DPI UPDATE SPRING FINANCE WORKSHOP at the WASBO Accounting Seminar

1. DPI UPDATESPRING FINANCE WORKSHOPat the WASBO Accounting Seminar March 21, 2012 DPI School Finance Team http://sfs.dpi.wi.gov

2. Welcome • A welcome and thank you – to you! • Where the SFS Team is headed: • New on-line reports for Ch. 220 and Foster/Group home; • New Annual/Budget report incorporating Special Ed – tentative 2013-14; • Continued communication and help to districts.

3. Thank you – to SFS Staff • Assistant Director: Deb Brown; • Consultants: Erin Fath, Brad Adams, Bob Avery, Paul Dix; • Accountants: Michele Tessner, Victoria Chung; • Auditors: Gene Fornecker, Brian Kahl; • IS Specialists: Daryl Miller, Dan Parizo; • Office Op Assistant: Trish Hibbard

4. UPDATES: • Changes to Revenue Limits • Energy Efficiency Exemption • 2012-13 Pre-Populated Worksheet • Changes to Open Enrollment • 2012-13 Per Pupil Adjustment Aid • WUFAR Changes • OPEB Changes • Online Fraud Reporting • Special Education • Odds and Ends

5. Changes to the Energy Efficiency Exemption 2012-13 REVENUE LIMIT

6. Energy Efficiency Exemption • Wis. Stats. §121.91(4)(o)1 • If a school board adopts a resolution to do so, the limit otherwise applicable to a school district under sub. (2m) in any school year is increased by the amount spent by the school district in that school year on a project to implement energy efficiency measures or to purchase energy efficiency products, including the payment of debt service on bonds or notes issued to finance the project, if the project results in the avoidance of, or reduction in, energy costs or operational costs, the project is governed by a performance contract entered into under s. 66.0133, and the bonds or notes issued to finance the project, if any, are issued for periods not exceeding 20 years.

7. Energy Efficiency Exemption NEW for 2011-12 (2011 WI Act 32) • Two new clauses • Allowable to pay for debt service • Performance contracting requirement • Performance contracting is not dependent on the debt clause • Required for ALL projects being executed in conjunction with the revenue limit exemption

8. Energy Efficiency Exemption • Because of the timing of this new requirement, in 2011-12 districts will not be penalized if they do not have performance contracts in place; • Beginning with 2012-13, districts will be required to certify to the Department that they are complying with this requirement.

9. Energy Efficiency Exemption NEW for 2011-12 (2011 WI Act 32) • REQUIRES Performance Contracting, as defined in §66.0133 • DPI does not oversee this requirement • But we require that districts certify they have met this requirement. • DOA has information available for state agencies that may provide useful background information for school districts • Go to: www.doa.state.wi.us and search for “performance contracting” in the keyword search at the bottom of the page. • Including contractors approved to meet state performance contracting requirements

10. Energy Efficiency Exemption NEW for 2011-12 (2011 WI Act 32) • May be used for debt service payments • Debt may be issued up to 20 years • Does not change the requirements / statutes related to the $1M limit on non-referendum debt • Limit may be exceeded if district allows for a petition period to take the issue to referendum

11. Energy Efficiency Exemption NEW for 2011-12 (2011 WI Act 32) • Debt service payments (cont) • Requires annual resolutions by the district board of education to exceed the revenue limit by the amount of the payments. • Resolutions must be filed with DPI through the referendum reporting portal.

12. Energy Efficiency Exemption NEW for 2011-12 (2011 WI Act 32) • Debt service payments (cont) • Treated the same way non-recurring referenda are treated on the revenue limit worksheet.

13. Energy Efficiency Exemption NEW for 2011-12 (2011 WI Act 32) • Debt service payments (cont) • Setting the levy: • Statute requires that any revenues generated through this exemption be expended within the fiscal year. • The exemption will therefore equal the debt service payments being made based on the fiscal year. • Debt service levies will continue to be calculated on a calendar year basis. • Exemption may not equal total Fund 38 levy.

