1 of 92

Strategic School Finance Training

CDE/CSFP

Governmental Accounting

Glenn Gustafson

2 of 92

Governmental Accounting Basics

Agenda

Goal of Training

Increase district business officials knowledge of:

The Accounting Equation
Accounting Principles
Fund Accounting
Basis of Accounting
Financial Reporting
Audit Roles
Governmental Accounting Best Practices
Survey, upcoming Trainings, & PFSU Contacts

3 of 92

Basic Accounting Principles - Balance Sheet

specific accounting principles

Double-entry. Double-entry means that every time a business engages in a business transaction, there are always two sides of this transaction – Debit and Credit. These two sides must be properly recorded and balanced to maintain correct information. For example, when a business sells ready products to customers for Cash, Inventory decreases and Cash increases on the Balance Sheet.

4 of 92

Basic Accounting Principles

Accounting Equation

The Trial Balance generated from general ledger system must balance to Zero.

Assets and Expenses have Debit Balances.
Liabilities, Fund Balances, and Revenues have Credit Balances.

5 of 92

Accounting for Rev, Exp, & Balance Sheet

Assets should have a Debit Balance

Liabilities & Fund Balance should have a Credit Balance

Assets = (Liabilities + Fund Balance)

Revenues should have Credit Balance

Deposit a Check: Debit Cash & Credit Revenue Account

Expenses Should have a Debit Balance

Cut a Check: Debit Expense Account & Credit Cash

At Year-end: Revenues (credit) less Expenses (debit) “clear” to Fund Balance.

If Revenue>Expense, Does Fund Balance Grow or Decrease?

6 of 92

Basic Accounting Principles

These Principles are accepted world wide in order to make Financial and Organizational comparisons possible.

Time Period. This basic concept says that a business should report in Final Accounts all its financial activities and transactions over a standard period of time – usually monthly, quarterly and annually.

Consistency. An adopt an accounting principle or method, continue to follow it consistently in future accounting periods. Only change an accounting principle or method if the new version in some way improves reported financial results.

Full disclosure. All information should be included in an entity's financial statements that would affect a reader's understanding of those statements.

Timeliness. Financial statements should be timely in order to be relevant.

7 of 92

Basic Accounting Principles

Matching. Revenue should be recorded during the period when it is earned regardless of when the business received Cash. Expenses should be reported in the same period in which the corresponding Revenue was earned. For Example, June services invoice paid in July should be be expensed in the prior year & Accounts Payable 7421 instead of cash.

Revenue Recognition. Or, the realization concept. It says that all revenues and profits should be recorded in Final Accounts when the legal title to the product is transferred from the seller to the buyer. Meaning, that when the good or service have been provided to the customer. Not when the order was taken or when the cash was paid. For Example, Grant revenue requested after June 1 & Received in July uses Accounts Receivable 8142 instead of cash. Conversely, unearned revenue 7482 is used to decrease revenue when higher than incurred expenses.

Accruals. 60 day window after fiscal year end date. Accruals happen when the business received something, but has not yet paid for it. For example, Salary & Benefit Accrual paid in July and August for Services provided in the prior fiscal year.

8 of 92

Governmental Accounting Basics

9 of 92

Governmental Accounting Governing Organization

What/Who is GASB?

Established in 1984, the Governmental Accounting Standards Board (GASB) is the independent, private- sector organization based in Norwalk, Connecticut, that establishes accounting and financial reporting standards for U.S. state and local governments that follow Generally Accepted Accounting Principles (GAAP).

What are Pronouncements?

Each of the final Statements of Governmental Accounting Standards issued by the GASB since its establishment in 1984 is designed to provide taxpayers, legislators, municipal bond analysts, and others with information that is useful to their decision-making process regarding governmental entities. For Example, GASB 87 & 96 establishes a single model for lease and SBITAs accounting based on the principle that leases are financing of the right to use an underlying asset.

10 of 92

Government and Business Differences

Legal Structure
Political Process
Different mission/motive
Government Activities - resources driven by available resources
Business - resources driven by free market.

11 of 92

Fund Accounting

What Types of Funds are there?

