003.01
Accounting System. An accounting system is that
combination of people, equipment, methods, internal controls, and procedures
organized to record financial activity and to display that activity in
financial reports. A primary purpose of an accounting system is to produce
financial information organized in meaningful ways for various reporting uses.
The accounting system is the means by which financial data is acquired during
the actual operation of the public school district, recorded in an appropriate
permanent form, and then analyzed to produce the reports for various purposes.
Internal control is a system affected by the district's
board of education, management, and other personnel designed to provide
reasonable assurance regarding the achievement of objectives in the following
categories:
(a) reliability of
financial reporting,
(b)
effectiveness and efficiency of operations, and
(c) compliance with applicable laws and
regulations. Internal control consists of the following five interrelated
components:
(1) control environment (sets the
tone of an organization, influencing the control consciousness of its people
and is the foundation for all other components of internal control, providing
discipline and structure),
(2) risk
assessment (the entity's identification, analysis and management of risks
relevant to achievement of its objectives and to the preparation of financial
statements that are fairly presented in conformity with accounting principles
generally accepted in the United States of America (or another comprehensive
basis of accounting) (Appendix A, a copy of which is on file at the Nebraska
Department of Education's (NDE's) central office in Lincoln),
(3) control activities (the policies and
procedures that help ensure that management directives are carried out),
(4) information and communication
(the identification, capture, and exchange of information in a form and time
frame that enable people to carry out their responsibilities),
(5) monitoring (a process that assesses the
quality of internal control performance over time).
003.02
Basis of
Accounting. The basis of accounting refers to the point in time
when revenues and expenses or expenditures are recognized in the accounting
system. The basis of accounting, therefore, determines the time at which the
accounting system recognizes accounting transactions.
003.02A
Cash Basis.
Cash-basis accounting recognizes transactions when cash is actually received or
disbursed. Public school districts in Nebraska may operate on another
comprehensive basis of accounting which includes the use of the cash basis of
accounting.
003.02B
Accrual and Modified Accrual Basis. Accrual basis
accounting recognizes revenues as soon as they are earned. Expenses are
recognized as soon as the liability is incurred, regardless of the timing of
the related inflows and outflows of cash. For funds that use the modified
accrual basis of accounting, revenues are recognized when earned, but only to
the extent that they are available (i.e., collectible within the period soon
enough afterwards to be used to pay liabilities of the current period). Debt
service payments and a number of specified liabilities are only recognized as
expenditures when due. Public school districts in Nebraska may operate on a
system of accounting in conformity with accounting principles generally
accepted in the United States of America (Appendix A, a copy of which is on
file at the NDE's central office in Lincoln), which may include the use of the
accrual and/or modified accrual basis of accounting. School districts using the
accrual or modified accrual basis of accounting must report to the NDE on a
cash basis.
003.03
Fund Accounting. A fund is a fiscal and accounting
entity, with a self-balancing set of accounts and is completely independent of
any other fund. All school district accounting systems must be organized and
operated on a fund basis. The reporting focus of the funds is upon determining
financial position rather than net income.
003.03A
General
Fund. The General Fund may finance all facets of services rendered
by the school district, inclusive of operation and maintenance. General Fund
revenues are classified according to source while its expenditures are
classified according to specific functions. The General Fund must be maintained
by all operating school districts in the State. General Fund expenditures are
limited by the TEEOSA.
003.03B
Depreciation Fund. A Depreciation Fund may be
established by a school district in order to facilitate the eventual purchase
of a costly capital outlay by reserving such monies from the General Fund. To
allocate monies from the General Fund, a school district will show the movement
of monies as an expense from the General Fund and the Depreciation Fund will
show the revenue as a transfer from the General Fund. The school district may
divide this fund into more than one account to allocate a portion of this fund
for different valid purposes. The purpose of a Depreciation Fund is to spread
replacement costs of capital outlays over a period of years in order to avoid a
disproportionate tax effort in a single year to meet such an expense. The
budgeted total requirements of this fund is restricted as part of the Allowable
Reserve by the TEEOSA. The Depreciation Fund is considered only a component of
the General Fund.
003.03C
Employee Benefit Fund. An Employee Benefit Fund may be
established in order to specifically reserve General Fund money for the benefit
of school district employees (unemployment compensation, early retirement,
health insurance deductibles, etc.). To allocate monies from the General Fund,
a school district will show the movement of monies as an expense from the
General Fund, and the Employee Benefit Fund will show the revenue as a transfer
from the General Fund. The school district may divide this fund into more than
one account to allocate a portion of this fund for different valid purposes.
The cash reserve of this fund is restricted as part of the Allowable Reserve by
the TEEOSA. The Employee Benefits Fund is considered a component of the General
Fund.
003.03D
Contingency Fund. A Contingency Fund is authorized by
Section 79-1072, R.R.S. and may be established by school districts to fund
uninsured losses and legal fees incurred by the school district for defense
against possible losses. Expenditures from this fund must not exceed five
percent of the total budgeted General Fund expenditures of the school district.
To allocate monies from the General Fund, a school district must show the
movement of monies as an expense from the General Fund, and the Contingency
Fund must show the revenue as a transfer from the General Fund. This fund is
restricted as part of the Allowable Reserve by the TEEOSA.
003.03E
Activities
Fund. The Activities Fund is required to account for the financial
operations of quasi-independent student organizations, interschool athletics,
and other self-supporting or partially self-supporting school activities, not
part of another fund. The inclusion of such accounts in the General Fund (see
003.03A) would
distort the financial position of the basic school operation and would
complicate the computation of the net expense incurred in conducting school
services. The Activity Fund may not be used to record general operation
revenues or expenditures, nor may the Activity Fund be used as a clearing
account for the General Fund. The school district may divide this fund into
more than one account to allocate a portion of this fund for different
purposes.
