CASH SD Workshop October 5, 2017 Eric Hall CASH Past Chair, Eric Hall & Associates CASH Workshop Making the School Facility Program Work for You Thursday, October 26 th – Hilton Garden Inn Redding • Thursday, November 2 nd – Sonoma County Office of • Education 1
CASH SD Workshop October 5, 2017 Register for the Fall Conference which will be held at the Duke Hotel in Newport Beach. Go to www.cashnet.org for more info. 2018 201 CAS CASH /AIA /AIACC Leory Leory F. . Gr Green eene Design Des gn & & Planning Planning Awar Awards ds Current Entries Williams + Paddon Showcase your K-12 Design Architects + Planners project at the CASH Annual Conference! Quattrocchi Kwok Architects Gelfand Partners Architects ♦♦♦ Entry Entry Fee Fee due: due: Friday, Friday, WLC Architects, Inc. September Septe 29 29 th th th (tomorr Octob October 6 6 th (tomorrow!) w!) JK Architecture Engineering Proje Pr oject due: due: Friday Friday, Octob October BCA Architects 27 27 th th BakerNowicki Design Studio 2
CASH SD Workshop October 5, 2017 Speakers Speak directly into the microphone. Repeat audience questions during the Q & A session so that the full audience can hear what is being asked as well as the answer. Avoid using acronyms. Directory of Acronyms can be found in the back of the room. Housekeeping This workshop qualifies for AIA continuing education. Turn off or silence cell phones. Emergency exit and restrooms. Please complete your workshop evaluations. Lunch will be served in the Solana Room. 3
CASH SD Workshop October 5, 2017 New New Requir Requirements ements – – Why Why Do Do They They Ma Matter tter Now? Now? Eric Hall CASH Past Chair, Eric Hall & Associates New New Requir Requirements ments – Why hy Do Do They They Matter Ma tter Now? Now? State Audit of OPSC was initiated in 2016. “The Office of State Audits and Evaluations (OSAE)” conducted the audit. OSAE is within the Department of Finance (DOF). OSAE found fault with OPSC’s audits. 8 4
CASH SD Workshop October 5, 2017 OSAE charged OPSC with allowing districts to make inappropriate expenditures of state bonds. The inappropriate expenditures included: Band uniforms, golf carts, tractors, and computers. 9 In January 2017, Governor Brown announced he would honor the will of the people regarding Proposition 51. However, citing the audit of the OPSC, he would agree to sell Proposition 51 bonds with two (2) new conditions. 10 5
CASH SD Workshop October 5, 2017 The Governor’s Conditions: First- districts must sign Upfront Grant Agreements before receiving state bond funds. Second- Proposition 51 bond audits happen at the district level with new procedures. 11 Implementing Implementing the the Governor’s Governor’s Conditions Conditions The SAB approved the Upfront Grant Agreement as a required Document in June 2017. The new audit requirements are law as of June 2017. 12 6
CASH SD Workshop October 5, 2017 The Upfront Grant Agreement by the SAB for projects from the “Acknowledged List.” 13 New New Audit Audit Requir Requirements ments ar are Outlined Outlined in in Sta Statute ute The new requirements will be incorporated into the K-12 Audit Guide. The audits must be done by the District’s independent auditors. Districts must pay for the audits. 14 7
CASH SD Workshop October 5, 2017 Districts must sign the agreement in order to receive an apportionment from Proposition 51 funds; AND Districts must abide by the agreement expenditure provisions or be penalized. 15 Grant Agreement: How to Navigate Projects to the Audit Presenter: Sara Slater, Assistant Fiscal Services Director of Facilities Planning and Development for the Long Beach USD 8
CASH SD Workshop October 5, 2017 Reason for Grant Agreement › Proposition 51 – November 8, 2016 Bond Passed › Administration Concerns – $3 million of ineligible expenses › Accountability – June 5, 2017 State Allocation Board (SAB) approved template grant agreement – Conforming School Facility Program (SFP) regulations on September 6, 2017 17 What is the Purpose of the Grant Agreement? › Binding document that defines responsibilities › Eligible vs. Ineligible Expenditures › Defines accounting of a project › Thorough understanding of the requirements in receiving the funds › Still requires 50/04, 50/05, and 50/06 18 9