Government Funds - (General Operations)

General (Funds 10-19)
Special Revenue (Funds 20-29)
Debt Service (Funds 30-39)
Capital Projects (Funds 40 - 49)

Proprietary Funds (Business type activity)

Enterprise (Funds 50-59)
Internal Service (Funds 60-69)

Fiduciary Funds - (District acts as a fiduciary)

Agency, Private-purpose trust funds (Funds 70 - 79)

12 of 92

Basis of Accounting

The basis of accounting refers to the methodology under which revenues and expenses are recognized in the financial statements. There are 3 different methods:

Accrual Basis (GAAP)-a business recognizes revenue when earned and expenses when expenditures are consumed. This approach requires a greater knowledge of accounting, since accruals must be recorded at regular intervals. If a business wants to have its financial statements audited, it must use the accrual basis of accounting, since auditors will not pass judgment on financial statements prepared using any other basis of accounting.

Modified Accrual Basis (GASB)-Local government recognizes revenues that are available and measurable. It recognizes expenditures as they are incurred. It tracks receivables and payables.

Cash Basis (NOT GAAP)-recognizes revenue when cash is received, and expenses when bills are paid. This is the easiest approach to recording transactions, and is widely used by smaller businesses. It DOES NOT track receivables and payables.

Which BASIS does your District’s accounting practices most closely represent?

13 of 92

Fund Accounting

Deeper Look into Modified Accrual Accounting

Modified Accrual Basis of Accounting

Revenues are considered to be available when they are collectible within the current Period(60 day Accrual window).
Expenditures are generally recognized when the related fund liability is incurred, as in accrual accounting.
Expenditures recognition is modified from accrual accounting for:

Debt Service, claims and judgements, other postemployment compensation & benefits are recorded when payment is due.

General capital asset acquisitions are reported as expenditures in governmental funds.

Allocations of costs, such as depreciation, are not recognized in Governmental Funds.

Issuance of long-term debt and acquisitions are reported as other financing sources.
Income Statement is July 1 - June 30 Activity, not just cash.
Balance Sheet is a Point in Time 6/30/23.

14 of 92

Governmental Accounting

Best Practices

Maintain General Ledger on Modified Accrual Basis throughout the year with these system entries:

Cash GL account is reconciled monthly and balances to the Bank Rec
Account Payable are systematically created when an PO/invoice is entered prior to payment
Payroll is posted on a cash basis monthly with salary/benefit accrual adjusted at year-end
Revenues are recorded on a cash basis (when received), with Property tax for the July 10th and Aug 10th, if applicable, adjusted at year-end

General Ledger is reviewed monthly at month-end to ensure:

Cash/Investments equals reconciled bank balance
Receivables are current and accurate
Payables are current and accurate
Due to/Due Froms balance in total, & clear them monthly
Grants A/R or Unearned are current and accurate

15 of 92

Fund Reporting

Let’s look at your audit Table of Contents: (Pull up your District’s)

GAAP(Accrual) vs GASB (Modified Accrual)
District Wide financial statements (full accrual)

Statement of Net Position
Statement of Activities

Fund Financial Statements (modified accrual)

Balance Sheet
Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Position.
Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds
Reconciliation of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to Statement of Activities.

Notes
Supplementary Information

Budget to Actual Variances
Net Pension liability, Net Share of Other Post-Employment Benefits (OPEB)
Combining Balance Sheet-Non Major Governmental
Auditor’s integrity

Single Audit

16 of 92

Property Tax Balance Sheet Accounts

17 of 92

Property Tax Example

Schedule

18 of 92

Property Tax Example different Basis

Sept 1st-30 taxes Collected. Paid on October 10th

Accrual Basis. Record the Revenue in September, offset is 8105. In October, Record Cash and offset 8105.
Modified Accrual Basis. Record the Revenue in September, offset is Cash.
Cash Basis. Record the Revenue in September, offset is Cash.

June 21st-30 taxes Collected. Paid on July 10th

Accrual Basis. Record the Revenue in June, offset is 8105. In July, Record Cash and offset 8105.
Modified Accrual Basis. Record the Revenue in June, offset is 8105. In July, Record Cash and offset 8105.
Cash Basis. Record the Revenue in July, offset is Cash.

Incorrect because taxes collected are for 6/21-6/30

19 of 92

Property Tax Accrual Accounts

July 10th Payment

8105 Cash with Fiscal Agent. Only used for July 10th payment for Tax Period June 21- June 30.

Manual AJE to record all activity on the payment. 8105 should equal Cash Deposited.

Clears in FY25, when the Cash is receipted

Debit Cash – Credit 8105(Not Revenue)

Might be using “8105” as another checking account. To correct find another cash account for the existing.

