Medicare Part D amounts to be booked
Federal Government Retiree Drug Subsidy - Medicare Part D allows for the Texas Public School Retired Employee Group Insurance Program (TRS-Care) to receive retiree drug subsidy payments from the federal government to offset certain prescription drug expenditures for eligible TRS-Care participants. On-behalf payments must be recognized as equal revenues and expenditures/expenses by each reporting entity.
The allocation of these on-behalf payments is based on the ratio of a reporting entity’s covered payroll to the entire payroll reported by all reporting entities. TRS based this allocation percentage on the "completed" report submissions by reporting entities for the month of May.
TRS has published the amounts to be recorded in your general ledger as on-behalf entries. The list may be found here. Your entry will be to revenue object code 5831 and expenditure object code 6144. We suggest that you assign a sub-object or other identifying optional code to this entry so that your auditors can easily identify it.
GASB 45 Statement for your Auditors
GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions effective in three phases based on a government’s total annual revenues in the first fiscal year ending after June 15, 1999:
- Phase 1 – those with annual revenues of $100 million or more must comply in periods beginning after December 15, 2006.
- Phase 2 – those with total annual revenues of $10 million or more but less than $100 million must comply in periods beginning after December 15, 2007.
- Phase 3 – those with total annual revenues of less than $10 million must comply in periods beginning after December 15, 2008.
This statement establishes standards for the measurement, recognition, and display of other postemployment benefits (OPEB) expense/expenditure and related liabilities (assets), note disclosures, and if applicable required supplementary information (RSI) in the financial reports of state and local government employers.
TRS is furnishing this information to assist reporting entities in complying with the GASB requirements. Certain information required by GASB 45 will have to be derived from the reporting entity’s payroll records. Please forward this document to your reporting entity’s financial/accounting manager and your auditor.
Fund Balance Policy examples to meet new requirements:
A new board policy is required for the new fund balance requirements for 2010-2011. Rita Chase with TEA states:
"The reason the board should adopt a resolution on the committed funds is that these funds can be used only for specific purposes decided by the school board. Committed amounts cannot be used for another purpose unless the school board formally reverses or changes the specific purpose for the funds by approving in the minutes (the same action taken to commit). This would need to be in place at the beginning of the new school year.
If the district did not spend all of their high school allotment they need to set this aside this amount for the next year, since these funds are restricted for the high school allotment they would be in the 3400. They do not need formal approval on this."
These two categories could be implemented within a larger fund balance policy that states the District’s overall intent of fund balance size. Within that fund balance policy approved by the Board of Trustees, the District should state the following:
Committed Fund Balance
The Board of Trustees is the District’s highest level of decision-making authority and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board of Trustees at the District’s Board meeting.
Assigned Fund Balance
The Board of Trustees has authorized the District’s Chief Financial Officer (or some other body or official) as the official authorized to assign fund balance to a specific purpose as approved by this fund balance policy.
This wording is straight from GASB 54. Information provided by the audit firm of Belt Harris Pechacek, LLLP, Certified Public Accountants| www.texasauditors.com
A copy of a board resolution that may be approved by the board may be found at this link.
TRS & HB 3646
SECTION 97 states: For purposes of interpreting and implementing Section 825.406, Government Code, the Teacher Retirement System of Texas may not consider salaries of personnel paid in whole or in part from education stabilization funds distributed to school districts under the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5) as being paid from federal funds.
Margie Horton with TRS sent this statement regarding TRS and the section stated above: the only collection that will not be made on this money is the state’s contribution for Federal Fund/Private Grants and Federal TRS-Care. A member must pay contributions on all TRS eligible salary. Unless the payment is considered pay for a wholly separate job, it will be subject to the Statutory Minimum Report.
SFSF Funds
TEA sent correspondence on July 30 regarding the Stabilization (Stimulus) Funds and the application process. This correspondence can be found here. TEA has set up free webinars for instructions for the application. They have several dates available that can be found here near the bottom of the page under the heading “SFSF-Application Technical Assistance Webinars”. TEA will have the SFSF Grant Application available in eGrants on Monday, August 3.
