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Systemwide Revenue Bonds (SRB) and Capital Projects

Systemwide Revenue Bonds (SRB) and Capital Projects. Kathy Skara Year-End Legal Training May 2010. SRB (Systemwide Revenue Bonds) Audit Starts with FIRMS Legal data. It is critical to ensure our legal data is consistently reported so that we have a smooth SRB audit.

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Systemwide Revenue Bonds (SRB) and Capital Projects

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  1. Systemwide Revenue Bonds (SRB) and Capital Projects Kathy Skara Year-End Legal Training May 2010

  2. SRB (Systemwide Revenue Bonds) Audit Starts with FIRMS Legal data • It is critical to ensure our legal data is consistently reported so that we have a smooth SRB audit. • There should never be any SRB-related activity recorded in CSU Fund 461: TF-Associated Student Body Trust • This CSU Fund is used to collect the ASB fee on behalf of the Associated Students auxiliary organization and transfers the funds to the auxiliary organization. Refer to RMP Implementation Guide #21 ASB Fee Document at http://www.calstate.edu/BF/rmp/ • ASB Fees are different from Student Union Fees.  Student Union Fees should be captured in CSU Fund 534.  The two fees should not be co-mingled. Year-End Legal Training

  3. SRB Audit Starts with FIRMS Legal data • CSU Fund 534: TF Campus Union-Operations and Revenue • Return of Surplus (ROS) Check(s) to the Auxiliary Student Unions should be recorded to object code 660045: Return of Surplus. • Please email scanned copies of check(s) AND all backup to Terri M. Williams tmwilliams@calstate.edu • Before year end close, compare the dollar amount recorded in object code 660045 with total checks issued. If the dollar amount doesn’t match, please adjust your books accordingly. • The dollar amount in your general ledger for ROS should tie to your check copies plus any other AP disbursements like a wire. May 2010 Year-End Legal Training 3

  4. SRB Audit Starts with FIRMS Legal data  CSU fund 537: TF Auxiliary Org.-Operations and Revenue is mainly for SRB related activity. • If you have non-SRB transactions (Deposits held for an auxiliary org that is not a Campus Union) the PS fund need a special FNAT key, FNAT #127073 • FNAT #128893 for SRB Transactions, which maps toProject SRB00 May 2010 Year-End Legal Training 4

  5. Capital leases Auxiliary Organizations (CSU Fund 537) • For debt issued PRIOR to January, 2008 • Principal payment: • No lease receivable is established in legal; record payment to object code 580098 "auxiliary lease principle payment", mapped to GAAP account 723006. • Interest payment: • Record payment to object code 508001 "Income from external investments", mapped to GAAP account 723003. • Please do NOT record May and June accrual of the Auxiliary Base Rental interest payment in legal. This will be a GAAP accrual. May 2010 Year-End Legal Training 5

  6. Loans Auxiliary Organizations (CSU Fund 537) • For debt issued AFTER to January, 2008 • Senate Bill 855 provides the authority to issue bonds on behalf of auxiliaries • Now a loan and no longer a capital lease • Loan between the CO and the auxiliary directly; campus acts as an agency only and the receipt of auxiliary base rental payments should not have a P&L impact to campus books. • Receipts of Auxiliary Base Rental Payments and Interest Payments should be credited to object code 250002, unclear collection (other current liability). • When the payments are remitted to the CO, debit the object code 250002 (other current liability). May 2010 Year-End Legal Training 6

  7. Fund Balance Clearing • Reminder: adjustments to FBC will cause your SAM99 to be out of balance • For specific questions regarding this issue please contact: • Brian Lee • Lead Revenue Bond Accountant • (562) 951-4399 or blee@calstate.edu May 2010 Year-End Legal Training 7

  8. Spend Down of State Funds • Continue to spend down 575: State College Dorm Bldg Maint. and Equip. Res. Fund. • Terri M. Williams • Revenue Bond Accounting and Financial Reporting Supervisor • (562) 951-4386 or tmwilliams@calstate.edu • Brian Lee: • Lead Revenue Bond Accountant • (562) 951-4399 or blee@calstate.edu May 2010 Year-End Legal Training 8

  9. Capital Projects Funding Sources CSU Funds Capital Projects – Cash Transfer Letters (CTL), Allocation Orders (AO) and Claim Schedules Project Completed Outstanding Accounting Issue – purging old inactive funds Accounting Issues What’s New - BABs May 2010 Year-End Legal Training 9

  10. Funding Sources • A construction project, “Capital Projects”, must have separate and distinct “accounts” (sub funds) for each of the different funding sources: • Bond Anticipation Notes (BAN)/Commercial Paper (CP) - Short-term debt issued usually to fund projects during construction period. • Systemwide Revenue Bonds (SRB) - Long-term debt to fund construction projects. • General Obligation (GO) Bonds - Legislation approved by voters. Also known as Higher Education Bonds • Lease Revenue Bonds -Public Works Board • Fee Revenue Funds • Donor Funds • 2-7 Form, which is the project budget, contains the funding sources May 2010 Year-End Legal Training 10

  11. Capital Projects CSU Funds • Active GO Bonds (Higher Education) • 574-318 • 785-338 • 6028-319 • 6041-320 • 6048-321 • Lease Revenue Bonds - Public Works Board • 660 - 310 • Dormitory Construction Fund (State fund 576) SRB • Housing – 221 • Parking – 222 • Aux Facilities (Health) - 223 • Student Union – 224 • Donor – 225 • Aux Organization – 228 • Continuing Ed (CERF) - 229 May 2010 Year-End Legal Training 11