Might be booking to 8121. Ok, not Best Practice.

20 of 92

Property Tax Accrual Accounts

August 10th if Applicable

8121 Taxes Receiveable. Used to accrue the Aug 10 Local/Current Property tax (1110) only payment for tax period July 1-31.
Book 1110 to Previous Year Revenue as of 6/30/XX, with Offset 8121.
Book Remaining July 1-31 items (SOT, Abatement, Del, Int, Penalties, Treasury fees) & 8121 in the current year.

21 of 92

Property Tax Accrual Accounts

Certified v Collected

8121 & 7800(7481) Used to book Deferred Revenue.

Amount Certified (Dec Mill Levy Cert) Less Amount Collected/Accrued in previous fiscal year (2/10-7/10 or 2/10-8/10 payments)
This is a non-cash entry! Dated 6/30/XX.

Debit 8121–Credit 7800, reverse in the following FY on July 2nd.

Correct if not using 7800 (7481 changed years ago)

8121 will greater than 7800, if accruing August.

22 of 92

Property Tax Timing

What was Certified in December 2024 is collected during January-December 2025 (Paid Feb 10, 2025-Jan 10, 2026)

What is booked to 1110(local property tax) in FY25?

Collected Aug(Sep) 10-Jan 10,2024 (Certified Dec 2023).
Collected Feb 10-June 24 (Certified Dec 2024).
Amount Accrued Jul 10 &/or Aug 10

The remaining to be collected (Paid Sep 10-Jan 10) is booked in FY 26 as revenue.

Collected at accrual date is likely 95-99% of total Certified.

23 of 92

Role of the Auditor

The primary role of the auditor is to render an opinion on the accuracy of the financial statements.

Heavy emphasis on the Balance Sheet.
Modified Accrual vs Cash Basis

Auditors are Independent Reviewers

Independence means that the district should be booking all transactions and year-end audit entries, and Auditor reviews entries. Perhaps, adding some entries to correct submitted.

24 of 92

Role of District

The District's management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. GAAP & GASB.

Every District’s Goals:
Get through Pipeline reports - Tier I, II, and Grant Revenue Reconciliation Report before/during Auditor’s visit by taking ownership of the Modified Accrual entries.

Property Tax, Salary & Benefit Accrual, Grant Receivable and Unearned Revenue, Food Service Inventory and Patron Balances, etc

Receive less correcting AJE for Fund Financials from Auditor every year.

25 of 92

Budget

26 of 92

Budget Planning & Preparation

Goal of Training

How to develop a more communicative & strategy driven budget process with BOE, Staff, & Community.

27 of 92

Budget Planning & Preparation

Finance Professional Budgeting Primary Roles:

Source of creditable accurate financial information & stewardship
Resource the organization in a responsible way.
Ensure District statutory compliance
Knowledge of Resources & Events

28 of 92

Budget Planning & Preparation

Purpose of a Budget

A budget provides a plan of financial operation embodying an ESTIMATE of proposed Revenues and Expenditures

Detailed budget planning allows a district to reflect educational values and needs, aligning with the district’s strategic plan.

The structure and format provided by a well-designed budget promotes rational decision-making regarding the importance of various district services.

Staff and the board are assisted in educational planning as well as in the prioritization and planning of all district operations through the allocation of resources.

29 of 92

Process, Planning, Philosophy, and Guiding Principles.

30 of 92

Budget Planning & Preparation

Who Needs to be Involved

Board of Education
District Staff & Leadership
Community

School Accountability Committee SAC 22-11-402(1)(a) Each school’s committee recommends to the school principal its priorities. The principal considers the committee’s recommendations and takes them into account in formulating budget requests and creating the school budget. The committee sends a copy of its recommended spending priorities to the school district accountability committee and to the board.

31 of 92

Budget Planning & Preparation

Who Needs to be Involved

Community-Continued

District Accountability Committee DAC 22-11-302(1)(a) The committee recommends to the board the priorities for spending district moneys. Whenever the committee recommends spending priorities, it makes reasonable efforts to consult in a substantive manner with the district’s school accountability committees. The board considers the committee’s recommendations in adopting the district budget.

