Final
Accounting for School Expenditures
SCHOOL FINANCE SYSTEM
Votes:
Action Taken:
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02:37 PM
The committee came back to order.
02:37 PM -- Accounting for School Expenditures
Vody Herrmann, School Finance Unit, Colorado Department of Education, provided a brief history of how the school district chart of accounts came to be and noted that in the early 1970s, the State Board of Education was provided authority to adopt a financial policies and procedures handbook. Ms. Herrmann distributed three handouts, one outlining her Powerpoint presentation, one showing required reporting levels for the chart of accounts, and one providing information to the committee on the Colorado Preschool Program (Attachments I, J, and K). She was accompanied at the table by Velma Rose, Chief Financial Officer for Denver Public Schools (DPS) and Glen Gustafson, Chief Financial Officer for Colorado Springs District 11. Ms. Herrmann discussed the current membership of the Financial Policies and Procedures Committee, which is chaired by the CDE. The committee maintains the Financial Policies and Procedures Handbook and oversees the chart of accounts. Ms. Herrmann discussed the statutory basis for the chart of accounts and the implementation of those requirements. She discussed the fact that salary and benefit costs may be generalized by school site.
02:43 PM
Ms. Herrmann discussed the fact that chart of account funds are referenced in statute. By State Board rule, several other funds have been added to meet United States Generally Accepted Accounting Practices (GAAP). Ms. Herrmann described how the program element sets forth the specific areas on which school districts report. Ms. Herrmann reviewed the definitions of the elements in the chart of accounts. The account code structure is 22 digits, plus 6 separators, which were broken down by Ms. Herrmann in her presentation. She said that this is a minimum level of detail required, but that school districts may go into a further level of detail. She noted that location codes have been discussed in their potential to identify individual schools, but CDE is not currently allowed to ask identification as to which code relates to each individual school.
02:52 PM
Ms. Rose, representing DPS, discussed the fact that school sites record actual costs, including maintenance. Expenditures that are not charted to a specific site include transportation. Mr. Gustafson said that revenue and expenditures must be distinguished and that school districts may vary in the level of detail reported, as long as they are meeting requirements for reporting through the chart of accounts. Senator Bacon asked questions about allocation of staffing resources by FTE. Ms. Rose discussed the way that DPS budgets for staff at the school level. Mr. Gustafson indicated that Colorado Springs District 11 developed a prototype budget for individual schools and that interesting information resulted. Subsequently he discussed the district's use of average teacher salaries and benefits.
02:58 PM
Ms. Herrmann addressed the variances in schools and school districts that impact operational costs. Ms. Rose described how the size of school impacts budgets and that the cost of a principal's salary at a small school is a higher cost per student, and that high needs may also exist at such a school. Senator Windels asked whether there have been problems with interpretation of the chart of accounts requirements, specifically in regard to coding. She said that there are certain areas in which increased scrutiny has taken place and effective compliance has been requested. Senator Windels asked how statutory requirements address changes to the chart of accounts. Ms. Herrmann said that authority for changing the chart of accounts exists with State Board of Education, and that the will of the school districts may be a factor as well.
03:03 PM
Representative Pommer asked whether the state has looked into a state software licensing system that would be made available to all school districts. Ms. Herrmann, in responding, said that all school districts now have made their systems compatible with the state Automated Data Exchange system for reporting purposes. Representative Merrifield asked whether it is possible to set out what revenue is going into the classroom. Ms. Herrmann said determinations need to be made whether classroom expenditures include strictly teachers and supplies, or whether this cost includes everything available in the school as classroom resources. Ms. Herrmann and Ms. Rose both noted that the amount of funding for classroom instruction can vary. Mr. Gustafson said that the 100 program series in the chart of accounts reflects classroom instruction and can be used to look at these costs. Representative King asked questions about variances that may occur in charter school accounting. Additionally, Ms. Herrmann spoke about categorical accounting and the way that closer communication with school districts has resulted in better data. Ms. Herrmann responded to additional questions about how better data on funding for special education students could assist in consideration of any changes, such as an insurance pool for school districts.
03:11 PM
Representative Pommer asked for samples of school district budgets. Ms. Herrmann responded to questions as to how data is received by the CDE and described the audited financial report received through the Automated Data Exchange. Representative Benefield asked questions about how instructional programs are coded and whether a definition would be standardized. Ms. Herrmann continued her presentation with a discussion of location codes. Representative King asked how preschool education is accounted for through the 0040 code. Senator Windels asked how the coding assisted in knowing the source of funds for local, state, or federal sources. In response to a question, Ms. Rose noted that DPS tracks all private funding support. Representative King asked how the student identifier relates to the chart of accounts. Ms. Herrmann said that an end-year audit occurs to run against the October pupil count. She also noted that on-line pupils sometimes have a full-time contract with a school district and may seek permission to attend another school district for a specific program. In response to questions, she noted that occasionally a student is counted as a half-time student in two different school districts.
03:26 PM
Ms. Herrmann continued her presentation with additional information about location codes. She said that some school districts use a code for district-wide costs. Set-aside funding was the next portion of the presentation as she discussed compliance checks in that area. She walked through several other areas for set-aside funding where specific funding targets exist but CDE does not check for compliance due to the broad nature of the statutory charge. Representative King asked about separating out the "earmarking" requirements for capital reserve and insurance, and committee discussion ensued about the impact of this on some school districts.
03:35 PM
Ms. Herrmann noted that discussion has taken place concerning identification of expenditures using individual school codes specifying each school in the state, and she said that such a change would raise several questions, including the purpose of such a change and whether it would require an accounting for complete "allocation of costs to each school," including some centralized costs. Senator Tupa requested information about expenditures by location codes at different school levels. Ms. Herrmann discussed some of the difficulties in such an analysis, and said that the last time she had looked at such an analysis, the expenditures were fairly similar at the elementary, middle school, and high school levels. Mr. Gustafson said that for core services, school districts have location and program code identifiers, which represent two tools available in analyzing costs by school level. Senator Windels asked further questions about per pupil expenditures at different grade and school site levels. There was discussion of the role that economies of scale play in determining those costs.
03:43 PM
Senator Tupa commented on class size at the high school level. Ms. Rose discussed the variance in curriculum and program requirements at different school levels as well. The committee continued to discuss these issues. Representative King asked Mr. Gustafson whether his district had made chart of account changes after studying these issues, and Mr. Gustafson said that his school district's approach has become much more site-based. Ms. Herrmann made final comments on the process for data reporting and encouraged state leaders to recognize administrative costs required to meet data reporting goals.
03:55 PM
Senator Windels said that the August 30 agenda would include a discussion of capital construction funding, as well as funding and revenue received for categorical programs. She announced that the task force would meet on August 12 at 10:00 a.m. in the CASB building. Senator Windels commented on discussion about resources for early childhood education relative to resources available.
03:58 PM
The committee adjourned.