  12. Capital Projects Allocation Orders Our Finance & Treasury (F&T) Department requests Cash Management Office (CMO) to issue an allocation order granting spending authority to the campus. The Request for Allocation Order from the F&T Department, and the Cash Transfer Letter issued by our Systemwide Financial Accounting group, will be forwarded to the campus by the Cash Management Office. May 2010 Year-End Legal Training 12

  13. Capital Projects Allocation Orders Note: This process is repeated throughout the construction phase as new AOs are requested and approved. SFO records allocation orders in Agency 6620. The CO Capital Projects fund accountant sets up and adjusts the budget in the expenditure account (bond sub-fund) for the amount allocated to the campus. Campus posts the allocation order as an authority to spend. May 2010 Year-End Legal Training 13

  14. Allocation Orders • Entries for Allocation Orders Pending - All Funds • Allocation orders pending are to be journalized in the appropriate General Ledger using the following account controls: • FIRMS Object 404001 Allocation Orders - Pending • FIRMS Object 404002 Reserve for Allocation Orders - Pending • If the SCO expenditure allotment is UNDER (less than) campus expenditure allotment, there will be a CREDIT balance in FIRMS Object 404001. If the SCO revenue allotment is UNDER (less than) campus revenue allotment, there will be a DEBIT balance in FIRMS Object 404001. • An allocation order pending is a required year-end report. • These entries must be reversed July 1. 14

  15. Cash Transfer Letters (CTL) Capital Projects • For GO (Higher Education) Bonds • All Cash Transfer Letters (CTL) are available on the CO website. CPDC assigns the specific CTL based on the project’s funding source. http://www.calstate.edu/sfo/Cash_Transfer_Forms/index.shtml • A claim schedule must have a certification letter from CPDC and a CTL. • For Dormitory Construction Fund 576 • The Campus will receive the Allocation Order with the CTL attached. May 2010 Year-End Legal Training 15

  16. Cash Transfer Letters (CTL) Capital Projects • Need a CTL for Bond funds and Commercial Paper (BAN) • To Claim schedule funds • To Abate funds • To PFA funds • Or any transaction that moves money between funds • No CTL for Fee Revenue funds or Donor funds May 2010 Year-End Legal Training 16

  17. CTL Web Site for Higher Education Bonds • http://www.calstate.edu/sfo/Cash_Transfer_Forms/index.shtml May 2010 Year-End Legal Training 17

  18. CTL Forms for Higher Education Bonds/GO Cash Transfer Letter Forms May 2010 Year-End Legal Training 18

  19. Capital Projects Claims When filing a claim against a BAN or Bond funding source, a CTL must be included or the claim will be rejected. Campus must not file a claim against a BAN funding source when the BAN account has been closed to a Bond account, or the claim will be returned. May 2010 Year-End Legal Training 19

  20. Capital Project Project Completed • When a project is completed, a “Notice of Completion” will be filed; then, the campus needs to notify F&T. • Once claims and encumbrances have been satisfied, balances will be de-allocated. • Bond funds will be transferred to Dormitory Interest & Redemption Fund (DIRF) and fees and donor funds will be returned to campus revenue. May 2010 Year-End Legal Training 20

  21. Outstanding Issue • Closing out Trial Balance - Fund Balance Clearing • CO Capital Projects group will work with campuses on the proper JE to purge inactive funds. • Contact Bill Pittman • Capital Projects Lead Accountant • (562) 951-4612 or bpittman@calstate.edu May 2010 Year-End Legal Training 21

  22. Accounting Issues • Campuses often use the incorrect year for revenue accounts on cash transfer letters (CTL) submitted to the state. This requires the Chancellor’s Capital Projects Accounting group to make a correct journal entry to each instance. • Campuses sometimes use the incorrect CTL • Choosing the wrong CTL from the web for Higher Education Funds • Not using the CTL provided with the AO for Fund 576 • Make sure the right people are on the distribution list to receive the CTL with the allocation order in order to ensure the campus is using the right one. May 2010 Year-End Legal Training 22

  23. CTL – Using the Correct Fiscal Year For Example CFY = 2009 For period July 1, 2009 through June 30, 2010 CFY May 2010 Year-End Legal Training 23

  24. What’s New – BUILD AMERICA BONDS American Recovery & Reinvestment Act of 2009(ARRA) created Build America Bonds (BABs). With the 2010B SRB, the CSU issued BABs - taxable debt whereby the CSU will receive a 35% tax credit subsidy of interest expense payments (bi-annual) from the Federal Government. Campuses will receive the subsidy via a CPO from the CO the same day that the CO receives the subsidy. Campuses will continue to be charged the full taxable interest expense amount by the CO through the centrally paid direct costs process. Very Important - When the campuses receive the CPO for the subsidy, they will be book it to “other revenue” – object code 580090. BABS May 2010 Year-End Legal Training 24

  25. BABS 2010B SRB Issuance • It is important to remember that BABs proceeds can’t be used to pay indirect costs, only capital project direct costs incurred after March 1, 2009. • All costs both direct and indirect incurred prior to March 1, 2009 must be paid out of non-BABs (2010A series) proceeds. May 2010 Year-End Legal Training 25

  26. www.calstate.edu Year-End Legal Training

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