The New IPAM and AFR Rules and Regulations

1
The New IPAM and AFR Rules and Regulations

• Presenters
• Illinois State Board of Education
• Miller Cooper
• PMA Financial, Inc.

2
Overview

• Over past five years, ISBE and various
  sub-committees have reviewed and considered
  updates to the Illinois Program Accounting Manual
  (IPAM).
• Changes included consistency with Federal
  accounting manuals, updates to GAAP accounting
  standards, and changes to various local laws.
• Changes were provided for review to IASBO, IASA,
  IASB, etc.
• During 2006, changes to IPAM and subsequent
  changes to Accounting Rules were provided to JCAR
  for review and public comment.
• Changes were adopted by JCAR effective with
  FY2009 BUDGET and AFR financial reporting periods.

3
Illinois Program Accounting Manual

• Basis for school district accounting, budgeting
  and reporting
• Consistency with federal accounting program
  manuals and account codes
• IPAM Rules
• Found at ISBEs website under RULES CURRENTLY
  IN EFFECT
• http//www.isbe.net/rules/archive/default.htm
• IPAM Chart of Accounts/Manual
• Found at ISBEs website under SCHOOL BUSINESS
  SERVICES PUBLICATIONS
• http//www.isbe.net/sfms/pdf/ipam.pdf

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http//www.isbe.net
5
23 Illinois Administrative CodeSection 100

• Changes Effective July 1, 2009
• Contains updated account code tables
• Table A Classification of Funds
• Table B Balance Sheet Accounts
• Table C Revenue Accounts
• Table D Expenditure Accounts
• Table E Sources/Uses Accounts Miscellaneous
• Table F Expenditure Object Accounts

6
RULE CHANGES

• Rule Changes discussed today are found in 23
  Illinois Administrative Code 100.
• Rules for Code Sections 110 and 125 will be
  obsolete effective July 1, 2008.
• New requirement for Accounting, Budgeting,
  Financial Reporting, and Auditing
• Currently found under Proposed New Part 100 on
  the website.
• IPAM
• Currently found under Amendment to Part 110
• Part 110 is replaced by changes in Part 100
  effective July 1, 2008.
• Student Activity Funds
• Currently found under Amendment to Part 125
• Part 125 is merged into Part 100 effective July
  1, 2008.

7
State Reporting Requirements For Account Codes
NOTE The red xs are additional optional
account code spaces that ISBE is recognizing in
the IPAM account code structure. Account and
Source are used interchangeably
- Salary Type XXX
8
School District Annual Budget
Cover Page Form 50-36
9
School District Annual Budget

• Current Budget Provisions
• Adopted by September 30th
• Submitted electronically to ISBE
• Required to be BALANCED within 3 years of the
  initial UNBALANCED budget
• School Code, Section 17-1
• These changes were adopted effective FY2007
  financial cycle.
• FY2008 Budget Forms are available on ISEB website
• http//www.isbe.net/sfms/budget/2008/budget.htm
• FY07 and FY08 Budget Documents are stored in
  archived files by RCDT s.
• ftp//ftpfinance.isbe.net/SDB/
• New Budget Provisions
• Effective FY2009 finance cycle beginning July 1,
  2008.
• New FY2009 Budget and AFR documents will be
  available on the ISBE website in Spring 2008.

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Illinois School District Budget Format

• Budget Summary
• Estimated Fund Balance (at beginning of Fiscal
  Period)
• Receipts / Revenues
• Disbursements / Expenditures
• Line 18 Excess of Direct Receipts/Revenues Over
  (Under) Direct Disbursements/Expenditures
• Other Financing Sources (7000)
• Transfers from Other Funds
• Sale of Bonds
• Other Finances Uses (8000)
• Transfers to Other Funds
• Estimated Fund Balance (at end of Fiscal Period)
• Summary of Cash Transactions
• Estimated Balances on Hand (beginning of Fiscal
  Period)
• Receipts
• Disbursements
• Estimated Balances on Hand (end of Fiscal Period)
• Estimated Receipts/Revenues
• Estimated Disbursements/Expenditures
• Deficit Budget Information

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QUESTIONS?
12
School District Annual Budget
Budget Summary (Pages 2 3)
13
Major Rule Changes Effective FY2009

• Eliminates Rent Fund (Currently Fund 80)
• Creates NEW TORT IMMUNITY/JUDGEMENT FUND (New
  Fund 80)
• Renames Bond Interest Fund (Fund 30) to DEBT
  SERVICE FUND
• Renames Site Construction Fund/Capital
  Improvement Fund (Fund 60) to CAPITAL PROJECTS
  FUND
• There is no ISBE threshold requirement for
  Capital Projects.

