 8150) requirements (Education Code (EC) Section ). Current requirement: phase-in of contribution amount through , with full 3% contribution in subsequent years. NEW requirement under Proposition 51: LEAs that receive an apportionment must begin depositing 3% starting fiscal year after year funds are received (not apportioned). How statute read on January 1, e.g., if Prop 51 funds received in , LEA must begin depositing the full 3% to the RMA (Resource 8150) in School Fiscal Services Division 28

29 Did You Know? SACS The standardized account code structure (SACS) was created through legislation in 1994 (Senate Bill 94). LEAs began implementing SACS in , and all LEAs were reporting financial data using the SACS software as of CDE will contract with Kern COE to have Fiscal Crisis Management Assistance Team build a new, Web-based version of the software. School Fiscal Services Division 29

30 Got Our Eye on the GASB Governmental Accounting Standards Board (GASB) Statements 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (OPEB) Effective beginning ; replaces GASB Statement 45. Similar to GASB Statement 68, except applies to OPEB. Requires a liability to be reported on the face of the financial statements. Liability reported depends on the structure of the OPEB plan. Single employer plan administered through a trust net OPEB liability. Cost-sharing plan administered through a trust proportionate share of the collective OPEB liability for all entities participating in the plan. Plans not administered through a trust total OPEB liability. e.g., funds earmarked in Fund 20 for future OPEB costs (not considered funded). School Fiscal Services Division 30

31 Got Our Eye on the GASB GASB Statement 75, Accounting and Financial Reporting for OPEB (cont d) More extensive note disclosures and required supplementary information. Alternative measurement valuation option in lieu of a an actuarial valuation still available for plans with < 100 members. CDE is evaluating the impact on SACS financial reporting software and financial statements. Change in OPEB object code definition, government-wide conversion entries. Stay tuned School Fiscal Services Division 31

32 Got Our Eye on the GASB GASB Statement 84, Fiduciary Activities New statement issued in January Effective (reporting periods beginning after December 15, 2018), with earlier application encouraged. Establishes criteria for identifying state and local government fiduciary activities. Existing standards did not provide guidance for determining whether and how a government should report fiduciary activities. School Fiscal Services Division 32

33 Got Our Eye on the GASB GASB Statement 85, Omnibus 2017 Issued March Effective (reporting periods beginning after June 15, 2017) with earlier application encouraged. Addresses several accounting financial reporting issues identified during the implementation of certain GASB pronouncements. Of note: An employer should recognize expenditures for on-behalf payments for pension or OPEB in the employer s financial statements (paragraph 9). An employer should recognize revenue equal to the amount of expenditures determined per paragraph 9 (paragraph 10). School Fiscal Services Division 33

34 Unaudited Actuals Financial Data Data files are available for download on the CDE Annual Financial Data Web page: Ed Data Provides state, COE, and school district financial reports in a user-friendly format. Also features district financial data comparisons functionality. School Fiscal Services Division 34

35 Financial Accountability and Information Services (FAIS) Accounting and Financial Reporting Resources SACS-related information (SACS Query, SACS Forum, SACS validation table updates) California School Accounting Manual Accounting and Fiscal Correspondence SACS Financial Reporting Software School Fiscal Services Division 35

36 P-1 Notable Mentions P-1 Apportionment total was $35 billion, up $2.1 billion from , include an increase for Gap ($2.9 billion), decrease in EPA ($258 million) and increase of local revenue ($983 million). CDE s P-1 Gap percentage was 54.42%; we expect that to increase at P-2 when we do the full iteration process to re-allocate gap funding for excess tax school districts. An additional $27 million was allocated for AB 602, reducing the deficit factor from to Governor s Budget proposes a one-time deferral of $859.1 million of the June P-2 payment to July. Based on CDE s P-1 estimates the deferral will be approximately 27% of each LEA s P-2 payment. See CDE s P-1 calculation letter for additional guidance on how to estimate the impact for your LEA ( School Fiscal Services Division 36

37 Special Education Out of Home Care AB 403 Statutes of 2015: Reforms placement and treatment options for youth in foster care. Effort called Continuum of Care Reform. As legislation is implemented most children will transition from group homes to foster homes. AB 403 calls for replacement mechanism of Rate Classification Level system, which is a key component to existing OHC funding model. No alternative funding solution yet. Department of Finance s Trailer Bill language locks in foster and group homes data counts at level in determining funding. School Fiscal Services Division 37

38 Did You Know? Principal Apportionment Non-Classroom Based Charter schools that do not request a funding determination the year before their current one expires are at risk of temporarily losing ADA funding. CDE s Web site provides timelines: ( CDE has made available a calculator to estimate the cost of various LCFF audit findings for school districts and charter schools: ( CDE publishes and updates throughout the year Gap and Cost of Living Adjustment projections: ( School Fiscal Services Division 38

39 Waiver of Days/Material Decrease in Attendance (J-13 Process) There is a process whereby the Superintendent of Public Instruction can waive annual days/minutes requirements for emergencies and can adjust for material decreases in ADA. Authority is limited to conditions specified in statute, such as fire, flood, earthquake, epidemic (EC sections 41422/46392). Resources are currently available on CDE Web site, with more coming next year ( School Fiscal Services Division 39

40 Educator Effectiveness All funds were released in , no additional funding is available. As a condition of apportionment, LEAs must develop a plan for expenditure of the funds, present the plan during a public meeting of the governing board, and adopt the plan during a subsequent meeting. LEAs must submit a detailed expenditure report on or before July 1, The final expenditure report template is available on the CDE Web site at The Educator Effectiveness reporting tool is now available and can be found on the CDE Web site at School Fiscal Services Division 40