Other stakeholder meetings/survey

Staff
Students

32 of 92

Budget Planning & Preparation

Budget Development Components

Develop Timeline of deliverables for BOE, Staff, Community
Develop Guiding Principles
Develop a Priority list of needs
Develop Changes in Revenue Forecasts

Total Program grows by CPI, roughly. What is Count Trend?

Develop Changes in Expense Forecasts
Forecast Compensation Scenarios & Forecast Positions & FTE
Communicate with Vendors (health & liability insurance, utilities, supplies, purchased services, etc) to gauge cost increases
Current program reviews & replacement schedules
New programs (Recurring vs. Non-Recurring)

33 of 92

Guiding Principles

Should:

Provide a broad philosophy that encompass the core values & vision of the organization as reflected in the district strategic plan
Guides organization throughout its life in all circumstances, irrespective of changes in its goals, strategies, type of work or the top management
Influence decision-making

Process to decide the going to do vs NOT going to do.

5-6 principles at the most, mix of Program and Fiscal

34 of 92

Guiding Principles

Remain True to Core Beliefs

District Mission-is it current?
District Vision-is it current?
Strategic Plan-is it current?
Core Programs-Does everyone agree?

35 of 92

Guiding Principles - Examples

Fiscal Goals

Follow Strong Fiscal Responsible Practices for a Public Entity. This can mean different things to different stakeholders.

Achieve a balanced budget(revenue = expenses)

Adjust spending as Actuals become clear, so Actual revenue = expense.

if spending fund balance, need a clear plan on how it won’t lead to ongoing deficits. Recurring vs Non-Recurring.

A plan to spend on recurring, say a new position, could be Year 1 100% Fund Balance, Year 2 50% FB & 50% Operating, Year 3 100% Operating.

36 of 92

Guiding Principles - Examples

Resources Allocation for new or existing

Needed and wanted resources will outweigh resources available

Achieve a balance between compensation and program enhancements
Immediate Needs compared to Building for Future
What are the Strategic Goals?
What are the State and Federal mandates?
What are the Improvement Plans?

37 of 92

Guiding Principles - Examples

Program Review

District programs and services will be considered for Redesign

38 of 92

Timeline

39 of 92

Timeline

Include dates:

BOE meetings
SAC & DAC meetings
Negotiations dates, if applicable
Priority List development

Does Capital need early approval for Summer Work?

Expected Information from Legislature

Other district specific deadlines

40 of 92

Timeline

November-January (Revenue picture is Blurry)

FY26 Governor’s budget released in November

Glimpse at CPI & BSF movement

Legislature convenes early January
FY24 Revised Budget

Ending Fund Balance, Total Program, other property tax, staffing, surprises since June 2024.
Review current programs audited Actual to Budget variances to determine “wasted” resources

Fund Balance Growing every year?
What is the Revenue variance (+/- 1% to 3%?)
What is the Expense variance (+/- 3% to 5%?)

Development of Guiding Principles & Timeline

41 of 92

Timeline

January-February (Revenue picture is Blurry for FY25)

Present Timeline & Guiding Principles to BOE, DAC, SAC, Staff, Community.
Prepare Preliminary Revenue forecasts, especially Count.
Prepare Preliminary Compensation forecasts for current and proposed new staff.

Licensed and Classified Scattergrams samples on PFSU website.

Prepare Preliminary other expense forecasts

Property/Liability Insurance, Utilities, Fuel, Food Costs, Technology/ Internet, Legal, Audit, Contractors, Health Insurance, PERA, other large vendors, etc.

Development of Priority list & “known” changes.

42 of 92

Timeline

March-April (Revenue picture is getting clearer for FY25)

Present a prioritized list of options to BOE(then others):

short vs long term
Recurring and Non-Recurring
Provide cost estimates and implementation issues

March Economic Forecast, followed by State’s “Long Bill” is best revenue forecast until the Introduced School Finance Act for FY25.

District should do Pupil Count Projection instead of relying on State estimate.
Fine tune expense forecast as information comes in.

43 of 92

Timeline

May-June (Picture is clearest-until October Student Count & January Per Pupil Funding “true-up”)

Final School Finance Act from Legislature provides best estimate of Per Pupil Funding & other changes to funding. District Student count is better than State’s.

A proposed budget for fiscal year 2024-25 was submitted to the board by May 31, 2024. 22‑44‑108(1)(c)-POST TO WEBSITE

Notice was made in accordance with law that the proposed budget is available for public inspection. 22‑44‑109

Normal BOE meeting process after the Proposed Budget is presented to BOE.