14. Energy Efficiency Exemption NEW for 2011-12 (2011 WI Act 32) • Debt service payments (cont) • If the district intends to use savings realized from the efficiency program to offset the debt service payments and not levy for that, it may do so without using the revenue limit exemption. More information is available at http://sfs.dpi.wi.gov/sfs_enrgyrevlim

15. Pre-Populated Worksheets 2012-13 REVENUE LIMIT

16. 2012-13 REVENUE LIMIT • 2012-13 pre-populated worksheets are now available for districts to use for planning: • http://sfs.dpi.wi.gov/sfs_revlimworksheet • Select “2012-13 Pre-Populated Revenue Limit Worksheet”

17. 2012-13 REVENUE LIMIT The Pre-Populated worksheet includes: • Line 1, Base Revenues • Line 2, Base Membership • Line 7B, Hold Harmless (very few districts) • Line 8A, Prior Year Carry-Over • Line 12B, High Poverty Aid

18. 2012-13 REVENUE LIMIT District must estimate: • Summer and September 2012 FTE • Property Values • Recurring exemptions [“Line 8”] – transfer of service / transfer of territory, federal impact aid loss & referenda to exceed limit (note: prior year carryover amount is already calculated in the worksheet) • Non-Recurring exemptions [“Line 10”] – referenda to exceed limit, energy efficiency, adjustments for refunded/rescinded taxes (note: declining enrollment exemption will auto-calculate based on enrollment estimates provided by district).

19. 2012-13 REVENUE LIMIT At this point, the revenue limit worksheet will help districts get to an amount for Line 11, “Revenue Limit With All Exemptions”: • Provides an estimate of the total amount of revenue for State General/High Poverty Aid plus the district’s controlled levy • District’s can input amounts for state aid to estimate the split between aid and levy.

20. 2012-13 REVENUE LIMIT Updates to Pre-Populated worksheet • May – after membership audits for 11-12 are completed • July – after July 1 Aid Estimate • SAFR will be closed in mid-June to generate these estimates • Important to update PI-1504 before the system is locked to generate as accurate an aid estimate as possible.

21. Change to Open Enrollment 2012-13 REVENUE LIMIT

22. 2012-13 REVENUE LIMIT VERY NEW FOR 2012-13 • 2011 Act 114, passed in February 2012, provides for a new revenue limit exemption: • Districts may receive an exemption for the dollar amount of state aid reduction related to the Open Enrollment (OE) program, for resident pupils who open-enrolled out of the district, but who were NOT counted by the district in the pupil count for revenue limit purposes. • Effective for this year (2011-12), but the exemption occurs in the following year ; so the first year for exemption will be 2012-13.

23. 2012-13 REVENUE LIMIT OE Exemption, 2012-13 • How might this happen? • Pupil open-enrolls at some point after the pupil count for revenue limit calculation. Under Act 114, the OE application window is expanded (1st Monday in February through the last weekday in April) and a pupil may apply outside the newly expanded window if they meet specific criteria laid out in statute.

24. 2012-13 REVENUE LIMIT OE Exemption, 2012-13 • Criteria for applying outside the window: • Pupil is victim of violent criminal offense • Pupil is homeless (or was in immediately preceding year) • Pupil is victim of repeated bullying or harassment (parent has reported to resident district board, hasn’t stopped) • Change of residence – military orders • Pupil moved into the state • Change of residence (court order, custody/foster placement) • Pupil’s parent, resident and non-resident district school boards all agree it is in the best interest of the pupil. • Pupil’s parent & non-resident district agree (best interest of pupil) but resident district doesn’t; parent can appeal to DPI. Statutory language: ss. 118.51(3m)(b)

25. 2012-13 REVENUE LIMIT OE Exemption, 2012-13 • How might this happen? 2. Error in the pupil count: resident pupil who open-enrolls out is inadvertently missed in the pupil count that is used for the revenue limit calculation. This can occur if an OE pupil’s family moves to a different resident district, but the new resident district is not made aware of the move. • It will be incumbent upon the resident district to show DPI that an OE-outgoing pupil was actually missed in the pupil count (i.e., student rosters). • This underscores the importance of communication between districts for OE pupils.

26. 2012-13 REVENUE LIMIT

27. Per Pupil Adjustment Categorical Aid … 2012-13 REVENUE LIMIT

28. 2012-13 PER PUPIL ADJUSTMENT AID • For 2012-13 only, the state has created a one-time aid. • Essentially a “matching grant” to the per pupil adjustment on line 4A of the revenue limit worksheet. • Is outside the revenue limit, and is not included when calculating the base for 2013-14.

29. 2012-13 PER PUPIL ADJUSTMENT AID • Revenue Limit worksheet has been modified to provide districts with • A calculation of the maximum possible amount of PPA Aid • An estimate of actual PPA Aid, based on levy projections entered on the worksheet. • Also shows these numbers on a per pupil basis.