The financial operations of all school-connected activities
are a legal responsibility of the school district board of education. If
deficits in such activities are incurred, they shall may be paid from the
General Fund (see
003.03A). Such
revenue shah finances only those projects which qualify for approval under
policies established by the school district board of education for such
activities.
003.03F
School Nutrition Fund. The School Nutrition Fund is
required to accommodate the financial activities of all Child Nutrition
Programs. These include the School Lunch, School Breakfast, After School Snack,
Special Milk, Child and Adult Care Food, Fresh Fruit and Vegetable Program, and
the Summer Food Service Programs. The School Nutrition Fund must reflect a
record of all revenues and expenditures incident to the operation of all Child
Nutrition Programs. If a deficit is incurred in the operation, the deficiency
may be covered by funds transferred from the General Fund.
003.03G
Bond Fund.
The Bond Fund must be used to record tax receipts and the payment of bond
principal and interest, and other related costs (i.e. investment interest,
trustee fees, etc.). If the fund balance is not sufficient to meet interest or
bond retirement payments from the Bond Fund, the General Fund may be used for
these payments. Revenue from a levy to retire bonds in any school district is
retained in a separate fund by the county treasurer, the financial institution
serving as a fiscal agent or the school district. Funds may be disbursed upon
appropriate demand. All records of the transactions in this area must be
maintained in this fund. Proceeds from a bond issue must be deposited into the
Special Building Fund (see
003.03H) to be
expended on the actual building project.
003.03H
Special Building
Fund. A Special Building Fund must be established when a school
district decides to acquire or improve sites and/or to erect, alter, or improve
buildings. The sale of bonds, the sale of property, donations or tax receipts
will be the primary sources of revenue for the Special Building Fund.
Regardless of the source of money to be used for building construction and
related costs, all income for this purpose must be accountable through this
fund. General Fund expenditures for the purpose of this fund are not allowable.
Special Building Fund accounting provides a more effective means of identifying
those expenditures associated with construction activities and provides a
complete and consolidated record of all costs of the building program at the
conclusion of a project(s). If more than one Special Building Fund activity is
active at the same time, separate accounts for each project may be established
within the single Special Building Fund. The tax levy for this fund is
restricted. The Board of Education of s school districts may approve a budget
with a levy limitation of $
0.14 per one hundred dollars of
valuation (Section
79-10,120
R.R.S.); or a tax levy not to exceed $0,175 per one hundred dollars of
valuation may be established for this fund in any class of school district by a
vote of the people for a term of not to exceed ten years (Section
79-1098
R.R.S.).
003.03I
Qualified Capital Purpose Undertaking Fund. A
Qualified Capital Purpose Undertaking Fund (QCPUF) may be established for a
specific abatement project to address an actual or potential environmental
hazard, accessibility barrier, life safety code violation, life safety hazard,
or mold which exists within one or more existing school buildings or the school
grounds of existing school buildings controlled by the school district. Such
determination must not include abatement projects related to the acquisition of
new property, the construction of a new building, the expansion of an existing
building, or the remodeling of an existing building for purposes other than the
abatement of environmental hazards, accessibility barriers, life safety code
violations, life safety hazards, or mold. The period of years for such levy may
not exceed ten years and the levy for such project when combined with all other
levies pursuant to Sections 79-10,110.02 and
79-10,110
R.R.S. may not exceed $
0.03 per one hundred dollars of
taxable valuation. General Fund expenditures for the purpose of these funds are
not allowable.
For projects in place prior to April 19, 2016, the Qualified
Capital Purpose Undertaking Fund maximum levy remains at $0,052.
If taxable valuation is lower than the taxable valuation in
the year when the district last issued QCPUF bonds and the $
0.03 maximum levy is insufficient to
meet the combined annual principal and interest, the district can exceed the $
0.03 maximum levy for the difference
to meet that year's principal and interest obligations.
003.03J
Cooperative
Fund. The Cooperative Fund may be used by the school district
acting as the fiscal agent for any cooperative activity between such district
and one or more public agencies as defined in Section
13-803(2)
R.R.S. All public agencies, including the
school district acting as the fiscal agent, must show the payment for services
to a cooperative in their General Fund or other appropriate fund (see
003.03A).
003.03K
Student Fee
Fund. The Student Fee Fund is a separate school district fund not
funded by tax revenue into which money collected from students pursuant to
subdivisions (1), (3), and (8) of Section
79-2,127
R.R.S., (fees collected for participation in extracurricular activities; fees
collected for postsecondary education and fees collected for summer school or
night school), must be deposited. Expenditures from this fund must be for the
purposes for which the fees were collected.
003.04
General
Information
003.04A
Creating Funds. When it is determined that one of the
listed funds is necessary, the district's Board of Education approves the
creation of the fund when the budget, as required by the Nebraska Budget Act,
is approved. The school district's Board of Education must specifically
designate the uses for the Depreciation and Employee Benefits Funds.
003.04B
Discontinuing
Funds. When it is determined that one of the listed funds is no
longer needed, the school district's Board of Education may take action to
discontinue the fund. All remaining money in the discontinued fund must be
transferred to the General Fund (see
003.03A).
003.04C
Loans. Any
class of school district may borrow money to the amount of seventy percent of
the unexpended balance of total anticipated receipts for the General Fund,
Special Building Fund, Bond Fund, or Qualified Capital Purpose Undertaking Fund
for the current school fiscal year and the following school fiscal year
(Section
79-1070
R.R.S.). These funds may also be used to make loans to each other. School
districts must follow the provisions of Sections
79-1070
to
79-1071
R.R.S., when borrowing money.