The budget for fiscal year 2024-25 was adopted by the board by June 30, 2024. 22‑44‑110(4)

44 of 92

Prep Work

45 of 92

Popular Budgeting Strategies

Incremental Change-What is Changing

JUST the changes

Zero Based-Justify everything

Helpful if there are major changes, but rarely is a district starting at zero every year

Student Based

Mostly utilized by larger districts with multiple schools at all levels in order to ensure equitable distribution of FTE and Resources.
Also delegates more budget authority to schools.

46 of 92

Budget Mechanics

A comprehensive budget system must be integrated with the financial accounting system.

A layperson should be able to understand the budget document. Consistent with other districts & audit layout.

FY26 Budget template on PSFU website.

Will be “accessible”

Planned Training on 2/27/25. Start converting after Audit.
What is District Finance Philosophy/Goal

Small Budget to Actual Variances OR
Always better than budget?

47 of 92

Prep Work-Revenue Changes

Develop/Know Graph or Chart of Total Revenue

Total Program components

Pupil Count
Local % vs State Equalization % - Cash Flow Issues?

Local voter-approved Mill Levy Overrides - Cash Flow?
Other Local & Specific Ownership tax
State Revenue excluding State Equalization
Federal Revenue
Transfers

Review previous year & current year Audit for budget variances. What is your process?
What is Recurring?
What is Non-Recurring?

48 of 92

Prep Work-Expenses Changes

Develop Graph or Chart of Total Expenses
By Object (Salary, Benefits, Purch Services, Supplies, Equipment, Other)
By Program (Instruction, Support services (Staff & student) General & School Admin, Business, Operations, Transportation, other

Compensation

Cost of Step & Cost of 1% to Salary Schedule.
Do you have a scattergram? Vacancy Rate?

Review previous year & current year for budget variances.
What is Recurring? What is Non-Recurring?
Develop a process to collect budget information from leaders.

49 of 92

Professional Budget Document

Sample

BUDGET TEMPLATE ON PFSU WEBSITE-Bottom left

Cover Sheet & Cover sheets for each category listed below
Executive Summary-Statement of Major Budget Objectives, Key Assumptions, Graphs and Charts of data.
3-5 talking points answering “what are the 3 major changes with the budget this year?”

All 3 Resolutions, if Applicable.
Multi Year Budget Document by: Program & Object & Revenues & Expenses per pupil.

50 of 92

Professional Budget Document

FPP Handbook-mandatory components
Multi Year Budget Document by: Program & Object & Revenues & expenses per pupil.

Uniform Budget Summary (located at bottom left under Statutory Compliance and Reporting section)

Salary Schedules & FTE Summary(staffing rules summary if using school based budgeting)

Other District Info -District Strategic Plan, Performance Framework, School Calendar, Health Benefit Guide, Bond Schedule, etc

51 of 92

Budget Planning & Preparation

Suggestion: Single page summary

Forecast Revenue Changes from Previous Year

Changes in Total Program-Count & Funding (CPI & BSF)
New or Expiring Grants
Changes in Allocation to other Funds (Food Service Cap. Rsrv.)
Mill Levy Override potentials

Forecast Expenses Changes from Previous Year

Known or Mandated

Health Insurance ()
PERA (likely up .5% to 21.9%)
Purchased Services (Liability Ins, Utilities, etc)

Variable depending upon remaining resources

Program Enhancements (New Teacher)
Compensation (Cost of Step) & (1%)

Revenue = Expense, Perfect!! Revenue>Expense, Ok Revenue<Expense, Why and what’s the plan?

52 of 92

Budget Planning & Preparation

Remember

Your job is to resource the District on behalf of students, staff and taxpayers
You’re not a policymaker
You’re not the Superintendent

You don’t get a vote!

53 of 92

Budget Planning & Preparation

Final Thoughts

A plan & knowledge of trends takes out uncertainty.

If a trend of growing Fund Balance, be more aggressive.

Inform/make BOE more comfortable with spending annual resources on that year’s students.

What is the district saving for?

54 of 92

Salary Schedule/Staffing

55 of 92

Salary Schedule Strategy

Compensation Growth vs Raise

Compensation GROWTH occurs when all components (Pay, PERA, Healthcare) increase from the previous year’s at a higher % than CPI

If CPI is 8% and Staff compensation changes 9%, the employee is gaining buying power.