30. 2012-13 PER PUPIL ADJUSTMENT AID District levies to full authority and is eligible for full aid amount

31. 2012-13 PER PUPIL ADJUSTMENT AID • Is pro-rated in the event the district under-levies • If don’t use the additional levy authority from the Line 4A adjustment, won’t receive the “matching grant”

32. 2012-13 PER PUPIL ADJUSTMENT AID District under-levies to and is eligible only for a pro-rated aid amount

33. 2012-13 PER PUPIL ADJUSTMENT AID • Is pro-rated in the event the district under-levies • EXCEPTION: If the district has carry-over authority (Line 8A) from the prior year, can under-levy by that amount before pro-ration begins.

34. 2012-13 PER PUPIL ADJUSTMENT AID District under-levies by less than the Prior Year Carry-Over amount and is eligible for full aid amount

35. 2012-13 PER PUPIL ADJUSTMENT AID • Lines 21 A & B provide a calculation on a per pupil basis of the aid. • A) shows the revenue limit per member, less any carryover. • B) shows the amount of revenue limit authority the district is using per member. • B may be greater than A if there is carryover! • When B is less than A is when pro-rating kicks in.

36. 2012-13 PER PUPIL ADJUSTMENT AID District levies to full authority and is eligible for full aid amount • District under-levies to and is eligible only for a pro-rated aid amount. • The difference between Ln A and Ln B = $32.47/pupil • 616 pupils in this example • $20,000 net difference ($32.47 X 616).

37. wufar changes

38. WUFAR CHANGES • No new accounts added • No accounts deleted • Clarifications to WUFAR manual: • Section 504 expenditures should be accounted for in Fund 10, Function 219000 (not Fund 27) • Stipends paid: • Object 310 for non-district employees • Object 100 for district employees

39. WUFAR CHANGES • Clarifications (cont’d) • Instructional staff training…Function 221300 • Object 291 for staff reimbursements • Object 300s for direct district payments • Reminder: Do not charge staff training costs to instructional functions (100000) as this could result in overpayment of special education categorical aid • Be sure to use the most up to date WUFAR and review appendix for changes made • http://www.dpi.state.wi.us/sfs/wufar.html

40. opeb changes

41. OPEB CHANGES • Significant changes to the structure of district employee benefits should result in a new actuarial study to properly calculate the ARC and unfunded actuarial accrued liability • New study is required every 2 to 3 years depending upon size of OPEB plan • 200 or more participants—biennially • 200 or less participants—triennially • Don’t wait until last minute to hire an actuary • Ask for and check references provided

42. OPEB CHANGES • What happens to OPEB trust assets if no future liability exists? • Consult the trust document for any language addressing this situation • Consult with legal counsel

43. OPEB CHANGES • If a district terminates all retiree benefits for current employees how do the contributions to the Trust for retirees get allocated among funds assuming that some retirees were non-Fund 10 employees? • Contributions to the trust would be allocated based upon current active employees and since no current employees would qualify for a future OPEB benefit then all contributions should be charged to Fund 10

44. on-line fraud reporting

45. ONLINE FRAUD REPORTING • The term ‘Fraud’ refers to an intentional act by one or more individuals among management, those charged with governance, employees, or third parties, involving the use of deception to obtain an unjust or illegal advantage • The term ‘Errors’ refers to unintentional misstatements of amounts or disclosures in financial statements

46. ONLINE FRAUD REPORTING • Reporting of fraud • The disclosure of possible fraud to parties other than the client’s senior management and those charged with governance ordinarily is not part of the auditor’s responsibility and ordinarily would be precluded by the auditor’s ethical or legal obligations of confidentiality unless the matter is reflected in the auditor’s report

47. ONLINE FRAUD REPORTING • In the following circumstances a duty to disclose to parties outside the entity may exist: • Comply with certain legal and regulatory requirements • To a successor auditor when the successor makes inquiries • In response to a subpoena • To a funding agency or other specified agency in accordance with requirements for the audits of entities that receive governmental financial assistance

48. ONLINE FRAUD REPORTING • Wisconsin State Single Audit Guidelines requires: • management to report fraud to the granting agency and for taking timely and appropriate action to remedy the fraud (Sect 2.1.4) • Auditor should report fraud or evidence that fraud may exist to appropriate level of auditee’s management (Sect 3.6.2)

49. ONLINE FRAUD REPORTING • Wisconsin State Single Audit Guidelines requires: • Auditor must report fraud to granting agency in 2 situations (Sect. 3.6.3): • If auditee does not report to the granting agency • If auditee does not take timely and appropriate steps to remedy the fraud

50. ONLINE FRAUD REPORTING • If fraud or other misconduct involved funding provided under the American Recovery and Reinvestment Act (ARRA), the agency shall send written notification to the Inspector General of the federal agency that provided the funds • Links to the OIG fraud hotline will be available on several DPI webpages