WUFAR Coding for Technology, Debt, and Other Common Inconsistencies

1. WUFAR Coding for Technology, Debt,and Other Common Inconsistencies Terry Casper, Accountant Jillian Raff, Auditor School Financial Services Team March 2019

2. WUFAR Technology Coding

3. Why the Change? The US Census Bureau in 2015 began requesting additional detail for technology related expenditures as part of the Fiscal Survey F-33 New codes are required for FY 18-19

4. New Technology Functions 221500 Instruction Related Technology • Technology for instructional support (e.g. technology centers, computer labs, technology integration) • Classroom technology used by students or that have a instruction focus are coded to 100000 function • Library Media technology coded to 222000

5. New Technology Functions 295000 Administrative Technology Services • “Central IT” costs (e.g. network, servers, IT support, IT director salary & benefits, Microsoft or Google licenses for all staff) • Likely you were using 266000 for these costs

6. Object Changes 320 broken into 3rd digit detail objects • Technology and non-technology services split out • (repairs/maintenance and rentals/leases) • Rentals moved from 500 series to 320 series • Construction services are 327 • Cleaning services are 329 • 380s still used for inter-governmental payments for services (districts, CESAs, etc.)

7. Copier Leases Operating lease or initial year of capital lease are Object 322 Per page fees / maintenance agreements are Object 321

8. Site and Building Rentals Sites moved from 517 to 326 Buildings moved from 537 to 328 Used exclusively with Function 255000- Renting in lieu of ownership

9. Software Three options for software (including subscriptions, apps, ebooks) • #1: 360 Technology & Software Services • Usually involve subscription or periodic fees • Buying use of software for a period of time,as opposed to owning it • Software as a service, cloud-based computing, etc.

10. Software Three options for software #2: 480 Non-Capital Technology (Optional local 483 Non-Capital Software) • Software your district actually owns, including one-time “perpetual” fee below capitalization threshold • No difference between instructional and non-instructional • (object 435 has been deleted)

11. Software Three options for software • #3: 582 Technology Software • Software your district buys and owns with unit cost above your capitalization threshold

12. 400 and 500 series Non-capital and capital objects If technology 480s*, 581, 582 If not technology remain in usual 400 and 500 • *Optional local objects and used for WISEgrants: • 481 for technology supplies482 for non-capitalized technology hardware483 for non-capitalized technology software

13. Common School Fund (CSF) No longer using object 430s to track eligible CSF expenses. Local optional 435 and 436 have been deleted Project code 031 has been created to track CSF purchases

14. WUFAR CODING FOR DEBT

15. WUFAR Debt Funds Non-Referendum Debt • Fund 38 • No referendum required • Levy for debt payment INSIDE revenue limit Referendum Approved Debt • Fund 39 • Debt issued with voter approval • Levy for debt payment OUTSIDE revenue limit

16. Relevant WUFAR Codes SOURCES • Long-term proceeds: • 873 – Notes • 874 – State Trust Fund Loans • 875 – Bonds • 878 – Capital Lease • 879 – Premium from Debt Refinancing • 968 – Premium on Non-Refinancing Debt OBJECTS Long-Term Payments: Principal 673 – Notes 674 – State Trust Fund Loans 675 – Bonds 678 – Capital Lease Interest 683 – Notes 684 – State Trust Fund Loans 685 – Bonds 688 – Capital Lease Other Debt Payment 690 – Other Debt Retirement

17. Relevant WUFAR Codes • Function Codes are extremely important • 281000 • Normal debt service payments for long term capital debt and capital leases • Payments become part of district shared cost calculation • 282000 • Expenditures for payment of existing long term obligations through issuance of long term debt (Refinancing/Refunding) • Payments DO NOT become part of district shared cost calculation • 283000 • Expenditure of interest related to cash flow borrowings

18. Sample Cash Flow Borrowing Journal Entries DEBT ISSUANCE WITH PREMIUM JOURNAL ENTRY DEBT SERVICE PAYMENTS JOURNAL ENTRY

19. Sample Cash Flow Borrowing Journal Entries Remember accrued interest payable is recorded at the end of fiscal period for unpaid interest cost. Accrued interest = (days outstanding/total days) * interest rate * balance • When interest is paid after year end, the accrued interest payable is reversed.

20. Sample Bond Journal Entries DEBT ISSUANCE WITH PREMIUM JOURNAL ENTRY DEBT SERVICE PAYMENTS JOURNAL ENTRY

21. Sample Note Journal Entries DEBT ISSUANCE WITH PREMIUM JOURNAL ENTRY DEBT SERVICE PAYMENTS JOURNAL ENTRY

22. Sample BAN & NAN Journal Entries DEBT ISSUANCE WITH PREMIUM JOURNAL ENTRY The classification of the Anticipation Note is determined by the eventual type of debt to be issued after the Anticipation Note is retired, but both are promissory notes. Therefore, use sources and objects for BAN and NAN transactions end in 3.