TEA Presentation at PEIMS Coordinator Training
Janice Hollingsworth of TEA recently presented the information found at this link at a PEIMS Coordinator Training. Please note on Page 6 that Fund 266 should be used for the HB3646 pay increase stimulus funds. Also note the change for High School Allotment coding for 2009-2010 from Fund 428 to Fund 199 with PIC code 31. You will need to add these code changes in your 2008-2009 books also for August payroll accruals.
Health Savings Accounts (HSA)
There is new information available on the HSA that districts need to know. The web site for this information is: www.ustreas.gov and click on 'Health Savings Accounts' on the left side under 'Direct Links".
Lone Star Reports by TEA
TEA has provided some useful historical financial data and graphs for our districts. Go to http://www.lonestarreports.com to see what information is available on your district!
Stimulus Information
TEA has posted information regarding the use and amount of stimulus funds for school districts, as well as the process for applying for the money. This information can be found http://www.tea.state.tx.us/arrastimulus/.
Please note the new fund codes that have been posted to be used for the stimulus monies.
Information for your DUNS #, CAGE Code, etc. may be found at this link. Please note the May 1 deadline for submitting your data collection to TEA.
Note: ESC 12 is offering assistance with the stimulus package application, etc. Please contact Barbara Agee for more information at 254-297-1238.
New Correspondence as of 4/24/09 can be found here - NCLB and here - IDEA.
Optional Flexible School Year
This is a reminder if your school is participating in the Optional Flexible School Year, as you probably know, there are different ways the campus calendars may be defined to accommodate this program. For example, one district may choose to offer five extra days of instruction at the end of the first and second semester, while another district may choose to offer 10 extra days of instruction at the end of the year only. In any case, the district will be required to establish multiple campus tracks to accommodate the different calendars. While absences carry a greater weight for students on the shorter calendar, the funding awarded for each ADA is the same. If this is not handled correctly, your state funding may be jeopardized.
IMPORTANT: Districts offering this type of program need to be aware of how these students are to be tracked in their student software system. No matter where the extra days fall within the calendar, a student who needs to be placed on a different track must be moved/withdrawn from one track and re-entered on another track, using the same date for the withdrawal/re-entry. The status changes needs to be done ON THE FIRST DAY OF THE CYCLE OF WHICH THE STUDENT WILL BE ON THE DIFFERENT CALENDAR. If you do not make the status change on the first day of the cycle, but use some day after the first day of that cycle, the district’s ADA will be inflated as these students will be generating more than one ADA.
EXAMPLE: (David Loseke, TEA, recommended that the student be changed (status change) to the new track for the Optional Flexible School Year the first day of the cycle that will have fewer membership days.) For example, if the district decides to let the students that qualify for the Optional Flexible School Year out of school the last 10 days, then their last day would be May 18th and the traditional school year ends on May 29th. The 6th six-week cycle begins on April 20th so the students that are attending school 170 days(track 2) would have a status change on April 20th moving them to the track 2.
A student can only generate 1 ADA for the year. The school year is divided into 6 six-week cycles, so these students would have 5 cycles and 1 cycle with a different number of days, which will still generate only 1 ADA for the year.
Make Work Pay Credit
The “Make Work Pay” credit will start showing up in your paychecks by April, 2009. For most taxpayers, this means that your take home pay should be slightly larger. A new W-4 is NOT required for this credit to take effect, but you may want to read the links below to decide whether or not you want to change your withholdings.
Please refer to the links below for more information on the American Recovery and Reinvestment Act of 2009.
http://www.irs.gov/newsroom/article/0,,id=204521,00.htmlhttp://www.marketwatch.com/news/story/making-work-pay-credit-could/story.aspx?guid=%7BAE919687-05BB-406A-8196-5E2785493E11%7D&dist=msr_3
http://www.irs.gov/newsroom/article/0,,id=204521,00.html
Link to the Form W-4:
http://www.irs.gov/pub/irs-pdf/fw4.pdf
2009 Stimulus Tax Table Now Available
The new tax tables are available for loading into RSCCC here and the IRS Notice 1036 is also included in that folder. New tax tables have been developed due to changes to the tax law made in the American Recovery and Reinvestment Act of 2009. The IRS asks that employers begin using these tables in lieu of the applicable previously published tables as soon as possible, but no later than April 1, 2009.