14
Major Rule Changes

• Expands 7000 8000 Accounts (Other Finance
  Sources/Uses) to address pledged transfers for
  the Debt Service Fund and Capital Projects
  Fund
• Adds (new) 9000 Accounts for resources such as
  E-Rate Transactions, Donated Food Commodities,
  State Textbook Loan Program, and QZAB Tax
  Credits

15
Capital Projects Fund or Fund Group

• Renamed from the old Site Construction Fund.
• This fund or fund group is required to account
  for proceeds resulting from each bond issue,
  receipts from other long term financing
  agreements (including impact fee agreements), or
  construction or maintenance grants used to
  finance a capital project, capital lease, lease
  purchase agreement, or if a tax is levied in
  accordance with Section 17-2.3 of the School
  code.
• If you have a capital project with a dedicated
  funding source, especially anything where debt
  was used as the funding source, then it should be
  accounted in this fund.
• ISBE does not have a requirement as to a capital
  projects threshold dollar amount.
• Examples
• District A issues 150,000 Debt Certificate for a
  Repair Project at one of their school buildings.
• Credit Fund 60 Capital Projects Fund the
  150,000.
• Expenditures should be accounted for in Fund 60
  for the project.
• When the project is complete, if there are
  remaining dollars in Fund 60 (Capital Projects)
  and the District wishes to transfer the remaining
  dollars back to an operating fund (OM), then the
  District would transfer from Fund 60 to Fund 20
  via account 7150. The Fund 20 would reflect the
  transfer in account 8150.
• District B receives 600,000 in Impact Fees from
  their local builder to be used for capital
  projects at their local school.
• Credit Fund 60 Capital Projects Fund the
  600,000
• Expenditures should be accounted for in Fund 60
  for any projects the District would begin using
  those funds.
• As a recommendation, during the Fiscal 2008
  Audit, Districts should request that Auditors
  establish the opening fund balances for the
  Capital Projects Fund.
• NOTE Any such transactions for pupil
  transportation such as leasing of buses must be
  reflected in the Transportation Fund so State
  Funding is not impeded.

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Debt Service Fund or Fund Group

• Replaces the old Bond Interest Fund
• This fund or fund group is required if taxes are
  levied to retire bond principal, or to pay bond
  interest, or if other revenue is pledge to pay
  principal, interest, or service charges on other
  long-term debt instruments.
• Revenue may be required to be transferred in from
  other funds to make long term debt payments.
  (I.e. Other Sources/Uses Account 8430
  transfers revenue from one fund to pay for
  principal on capital leases)
• The Debt Service Fund will allow for debt service
  expenditures via 5300 accounts.
• As previously stated, School District should work
  with their auditors to develop opening fund
  balance positions in this fund.
• Example
• District A, that issued a 150,000 Debt
  Certificate for a Repair Project, and credited
  Fund 60 with the Proceeds, needs to make the
  principal payment on the Debt Certificate. The
  District intends to use operating dollars from
  the O M Fund to pay for the Debt Certificates.
• District transfers dollars from Fund 20 (OM) to
  Fund 30 (Debt Service) via account 8400 (Funds
  for Principal Payments) and 8500 (Funds for
  Interest Payments). Fund 30 (Debt Service) would
  reflect the transfer of dollars in account 7410
  (Transfers from Other Funds to Pay Principal on
  Capital Leases) and 7510 (Transfers from Other
  Funds to Pay Interest On Capital Leases).
• District makes principal and interest payments
  from Fund 30 (Debt Service) via account 5270
  (Interest Payments) and 5370 (Principal
  Payments)

17
Tort Immunity and Judgment Fund

• Replaces old Rent Fund
• New name and purpose for Fund 80!
• This fund is required if taxes are levied or
  bonds are sold for tort immunity or tort judgment
  purposes.
• As previously stated, Districts should review
  with their auditors the effect of transferring
  existing balances established for tort purposes
  into the newly created Tort Immunity Fund.
• Example
• Revenues from Tort Levy can be directly accounted
  for in Fund 80.
• Expenditures can be accounted for through account
  number 2360 2372
• Balances in Fund 80 should be established with
  assistance from Districts auditors.