23. Sample State Trust Fund Loan Journal Entries DEBT ISSUANCE DEBT SERVICE PAYMENTS JOURNAL ENTRY

24. Bond Refinancing Transaction NEW BOND ISSUANCE PAYOFF OF REFINANCED DEBT

25. Bond Refinancing Transaction If principal and interest payments occur in the same fiscal year as the refinancing, the cash received as calculated above must be applied to principal or interest payments for this issue using Function 282000. If no principal and interest payments occur in the same fiscal year as the refinancing, the cash received must be coded to Fund Balance Restricted for Refinancing – 936310 at year end. In the subsequent fiscal year, the balance in 936310 must be applied to principal or interest payments as a 282000 function.  For example, if the total interest payments are $50,000 but a balance of $5,000 was remaining in 936310, $45,000 would be coded to Function 281000 and $5,000 would be coded to Function 282000.

26. Bond Refinancing Transaction DEBT REPORTING PORTAL The bond debt schedule refinanced in the example should be adjusted to look like the below: The “Refinanced Principal Adjustment” Column must be entered as a negative number.

27. Bond Refinancing Transaction DEBT REPORTING PORTAL • The district needs to enter a new debt schedule for the new debt issued. • The first line of the new debt schedule in the example would look like the below: • The first payment was adjusted to record $5,000 of interest in the 282000 function and “Refinanced Interest Adjustment” column. This is the amount of cash that was received in the refinancing transaction.

28. Sample Bond Defeasance Cash Defeasance Uses levied funds or cash on hand to make a prepayment of debt Removes portion of debt as a legal liability of the district once the escrow closes Eligible as a shared cost the year the escrow is funded DEBT SERVICE PAYMENTS JOURNAL ENTRY

29. COMMON INCONSISTENCIES

30. Fund 21 Negative Fund Balances • Not allowed in fund 21 • The gift must occur either prior to or in the same year as the expenditure is reported • If gift has not been received, but expenditure is made, record in fund 10.

31. Deferred Revenue • Gifts, grants, donations, contributions, etc recorded in source 291 are generally voluntary non-exchange transactions. • Voluntary non-exchange transactions are recognized as revenue when measurable and available. • Purpose restrictions specify the purpose for which the funds are to be spent, but do not affect revenue recognition.

32. Source 971 Included • Prior year expenses refunded in the current year. • Prior year and current year rebates, such as p-card, e-rate rebates, food service rebates, and focus on energy rebates • Worker’s compensation dividends • Insurance refunds • BAB, QZAB, and QCSB interest subsidies are recorded here in the year received.

33. Source 971 Not Included • Adjustments related to prior year accounting errors (969) • Insurance proceeds from equipment loss (860) • HRA and Flex plan forfeitures (990) • Sale of district property (260 or 860)

34. Object 971 Included • Repayments of Medicaid resulting from a prior year Medicaid Settlement • Repayment of prior year revenues Not Included • Adjustments related to prior year accounting errors (969) • Write-off of previously recorded revenues (969)

35. Source 990 Included • HRA and flex plan forfeitures • Timber sales • Wind turbine revenue • Teacher contract termination penalties • Lawsuit settlement proceeds • Credit card fee revenue

36. Source 990 Not Included • Current year or prior year rebates including current year focus on energy rebates, credit card rebates (971) • Sale of district property (260 or 860) • Rental of district property, including land (293) • Gifts, grants, donations, fundraising (291)

37. Source 969 Included • Adjustments related to prior year accounting errors • Early lease terminations and trade-ins Not Included • Used to transfer between funds (only appropriate sources with 410000 transfer functions)

38. Object 969 Included • Adjustments related to prior year accounting errors. • Early lease terminations and trade-ins • Write-off of previously recorded receivables Not Included • Used to transfer between funds (only appropriate sources with 410000 transfer functions)

39. TEACH Grants Recorded in Source 699 if received directly from DOA Recorded in Source 515 if received through CESA consortium Recorded in Source 315 if received through district consortium

40. Contacts and Resources Terry Casper, Accountantterry.casper@dpi.wi.gov, 608-267-9218 Jillian Raff, Auditorjillian.raff@dpi.wi.gov, 608-267-7882 WUFAR https://dpi.wi.gov/sfs/finances/wufar/overview