Compensation RAISE occurs when all components (Pay, PERA, Healthcare) decrease from the previous year’s at a lower % than CPI

If CPI is 8% and Staff compensation changes 6%, the employee is losing buying power.

56 of 92

Salary Schedule Strategy

What is CPI and why is it important?

Consumer Price Index is an index in prices paid by typical consumers for retail goods and other items.

The Denver-Aurora-Lakewood is the US Bureau of Labor Statistics index used by State, per TABOR, that dictates State Revenue Collection, along with a Population change.

When the State collects more revenue than CPI times Population, the state has to send excess back to taxpayers

Refunds or reduction of other taxes, aka TABOR rebate.

57 of 92

Salary Schedule Strategy

CPI for Schools

CPI is known every year in Jan or Feb. CPI from the previous calendar year increases Base Funding in the Total Program calculation.

2021 applied in FY23 was 3.5%,
2022 applied in FY24 was 8%,
2023 applied in FY25 was 5.2%,
2024 Forecast in FY26 range 2.5%
2025 Forecast in FY27 range 1-2.5%
Previous 10 years, average 2.15%

How many reset salary schedules in the last few years?

58 of 92

Small Group Discussions

How competitive to neighboring districts?
What are your FTE controls?
Does District track compensation change to CPI?
Does District have a strategy revolving compensation?
Are steps a dollar amount OR % amount?
What is the % between Maximum and Minimum(size of schedule)?
Does District have strict placement policy/practice or is placement case by case?
Is your salary schedule administratively manageable?
What are you doing?
What have others done?

59 of 92

Salary Schedule Redesign

Most Licensed schedules are a Step & Lane model (mid 20th Century)
Many have $ amounts for Step and Lane movement

A higher salary staff member earns a smaller %

Steps rarely indicate years of service at the district.

There is a common belief Steps for some are a guarantee, not really. (Frozen Years?)
Formal placement policy at districts with negotiations
Can cause internal issues

Decide what Lanes are important

BA v MA
How many?

Classified schedules are often at minimum wage, sometimes adjusting in January when it changes.

Negotiated vs Non-Negotiated-widely different experience!

60 of 92

Salary Schedule Redesign

IDEAS for Sustainability

Reset all dollar amount schedules to a fixed %

Suggest 1%-1.25%, then all remaining funds will increase the base and flow through the rest of the schedule.
This will ensure all are receiving the same % of wage increase.
The more steps cost the less available to increase the base(COLA).

For Admin & classified (Licensed if you can) consider getting rid of Steps and converting to a Minimum & Max Schedule.

Set the Minimum and a fixed % for the Maximum
All receive the same % increase (Retain).
Increase the base by ½(or some %) of the pay increase to current staff. Minimum and Maximum grow every year (Attract).

Change at the beginning of the fiscal year.

Mid-Year change are too hard on Payroll person.

61 of 92

Salary Schedule Redesign-Know District’s numbers

Scattergrams-Templates on PSFU website

62 of 92

Small Group Discussions-Staffing

Does District have a class size policy, target, other?
What other licensed staff are valued?

Title I and Read Act Interventionist?
English language learnings?
Instructional Coaches?
Classroom paraprofessional, not Special Education paras?
Librarian - Licensed or paraprofessional?
Special Education staff created and adjusted?
English language learnings?
Director of Teaching & Learning?

What other non-licensed staff are valued?

Support Services
Transportation
Maintenance and Custodial

Do you have a certain program that is an outlier/Legacy from the standard K12 model?

63 of 92

Fair Labor Standards Act-FLSA

Compliance

64 of 92

-FLSA

Are all the payroll practices compliant with FSLA?

How do you know?

Exempt vs Non-Exempt
Independent Contractor
Overtime vs Comp Time

Just because someone is “salaried” does not mean they are “exempt”

65 of 92

FLSA Provisions

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. Overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek.

Under FLSA, there are three types of employees:

Non-Exempt Employees
Exempt Employees
Independent Contractors

66 of 92

FLSA - Classifying Exempt vs. Non-Exempt Employees

Any employee who is classified as exempt is not subject to FLSA overtime and minimum wage requirements.

While there are several categories of exempt workers, one thing the majority of them have in common is they must pass the Salary Level Test as part of their exemption requirements.
In Colorado, school districts/charters are exempt from Colo FLSA but NOT Federal!