CASH SD Workshop October 5, 2017 Grant Agreement vs Trailer Bill › Grant Agreement references audit in accordance of Education Code 41024 › Grant Agreement is SAB regulations for implementation of Prop 51 › Grant Agreement is tailored to project › Trailer Bill explains audit requirement › Trailer Bill outlines repayment 19 Omnibus Budget Trailer Bill AB #99 › Establishes 41024 of the Education Code – Accounting regulations › Accounting Guide from Department of Finance (DOF) – Reporting requirements › Audit from external Local Education Agency (LEA) audit firm › Repayment of funds – ineligible expenses 20 10
CASH SD Workshop October 5, 2017 Grant Agreement Timeline › Approved unfunded list (Lack of AB 55 loans) › SAB allocates fund – Notification of funding › Sign 50/05 and grant agreement – 90 days to submit – Redundant requirement › 1st annual report from date of fund release 50/06 – Date from fund release letter – Yearly audit review › Report annually until project completion – Audit requirements – Eligible vs. Ineligible 21 Eligible vs Ineligible Expenses › Eligible is finite › Ineligible is ambiguous › Ineligible supplies as described in the California School Accounting Manual (CSAM), Procedure 770. › Items not considered Furniture and Equipment because they are considered operational or supplies in nature including: › Computers, printers, computer carts, golf carts, bunsen burners, test tubes, chemicals, mechanic wrenches › Operational expenses 22 11
CASH SD Workshop October 5, 2017 Appeals Process, Expenditure Authorization › Grantee may seek written clarification from the OPSC for items not included in the lists of eligible › Local auditor may use the written response from OPSC to guide the audit › The State is creating a website with appeals – Appeals, if accepted are only good for the appealing district – District can use other accepted appeals and submit written expenditure authorization 23 What’s Really New › Leroy F. Greene School Facilities Act of 1998 › Labor and public contract laws › Maintain a general ledger at a Project-specific level as described in the California School Accounting Manual (CSAM), Procedure 301 and 345 › Subject to an audit pursuant to section 41024 of the Education Code from LEA external audit firms – Office of Public School Construction (OPSC) will not review expenditures to determine eligibility, this will be done by the local auditor 24 12
CASH SD Workshop October 5, 2017 Things to Consider › Budgetary concerns › If you're a facilities hardship district what can you do? › How will this be applied to past projects? › Audit needs to be paid for out of general funds - cannot be charged to State Bond funds 25 Next Steps › CASH Audit Working Group › Develop audit guide – Department of Finance (DOF) › OPSC workshops – September 21, 2017 - Fresno – September 22, 2017 - Visalia – September 25, 2017 - West Sacramento – September 27, 2017 - Santa Rosa – October 4, 2017 - Eureka – October 5, 2017 - Yreka 26 13
CASH SD Workshop October 5, 2017 THE LOCAL AUDIT & DEVELOPING THE NEW GUIDANCE Presenters: Sara Slater, Long Beach USD Lettie Boggs, Colbi Technologies, Inc. Tom Duffy, CASH Legislative Advocate, Murdoch, Walrath & Holmes SAB 50-06 DLOPE Detailed Listing of Project Expenditures ›Districts still need to produce this every year and send it to OPSC ›Districts should continue to use unique coding in the GL for each project NEW – Districts will need to differentiate eligible from ineligible expenditures - and not report ineligible expenditures! IDEA – Districts could use a part of the code, such as the Year indicator, to mark ineligible expenditures for OPSC purposes 14
CASH SD Workshop October 5, 2017 What Doesn’t Change ›All the steps through the 50-05 remain ›You have to make your match (50/50 or 60/40) ›You have to track your interest and savings – and use them Mod for Mod, New for New, or on a District Funded Capital Project ›OPSC will want a 50-06 with DLOPE for Interest and Savings expenditures How Audits Work ›GAAP Standards ›Findings are discussed with the client prior to close of audit –Adjustments/Corrections can be made ›Confer with your auditor to understand the process and what will be required 15
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