TRS Benefit Changes for 2009-2010
Travel Rule Changes
The State Comptroller office has made a few changes to the current travel rules. Please take notes of the following changes and take into consideration for your next business trip. The Comptroller has a new web site for travel rules and regulations - tExtravel found at https://fmx.cpa.state.tx.us/fmx/travel/textravel/index.php . Please take note that the maximum state mileage reimbursement rate for travel has been decreased to 55 cents per mile effective Jan. 1, 2009. The new rate, a decrease of 3.5 cents per mile, is consistent with the rate recently amended by the Internal Revenue Service. Please review your local board policy to make sure it covers this change. Also note that any amount paid to an employee over and above this amount is considered taxable income to the employee and must be included on their W-2.
IRS Rules Change for 403(b)
The clock is ticking toward the end of the year and the beginning of a new oversight role for school districts with 403(b) plans. Districts must comply with new IRS rules that go into effect on Jan. 1, 2009. Under previous rules, districts had little accountability for 403(b) plans and generally relied on annuity vendors to enforce the rules. Next year, the responsibility for compliance with IRS rules will fall squarely on school districts. Here are some highlights of what school officials should know about their new duties.
A 403(b) plan can be elected by an employee or set up by the district. These two arrangements are called elective and nonelective plans. Every district is required to enter into a salary reduction agreement if requested by an employee to make contributions to a qualified investment account. This type of arrangement is the employee’s choice; the district’s responsibility is limited to having a written plan document that addresses the “material terms and conditions” of the plan.
A nonelective plan is one established by the district as a supplemental retirement account for employees. The district may contribute to employee accounts. It is the nonelective plan that will trigger the most significant increase in the district’s responsibility for oversight and compliance. Districts are not required to sponsor a nonelective 403(b) plan but it is a popular benefit to help employees save for their retirement.
Employers will have both compliance and fiduciary responsibilities for their established 403(b) plans. In terms of compliance, the district is responsible for enforcing the rules for the plan such as eligibility and enrollment requirements, contribution limits, transfers, loans, distributions, and rollovers. Compliance duties are often handled by a third-party administrator (TPA) with special expertise in the administration of these plans. Fiduciary duty is the responsibility to prudently exercise discretionary authority relating to the plan, particularly in the selection of vendors for a nonelective plan. For elective plans, TRS handles screening and certification of qualified vendors and districts need only make sure that a sponsored vendor is on the approved list.
TASB Legal Services has developed a nontechnical document 
to answer administrator questions on 403(b) Retirement Savings Plans. It explains what school district officials should know. The Association of School Business Officials (ASBO) 
and the American Association of School Administrators (AASA) 
have developed detailed guides and models to help business officials understand and comply with their new responsibilities for 403(b) plans.
Use of IDEA Part B Funds for EIS
In combination with other funds, school districts and charter schools may use up to 15% of the entitlement received under IDEA Part B (i.e., fund/net asset code 224) to provide early intervening services (EIS). As discussed in Section 613(f) of P.L. 108-446 and 34 CFR 300.226, a school district or charter school may implement coordinated EIS that includes the following activities.
· Professional development (which may be provided by entities other than school district or charter school) for teachers and other school staff to enable such personnel to deliver scientifically based academic and behavioral interventions, including scientifically based literacy instruction, and, where appropriate, instruction on the use of adaptive and instructional software; and
· Providing educational and behavioral evaluations, services, and supports, including scientifically based literacy instruction.
Accounting Records
Consistent with federal law and rules, federal funds always retain their identity. School districts and charter schools are required to properly account for the receipt and expenditure of federal funds, and to ensure that federal funds are used for allowable costs in accordance with federal fiscal requirements. To demonstrate compliance with this requirement, school districts and charter schools should use a local option code within the applicable fund code (i.e., 224) that uniquely identifies the cost objective used to account for the expenditure of federal, state, and local funds on coordinated, EIS. School districts and charter schools should also maintain other documentation (i.e., policies, procedures, identification criteria, needs assessment, improvement plan, budget, purchase orders, invoices, payroll authorization forms, etc.) that adequately describes the EIS program implemented and uniquely accounts for the use of IDEA Part B funds for EIS.
