Advisory Committee on Financial Management

Advisory Committee on Financial Management, Accounting and Reporting Committee

Approved Meeting Minutes – July 14, 2010

The Advisory Committee met on July 14, 2010. Members in attendance: Pat Morphew, Karsten Anderson, Nancy Schulzetenberg, Tracey Fiereck, Greg Hierlinger, Lori Mohs, Tom Wieczorek, Jeff Yeager, Janet Halonen, Angie Manuel, Rita Poulton, Cindy Longhenry, Sue Nelson and Dianna Groskreutz.

MDE Staff: Audrey Bomstad, Mary Weigel, Sarah Miller, Greg Hein and Karen Dykoski, Gene Kimball and Cathy Wagner.

The meeting was called to order by Angie Manuel at 12:11 p.m.

Mary Weigel requested adding the UFARS manual overview to the agenda. The committee reviewed and unanimously approved the agenda with the recommended addition.

The committee reviewed and unanimously approved the minutes from the May 19, 2010 meeting.

Sarah Miller provided the committee with an update from the GASB 54 committee that met on July 13, 2010. There will be 5 types of fund balances: nonspendable, restricted, committed, assigned and unassigned. The UFARS manual descriptions will need to be updated for the changes required by GASB 54. The committee thought the training for GASB 54 requirements should be conducted by the audit firms and “regions”. Plans for the next committee meeting include: checking the statutes for possible needed changes, updating UFARS descriptions, creating new UFARS codes if necessary, changing the fiscal compliance table, communicating with districts the need for creating fund balance policies, researching unique health and safety and fund 4 issues. The GASB 54 committee will meet next on August 24, 2010 from 12:00 – 3:30 p.m. (meeting location to be determined).

MDE is working on updating and enhancing the UFARS manual. The committee received draft copies of the first 2 chapters of the new manual, as well as an overview of what the new manual might look like. MDE requested feedback from the committee.

Tom Wieczorek presented the following recommendations of the UFARS Redesign Committee that met on July 14, 2010:

1. Should MDE require budget information to be reported (e.g., by July 1 of current fiscal year), and published for use by legislators and others? If yes, when to initiate and would budget info be updated during the course of the FY?
Committee Recommendation: By September 15th, the fiscal year ending (referred to as “audit year”) would report preliminary UFARS data. Since the current UFARS structure allows for budget reporting, the UFARS file will begin reporting budgeted data no sooner than FY 12.

Header Identifies FY

A = Audited
U = Unaudited
B = Budgeted (future implementation – only used after Nov 30) – the only new addition

Fields Reported

Adopted Budget (not used – may report 0 to MDE), Revised Budget, Next Year Budget, YTD Amount

Dates for UFARS Reporting (reporting may exist in between dates but are cut off and used):

September 15th – preliminary audit year UFARS data file
November 30th – final audit year UFARS data file
January date aligning with ADM/LEP estimate reporting

MDE reads only budget fields.

2. Should an additional digit be added to the object/source dimension?
Committee Recommendation: Yes – stay left justified (e.g. 100 becomes 1000). The advisory committee should work with MDE to develop the coding structure. Implementation will be no sooner than FY 12
3. Should an additional digit be added to the finance dimension?
Committee Recommendation: Yes – stay left justified. The advisory committee should work with MDE to develop the coding structure. The additional digit would not be a ‘sub-series’ but would be an assignment of another finance code. Fourth digit allows for expansion. Implementation will be no sooner than FY 12.
4. Should a second additional digit (fifth digit of the finance code) be added to the finance dimension to reflect time (e.g., federal award year)?
Committee Recommendation: Yes – stay left justified (e.g. 1000 becomes 10000). The advisory committee should work with MDE to develop the coding. Implementation will be no sooner than FY 12.
5. Should any new dimensions be added to UFARS (PPA, Time, and Project)? If so, how many digits?
Committee Recommendation: No.
6. What can be done to simplify/reduce the number of existing codes within various dimensions?
Committee Recommendation:
a. Evaluate length of time for reuse of codes (7 years).
b. Use of flowchart for determination of need for new codes.
c. Manual evaluation of existing structure and clean-up. Recommended that the
advisory committee form a subcommittee for review of existing UFARS structure.
d. Add accounting procedure section of manual.

The Advisory Committee approved the recommendations of the Redesign Committee and MDE will present to the Commissioner for review and resolution.

Gene Kimball and Cathy Wagner talked about the batch upload process being developed in SERVS. The file will be in an XML format which allows for easier management of relationships of data. The header of the file will be district specific. Districts will be able to provide either actual expenditures to be reimbursed or year-to-date expenditures. If the district provides year-to-date expenditures, MDE will pay the difference between the total expenditures and payments made previously (by finance code, object code and course code). It has not yet been determined whether the files can contain negative amounts along with the positive amounts. Currently the batch upload process is being developed to handle the ancillary data needed for medical assistance and ARRA. The information needed for contract student placement reimbursement is still a work in progress. Since LEA finance systems do not contain the ancillary data needed for certain payments, there are three possible choices being considered for reimbursement:

1) Send an extra file with the ancillary data.
2) Manually enter the ancillary data after the financial data has been submitted via the batch upload process.
3) Manually enter all the data for finance codes that require ancillary data.

Implementation of the batch upload process is scheduled for September 2010.

The committee discussed summer payrolls. IT suggested that a district may be able to load future payments into SERVS that match the payrolls being paid in July and August. These amounts would be paid automatically on the date entered on SERVS, or could be triggered on a specific day by the district. If a district has its annual audit early in the summer, there is a problem with matching revenues and expenditures. SERVS may be able to include the future payments into the report used for the reconciliation of UFARS to SERVS. IT is working on this issue.

Angie Manuel discussed allowable 2xx benefit codes in Fund 45 (Post Employment Benefits Irrevocable Trust Fund). Currently, the UFARS Chapter X unrestricted grid does not allow object code 251 (Tax Advantage Employer-Sponsored Health Arrangements – health savings accounts (HSA), medical spending accounts (MSA), health reimbursement accounts (HRA) and health flexible spending arrangements (FSA). Object 251 will be added to the grid.

Karen briefly discussed UFARS edit checks. One of the changes in the reporting process is that some code sequences that generated warnings in previous years will now be identified as errors. All warnings and errors will be identified in the UFARS turnaround documents. Errors must be fixed prior to final submission. It is possible to submit multiple files with an audit status.

A report is being developed to assist LEAs in the SERVS/UFARS reconciliation process. Expenditures on SERVS and UFARS must match at the finance, course and object code level. Revenues must also match by finance, course and source, however no report has been developed and this will be an internal MDE process.

An update was given to the committee on the UFARS submission deadline. MDE is closing FY 2010 UFARS data submissions on Tuesday, November 30, 2010 and UFARS data must be submitted by 9:00 p.m. Previously, UFARS data submissions were allowed until December 31.

MDE is in the process of analyzing prior period adjustments and other fund balance changes. We will be looking at two types of activity. First, the prior year ending fund balance must equal the current year beginning fund balance. Second, the current year beginning fund balance plus revenues minus expenditures results in a calculated ending fund balance which must equal the reported UFARS ending fund balance. Any differences identified would require a copy of the journal entries and an explanation. It was decided to change the name from “Prior Period Adjustments” to “Adjustments to Fund Balance” on the fiscal compliance table. (An update to the minutes: IT does not have the staffing available to program the necessary information in the fiscal compliance table; however, this is in the queue for next year.)

The next Advisory Committee meeting date was scheduled for Thursday, September 16, 2010, at 12:00 noon.

The meeting was adjourned at 2:15 p.m.