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QUESTIONS?
19
School District Budget Changes
Cash Summary (Page 4)
Reclassifies Interfund Loans Notes and
Warrants
20
School District Budget Changes
Estimated Revenues (Pages 5 -10)
Funding Acct Local 1000s Flow-Through 2000s Sta
te 3000s Federal 4000s
21
Additional Account Codes In Revenue Section

• Adds Local Revenue accounts
• Impact Fees (Acct 1930)
• TIF Payments (Acct 1960)
• Driver Education Fees (Acct 1970)
• Vendor Contract Proceeds (Acct 1980)

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School District Budget Changes
Estimated Expenditures (Pages 11 - 19)
Functions Acct Instruction 1000s Support
Services 2000s Community Serv. 3000s Nonprogram.
Chgs. 4000s Debt Serv. 5000s Contingencies 6000s
Renamed Payments to LEAs and Governmental
Units
23
Additional Accounts Added To Expenditure Functions

• Instruction (1000 Accounts)
• New Accounts
• Pre-K (Account 1125)
• Driver Education (Account 1700)
• Tuition Payments to PRIVATE Entities (Accts
  within 1900)
• Support Services (2000 Accounts)
• New Accounts
• Expands 2300 accounts to include Tort Immunity /
  Judgement Fund expenditures (examples 2360 Tort
  Immunity Functions, 2362 Workers Compensation
  Payments, 2364 Insurance Payments)
• Renames 4000 Accounts (Nonprogrammed Charges) to
  Payments to Other LEAS and Governmental Units
  for payments to LEAS for Tuition and Transfers
  expenditures.

24
Additional Accounts Added To Expenditure Functions

• Expands 5000 Accounts (Debt Service) to identify
  the Principal and Interest payments on various
  Long Term and Short Term debt
• Reclassifies the Object Dimensions 700
  (Transfers) and 800 (Tuition) within the 600
  Series (Other Objects) in combination with new
  function codes.
• The existing 700 Object (Transfers) and the 800
  Object (Tuition) are combined in a new 600
  Object. The new 600 Object will have new
  function codes to identify transfers, tutition
  etc.)
• Adds other object classes for Non-Capitalized
  Equipment (700) and Termination Benefits (800)

25
Non-Capitalized Equipment

• Establishes the 700 Expenditure Object Account
  for purposes of Non-capitalized Equipment
• This replaces the old Transfers Object 700.
• Items that would be classified as capital assets
  except that they cost less than the
  capitalization threshold (that a District has
  established) but more than the 500 minimum value
  established for purposes of calculating per
  capita cost pursuant to Section 18-3 of the
  School code.
• Example
• District purchases 25 new computers for their
  tech lab. The computers are 1,000.00 each.
  The Districts capitalization threshold is
  5,000.00. The District accounts for each
  individual computer from an accounting
  standpoint.
• The District books the 25,000.00 expenditure in
  the Education Fund (10) in Function 1100
  Regular Program, Object 700 Non-Capitalized
  Equipment.
• If the District above had a 1,000.00
  capitalization threshold, then the District would
  book the expenditure into the 600 Object series.

26
QUESTIONS?
27
School District Annual Budget
Deficit Budget Summary (Page 21)

• Operating Funds
• Educational
• OM
• Transportation
• Working Cash

28
School District Annual Budget
Deficit Budget Plan (Pages 22-28)
29
QUESTIONS?
30
School District Annual Budget
Administrative Costs (Page 29) - Estimate of
FY08 Budgeted Expenditures Compared to FY07
Actual Expenditures
31
Questions?
32
School District Annual Budget
Vendor Contracts (Page 30) - Vendor Contracts
of 1,000 or More
New Revenue Account 1980
33
Questions?