Salary Level Test

In order to pass the Salary Level Test, an employee must be paid on a salary basis of no less than the standard salary level:

Current $684/week.
7/1/24 - $844/week
7/1/25 $1,128

67 of 92

FLSA - Classifying Exempt vs. Non-Exempt Employees

Any employee who passes this test is one step closer to being classified as exempt. After passing the Salary Level Test, an employee must also meet the requirements of one of the next six categories.

Executive Exemption
Administrative Exemption
Professional Exemption

Learned Professional Exemption
Creative Professional Exemption

Computer Employee Exemption
Outside Sales Exemption
Highly Compensated Employee Exemption

68 of 92

FLSA - Classifying Exempt vs. Non-Exempt Employees

Administrative Exemption

Must pass salary test first
Office/administrative work that is directly related to management of the organization
Has primary duties that include discretion or independent judgement

Computer Employee Exemption

Must pass salary test OR be compensated at $27.63/hr
Be employed as a computer analyst, software analyst, systems engineer, etc

69 of 92

FLSA - Classifying Exempt vs. Non-Exempt Employees

Non-Exempt Employees

If an employee fails to qualify for any of the above exemptions, then they are considered to be a non-exempt employee. Non-exempt employees are workers that are paid an hourly rate and are subject to the minimum wage and overtime requirements set by the FLSA.

70 of 92

FLSA Flowchart

71 of 92

FLSA - Independent Contractors

In addition to having to determine whether an employee is exempt or non-exempt, employers also need to understand the distinction between an employee and an independent contractor.
Generally, employers must withhold and pay income taxes, social security taxes, medicare taxes, and unemployment tax on wages paid to an employee. Typically, none of the previously mentioned taxes are withheld or paid on payments to independent contractors.
In short, understanding this type of classification can make a big financial difference for employers and employees alike.
Determining whether or not a worker is an independent contractor or not mainly revolves around the relationship between the employer and the worker. The IRS has a list of rules that pertain to determining that relationship.

72 of 92

FLSA - Independent Contractors

Rescinding the Independent Contractor Status Under the Fair Labor Standards Act rule (2021 IC Rule), the U.S. Department of Labor has published a final rule for classifying workers as independent contractors or employees.

To determine whether workers are employees or independent contractors under the FLSA, the final rule indicates employers must take into account six factors equally to determine if a worker is in business for themselves as a matter of economic reality.��The following six factors to be considered are:

Opportunity for profit or loss depending on managerial skill

Investments by the worker and the potential employer

The degree of permanence of the work relationship

The nature of and degree of control

The extent to which the work performed is an integral part of the employer’s business

Skill and initiative of the worker

73 of 92

FLSA - Conclusions

Final Thoughts on FLSA Status and Employee Classification

It is crucial that employers understand the distinction between different types of employees so that they can avoid any unnecessary payroll mistakes, fines, lawsuits, or damages.

Employers must look at the entire relationship and consider the extent to which they can control and direct the worker. Employers should also document all factors and common laws used to determine the relationship. ��Alternatively, any employer who can’t determine the relationship using these factors and laws can submit form SS-8 to the IRS, who will then review the factors and circumstances and make an official determination on the behalf of the employer or worker.

74 of 92

Chart of Accounts

75 of 92

Chart of Accounts(COA)

What & Why are the Chart of Accounts?

A financial, organizational tool that provides an index of every account in an accounting system.
Provides insight into all financial transactions of the organization.
5 Primary types:

Asset, Liability, & Fund Balance make up the Balance Sheet
Revenues and Expenses make up the Income Statement

Learning a Second Language
Understanding the COA is the key to success, next to clean Bank recs. If Cash is correct, then the other side is COA knowledge.

76 of 92

Chart of Accounts(COA)

Designed to “mirror” the federal COA.

CDE uploads the data to the department of Education.

Uniform standard COA for all districts, district charter schools, charter school collaboratives, charter school networks, and BOCES.
Financial Policies and Procedures Advisory committee resolves issues as they arise makes recommendations to improve reporting clarity of financial documents.
Governmental Fund Accounting
PDF or excel versions. Whatever is easier to you to search
Appendices are specific to FAQ/Issues.
Website Resource: https://www.cde.state.co.us/cdefinance

77 of 92

Basic Accounting Principles

Accounting Equation

General Ledger Trial Balance must balance to Zero.