For further discussion of this requirement, please refer to the TEA web site on EIS at http://www.tea.state.tx.us/special.ed/eis/. Program related questions regarding EIS should be directed to Phyllis Gandy or Denise Dusek in the TEA Division of IDEA Coordination. Fiscal related questions regarding EIS should be directed to Ramon Medina in the TEA Division of Financial Audits.
Child Nutrition Update
In our last RSCCC Business Users Forum, Stefanie Abassi and Anita Fincher, Child Nutrition, stated that if a school district discounts their food service meals to their district employees, the district is required to reimburse Food Service for the difference between the amount calculated per the formula found in section 15-3 of the Child Nutrition ARM http://www.squaremeals.org/vgn/tda/files/2348/23636_15-Meal%20Pricing.pdf (see below) and the amount charged to the employee. This does not include food service employees which may eat free and do not require reimbursement to Food Service. This generated a question from some of our districts as to how to code this reimbursement. We consulted Rita Chase at TEA and she says to expense to the function that the employee’s payroll is charged and use object code 6149 (other employee benefits). Then the question arose whether this needs to be included on an employees’ W-2 as taxable income? We have researched and found that it would not be taxable if you furnish the meals to them on your business premises. Please see page 14 of IRS Publication 15-b for more details http://www.irs.gov/pub/irs-pdf/p15b.pdf .
RSCCC Requisition
Did you know that you can have one secretary that inputs Requisitions for two different principals/department heads? This is how you would set them up so that only the Requisitions for that particular approver will be sent to the appropriate principal. Set up each principal/department in the Requisition User Profile with their accounts under the tab labeled “Special Review”. Then set them up on the Secretaries user profile on the Approval Path tab with “Special Review” checked. These instructions with screen shots can be found under the Documentation link in the Requisitions folder.
Additional Fingerprinting Information
Andrew Allen, Assistant Counsel for TEA, provided the following information to us from a recent fingerprinting presentation. Please call Andrew at 512-936-8238 with any questions.
TASBO published the following article on their web site for clarification of the IRS rules for 12 month compensation as of 7/3/08.
12 Month Compensation Clarified
Interim guidance from the IRS
IRS rules under discussion had proposed that the summer checks that teachers receive might be treated as deferred compensation. This would have greatly complicated school payrolls. Bottom line: Schools won't have to do that. The IRS has posted an Interim Guidance document indicating that, in most cases, teachers' earnings paid over a twelve month period do not involve deferred compensation. The introductory portion of the document reads:
Interim Guidance on the Application of 457(f) to Certain Recurring Part-Year Compensation Notice 2008-62
This notice describes a rule that the Treasury Department and the Internal Revenue Service (IRS) anticipate will be included in regulations to be proposed under 457(f) of the Internal Revenue Code.
The regulations to be proposed are expected to address certain types of arrangements involving recurring part-year compensation, including common arrangements involving public schools employees who provide services during a 10 month school year and elect to be paid ratably over 12 months. It is expected that the regulations would provide that if certain conditions described below are satisfied, 457(f) would not apply to such arrangements. It is also expected that a conforming change will be proposed for regulations under 409A, so that 409A also will not apply to such arrangements if such conditions are met.
Section II of this notice describes the rule expected to be included in the proposal regulations. Taxpayers may immediately rely on the rule described in Section II of this notice. Be sure to read the whole thing as there are some time frame and total compensation limits. It is also possible that some of this could still change, so watch for the final rules to be adopted.
TEA Expenditure Targets
ESC 12 has provided a "user friendly" template for calculating TEA's Expenditure Target . This template is designed to facilitate district compliance with proposed expenditure targets established annually by TEA pursuant to TEC § 44.011 (Link to Expenditure Targets Template)
Required Budget Summary for WEB Posting
Woody Brewton, here at ESC 12, has developed a template to assist districts in meeting the posting requirements of HB 1, which relates to posting the district's current year and proposed expenditure budgets on the district's Web Page. HB1 requires a school district to post the budget summary on the school's Internet Web site when it post the "Notice of Public Hearing" on the budget in the newspaper.