41 Proposition 39: California Clean Energy Jobs Act Provides for annual transfers from the General Fund to the Clean Energy Job Creation Fund for a period of five years, through (Year 5) is the last year of funding. Award allocations will be available late September/October Important Dates: Funds must be encumbered by June 30, [Public Resource Code Section 26233(d)]. Final projects must be completed by June 30, Final project reporting by June 30, School Fiscal Services Division 41

42 College Readiness Block Grant $200 million for As a condition of receiving funds: LEAs must develop a plan, present the plan during a public meeting of the governing board, and adopt the plan during a subsequent meeting [EC Section 41580(e)]. LEAs must report to the CDE by January 1, 2017, on how the LEA will measure the impact of the funds received on the LEA s unduplicated pupils access and matriculation to higher education [EC Section 41580(e)]. First apportionment equal to 50 percent of funding went out November Remaining funds to be paid in spring Final allocations and payments will be adjusted for LEAs that didn t meet January 1, 2017, reporting requirements and non-wasc accredited schools. School Fiscal Services Division 42

43 Audit Guide The Audit Guide New Programs/Procedures 1 Amended Programs/Procedures 5 The Audit Guide Amended Programs/Procedures 7 Deleted Programs/Procedures 2 School Fiscal Services Division 43

44 Audit Guide Audit Guide New Procedure Mental Health Expenditures (SB 884) If the LEA or SELPA had any mental health related services expenditures from Budget Item , Provision 14 (SACS Resource Code 6512), verify that the funds expended were used to provide mental health related services. School Fiscal Services Division 44

45 Audit Guide Audit Guide Amended Procedures Unduplicated Pupil Counts If the student selected in the testing sample has left the LEA, the LEA may contact the new LEA for the supporting documentation, or the auditor can select another student to sample. Educator Effectiveness The plan and subsequent adoption could be from either or Immunization For kindergarten, personal belief exemptions acceptable only if filed prior to January 1, 2016 (this applies to TK students who had personal belief exemptions on file). School Fiscal Services Division 45

46 Audit Guide Audit Guide Amended Procedures California Clean Energy Jobs Act ( Supplemental Audit Guide) Technical Amendment. Mode of Instruction ( Supplemental Audit Guide) Clarify if ADA reported to CDE as classroom-based instruction was generated in full compliance with nonclassroom-based, then the LEA should report ADA appropriately and exclude ADA from classroom-based ADA. School Fiscal Services Division 46

47 Audit Guide Audit Guide Amended Procedures Educator Effectiveness Add reference to The plan and subsequent adoption could be from either , , or Add procedure to verify if the LEA submitted the detailed expenditure report. California Clean Energy Jobs Act If an approved energy expenditure plan project is not yet completed, verify if the LEA submitted an annual progress report. Independent Study Course Based An LEA must be audited for two consecutive years when operating an independent study- course based program. Thereafter, use the materiality level table. School Fiscal Services Division 47

48 Audit Guide Audit Guide Amended Procedures Kindergarten Continuance Technical amendment to obtain a list of pupils who turned six years old by September 1 and were enrolled in kindergarten for the year, instead of comparing kindergarteners from current and prior year lists. Schedule of Charter Schools Include the charter school number for each charter school. Local Control and Accountability Plan Technical amendment to reflect the latest SBE LCAP adoption which replaces Section 2 with the annual update. School Fiscal Services Division 48

49 Audit Guide Audit Guide Amended Procedures After School Education and Safety Program Clarify when testing attendance for both the after school and before school programs that auditors select a sample of attendance instead of testing all attendance in the sampled schools. If there are any findings related to the early release or late arrival policies, disclose the finding as a noncompliance. School Fiscal Services Division 49

50 Audit Guide Audit Guide Deleted Procedures Immunizations Mental Health Expenditures (SB 884) Audit Guide Education Audit Appeals Panel Web page at School Fiscal Services Division 50

51 Charter Schools Anderson Union High School District v. Shasta Secondary Home School (2016) 4 Cal. App. 5 th 262 (Anderson) A charter school resource center must operate within the boundaries of its authorizing school district, unless an exception applies (exceptions in EC Section ). State Board Waiver Policy Approved in March Meeting 1. Term of the waiver to end June 30, Nonclassroom-based charter schools must submit a copy of their transition plans to all of the districts where the resource centers are located. 3. Charter school must provide a status update to parents. WAIVER POLICY EXPIRES NOVEMBER 2017 School Fiscal Services Division 51

52 LCAP School Fiscal Services Division 52

53 California School Dashboard Beta test became available March 2017 Reports on multiple measures of school success including: Test scores, Graduation rates English learner progress Suspension rates Focus on equity by providing performance information on student subgroups in more areas than test scores. Supports local decision-making. School Fiscal Services Division 53

54 California School Dashboard School Fiscal Services Division 54

55 California School Dashboard Resources: Getting to Know the California School Dashboard A two page flyer to help communicate the California School Dashboard to stakeholders. Communications Toolkit The toolkit provides links to key communications about the California School Dashboard. School Fiscal Services Division 55

56 School Fiscal Services Division Contacts Principal Apportionment Section phone: Financial Accountability & Information Services phone: Categorical Allocations, Management Assistance & Audit Resolution Phone: School Fiscal Services Division 56

57 School Fiscal Services Division 57