Assets and Expenses have Debit Balances.
Liabilities, Fund Balances, and Revenues have Credit Balances.
At Close of year, Revenues & Expenses “close” to Fund Balance

Training: June 27, 2024 Governmental Accounting Basics
Website Resource: https://www.cde.state.co.us/cdefinance

78 of 92

Chart of Account Fields

For Expenditures: More description needed!

Certain Program Codes are allowed with certain Location Codes
Certain Job Codes are allowed with certain Program Codes
PSFU website: Business Rules (Tier I & Tier II) & Helpful Hints

For Revenue and Balance Sheet (Asset, Liability, Fund Balance) only: Fund, Source, and grant if applicable are needed.

79 of 92

Fund Accounting-Chart of Accounts

Trial Balance = The Object(Expense), Source(Revenue), or Balance Sheet Code has to equal 0.
The other Fields are descriptors of Expense Object, Revenue Source, Balance Sheet codes.

80 of 92

Object Codes-Expense

Expense Object Codes- Start with a “0”

0100 - Wage/Salary
0200 - Benefits
0300 - Purchased Svcs
0400 - Purch Prop Svcs
0500 - Oth Purch Svcs
0600 - Supplies & Mats
0700 - Capital Outlay
0800 - Dues/Interest/Internal/Indirect
0900 - Other Svcs/Debt Svc

81 of 92

Source - Revenue

Revenue/Source Codes

1XXX - Local Sources
2XXX - Intermediate Sources
3XXX - State Sources
4XXX - Federal Sources
5XXX - Transfers/Allocation/Other Financing

82 of 92

Balance Sheet Code

Balance Sheet Codes

6XXX - Fund Balance/Equity

672X Restricted
675X Committed
676X Assigned
6770 Unassigned

7XXX - Liabilities
8XXX - Assets

83 of 92

Chart of Accounts - Rolling to the Bold

What Level of Detail does a District need?

District chart of account code structure and definitions allow for varying degrees of detail depending upon local district wants to track and report.

For example, Salaries. 0100 is the rolled code for all salaries. There are 7 sub-segments for salaries

A district may want to track extra duty/stipend wage by using 0150 & Salaries in 0110.
Another district might be fine with all wage in one account code, 0100
Another district uses all 7 sub-segments and further detail within the varying sub-segments.

Consistency matters. Think long and hard before making any major changes.

Chart of Accounts - Appendix N: Rolling to the Bold*

* NOTE: This is also referred to ‘rolled-up’ data (2nd Tier in data pipeline)

84 of 92

Chart of Accounts - Funds

85 of 92

Location Codes-Expenses

If using 100, 200, 300, & 500s. District may want to clean up or stay consistent.

86 of 92

Special Reporting Element OR 00 -

Expense

District Optional - Pipeline has no rules regarding SREs
10-19 Instructional
22-34 match 1st 2 numbers of Program code

87 of 92

Program Codes - Expense

Instructional

88 of 92

Program Codes - Expense Non-Instructional

89 of 92

Job Codes

Needed for all Salary (01XX) & Benefit (02XX) Object codes

100 Administrator
200 Professional - Instructional/Instructional Support/Other Support
300 Professional - Non-Licensed Support
400 Paraprofessional -
500 Business/Office/Administrative Support
600 Crafts, Trades, and Services
In terms of Fair Labor Standards Act

Exempt means salary - 100/200/300
Non-Exempt means Hourly - 400/500/600

Hourly must be paid for all hours actually worked, not what they are scheduled to be paid.

90 of 92

Project/Grant Codes

Project Codes:

0001 - 2999 - Project Codes

Pipeline has no rules regarding project codes 0001-2999

Grant Codes:

3XXX’s State Grants
4XXX’s - 9XXX’s Federal Grants
Assistance Listing Numbers (ALN) F.K.A.Catalog of Federal Domestic Assistance (CFDA)

0000

91 of 92

Feedback

Thank you for attending!

Please fill out this survey to help us make these sessions the best for you.

You can also find this at the end of your workshop tool.

92 of 92

Budget Planning & Preparation

Contact for Budget Issues

Katherine Proctor - School Finance Program Manager

Email proctor_k@cde.state.co.us

Phone: 303-957-8377

Glenn Gustafson, CPA - Part-Time School Finance Program Manager

Email: gustafson_g@cde.state.co.us

Phone: 719 650 1960