Advisory Committee on Financial Management

MDE Advisory Committee on Financial Management, Accounting and Reporting

Approved Meeting Minutes – March 26, 2014

Members Attending: Dianna Groskreutz , Willie Larson, Kelly Benusa, Jenny Charles, Tracey Fiereck, Chuck Herdegen, Greg Hierlinger, Lorrie Larson, Heide Miller, David Peterson, Nancy Schulzetenberg, Jeff Yeager.

Members Absent: Julie Cink, Janet Halonen, Tiffany Rodning.

MDE Staff Attending: Mary Weigel, David Day, Shannon Grindell, Patti Scott, Margaret Sullivan.

Guests: Tom Melcher, School Finance - Director and Carol Hokenson, School Finance – Assistant Director.

Call to Order: Dianna Groskreutz called the meeting to order at 12:05 p.m.

Agenda Approval: Kelly Benusa motioned to approve the agenda and Chuck Herdegen seconded the motion.

Approval of the February 19, 2014 Meeting Minutes: Subject to correction of a few misspelled names, Chuck Herdegen made the motion to approve the February 19, 2014 meeting minutes. Heide Miller seconded the motion.

New Committee Member Orientation: Tom Melcher acknowledged the ‘new’ committee members and provided an overview of the Advisory Committee on Financial, Management, Accounting and Reporting - Committee Charter which includes the statutory background, committee purpose, committee membership and operating procedures. He explained the committee was advisory in nature with a primary focus on matters of financial management and accounting. Because of its diverse representation, Dr. Melcher further explained that the committee provided a venue for the sharing of perspective with respect to financial management.

Enhancing Financial Management Tools: Carol Hokenson explained the Minnesota Department of Education (MDE) received from the legislature a two-year allocation to develop “better tools” for financial analysis. Committee member feedback focused largely on the development of revenue tools. Tracey Fiereck suggested financial management tools to provide a “full-picture of revenue” including general education aid and actual levy components. Jeff Yeager suggested an enhanced “what-if” (phase-two) that would incorporate final levy data. Carol Hokenson indicated the development of a special education “what-if” and enhanced ADM estimate tools are priorities for development. In closing, she requested additional comments or suggestions for enhanced financial management tools be forwarded by email to Terri Yetter (Terri.Yetter@state.mn.us) or Carol Hokenson (Carol.Hokenson@state.mn.us).

Electronic Transactions Question: This item is in response to a request from Margo Bauck on behalf of the MASBO legislative committee which recommended that the check endorsement language described in Minn. Stat. 471.391 Subd. 2 be updated to include electronic payments. Mary Weigel provided copies and an overview of the statutory requirement that each claim for payment from a Minnesota school district must include a signed declaration (Minnesota Statute 471.38). Mary also provided copies and an overview of Minnesota Statute 471.391 which describes the sufficiency, declaration and check endorsement.

In addition to the above statutes, Mary provided copies of Minnesota Statute 123B.02 – General Powers of Independent School Districts, Automated Clearing House (ACH) documents and a disclaimer from RICE County and an email dated March 20, 2014 from Mark Kerr, Office of the State Auditor.

Member comments followed Mary’s presentation. Nancy Schulzetenberg stated most of the districts her audit firm serves do not use electronic payments. Tracey Fiereck suggested possibly different treatments depending on the electronic transaction type. Greg Hierlinger cautioned the group that legal opinions can only be issued from the Attorney General’s office. He also indicated David Kenney’s upcoming presentation at the school district audit conference should include this topic. Mary Weigel will forward a packet of information from this discussion to Margo Bauck for additional comment.

PCORI Discussion: Tracey Fiereck presented an overview of the “Patient-Centered Outcomes Research Institute” (PCORI) fees associated with the Affordable Health Care Act. PCORI is funded, in part, by fees assessed on health insurers and plan sponsors of self-insured group plans. As Tracey explained, PCORI fees are not a permissible plan expense. For the plan year October 2013 through September 2014, the fee will be $2.00 per covered life. These fees which are scheduled to sunset in 2019 are reported and collected on IRS Form 720 – Federal

Excise Tax Return.

Following Tracey’s overview, the committee discussed the accounting for PCORI fees in Uniform Financial Accounting and Reporting Standards (UFARS). It was suggested that Object Code 896 – Taxes, Special Assessments and Interest Penalties may be the best fit for reporting these fees. Mary Weigel would discuss this matter with Tom Melcher before any recommendation would be implemented. Finally, it was recommended that the May agenda include a more complete discussion of “transitional reinsurance fees” also associated with the Affordable Health Care Act.

Single Sign On: Patti Scott distributed a draft copy of the “Superintendent Authorization for UFARS File Upload Secure Site.” She emphasized the form must be signed by the superintendent and submitted directly by the superintendent to MDE. Committee members requested that the reference to superintendent be updated to include other organizational equivalents. Because this is a draft copy, committee members were encouraged to email any suggested changes or comments to: MDE.UFARS-SingleSignOn@state.mn.us. The UFARS File Upload Secure Site will be effective for the 2014 UFARS file uploads.

MAFA Manual Update: David Day indicated the MAFA manual project has been revived and subcommittee members met March 20, 2014. A list of the subcommittee members was distributed; Kris Blackburn, Chair. David outlined the subcommittee’s three objectives which are to organize, simplify and clarify the MAFA Manual. Advisory board members are encouraged to contact subcommittee members with any suggestions or comments.

Call for March Agenda Items: Certificates of Participation (COP), Alternative Facilities course code, OPEB Bonds, Transitional Reinsurance fees, and a MAFA update.

Adjournment: Tracey Fiereck made the motion to adjourn the meeting and Jeff Yeager seconded the motion. The meeting was adjourned at 1:55 pm.

The next Advisory Committee Meeting is scheduled for May 28, 2014 at 12:00 noon to 4:00 p.m. in Room CC18.