Presented by: Carey Bradley, Consultant School Financial Services Team - PowerPoint PPT Presentation

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  1. Capital PROJECTS Funds Capital Expansion Fund (F41) Long-term Capital Improvement Trust Fund (F46) Presented by:Carey Bradley, Consultant School Financial Services Team Department of Public Instruction January 21, 2016

  2. Capital Projects Funds 4x These funds account for financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.

  3. Capital Projects Funds 4x Capital Expansion Fund (F41) Wisconsin Statute 120.10(10m) Long-term Capital Improvement Trust Fund (F46) Wisconsin Statute 120.137 Other Capital Projects Fund (F49) DPI Financial Requirements

  4. CAPITAL PROJECTS FUNDS Source of Revenue

  5. Capital Projects Funds 4x Capital Expansion Fund (F41) Projects financed by a special tax levy. Long-term Capital Improvement Trust Fund (F46) Projects financed with funds transferred from the General Fund. Other Capital Projects Fund (F49) Projects financed (mostly) with borrowed funds (G.O. proceeds). Controlled Revenues Only Controlled Revenue or Referendum Debt

  6. CAPITAL PROJECTS FUNDS Eligible and Allowed Expenditures

  7. Capital Projects Funds 4x Capital Expansion Fund (F41) Capital expenditures related to buildings and sites only.(Specific project/purpose as approved with the tax levy at the Annual Meeting) Long-term Capital Improvement Trust Fund (F46) Projects in the approved long-term capital improvement plan. (After initial five year waiting period) Other Capital Projects Fund (F49) Projects (mostly) per the referendum or resolution.

  8. CAPITAL PROJECTS FUNDS Requirements for establishing AND MAINTAINING a fund

  9. Capital Expansion Fund (F41) Common School District - Power of the Annual Meeting • Resolution to establish the levy for a certain purpose (project). • Annual Tax Levy approved at the annual meeting.

  10. Capital Expansion Fund (F41) REQUIREMENTS and RESTRICTIONS • Districts must levy directly into Fund 41, as reflected on the district’s Tax Levy Certification (PI-401) Report. • Tax levy and investment interest must be in a segregated account. • Transfers into Fund 41 from any other fund, including Fund 10, are not permitted. • Limitted to sites and buildings, not other capital equipment.

  11. Capital Expansion Fund (F41) REQUIREMENTS and RESTRICTIONS • Monies may be used for no other purposes unless a succeeding annual meeting or unified school district board of education votes to change the purpose. (annual action provides opportunity to change once per year in the specified timeline)

  12. Long-term Capital Improvement Trust Fund(F46) • Board of Education • Board approval of a 10 year capital improvement plan. • Board resolution to establish a trust. • Creation of a segregated bank account.

  13. Long-term Capital Improvement Trust Fund(F46) REQUIREMENTS and RESTRICTIONS • May only use funds for capital projects (per the ten year plan). • May not use funds for an initial five year period. (Five years from the date of the first deposit)

  14. Capital Projects Funds 4x Shared COST FOR STATE AID PURPOSES

  15. Cost Sharing and State Equalization Aid The fundamental purpose of the Equalization Aid formula is to “level the playing field” by providing assistance (distributing aid) to poorer districts (those with lower property value) to make up for what they can’t get from their property tax base. Shared Cost = District costs “shared” between Equalization Aid (the state) and property taxes (local tax payers). Aid is inversely related to district property value per member. Spending is aided at three levels.

  16. Capital Expansion Fund (F41) • Shared costs increase when the funds are expended from Fund 41, but the costs are amortized over the number of years a tax was levied for the project. • Example: • FY Expense of $5,000 and five years of levy will increase shared costs $1,000 each of the next five years. • Amortization (spreading out ) of expenditures levels out shared cost increases.

  17. Long-term Capital Improvement Trust Fund(F46) • Shared costs increase when the funds are physically transferred from the General Fund and deposited into the fund’s account. • Example: • FY Fund10 Expense (transfer) of $1,000 for each of five years will increase shared costs $1,000 each year. • The fund 46 expediture of $5,000 has not impact on shared cost. • Smaller Fund 10 transfers (expenditure) level out shared cost increases for a larger capital outlay. • Opportunity to maintain spending and shared costs in a given year.

  18. Where are you in the Formula? State Equalization Aid Increasing property values Increasing spending

  19. CAPITAL PROJECTS FUNDS REPORTING TO DPI

  20. Capital Expansion Fund (F41) REPORTING Resolution to establish the fund and initial tax levy (including Annual Meeting Minutes). Any resolutions that result in a change in the project/purpose. The Fund 41 tax levy must be reported in Fund 41 of the current year's budget and annual reports, and the tax levy table at the end of the report.

  21. Long-term Capital Improvement Trust Fund(F46) REPORTING • Official Board minutes approving the long-term capital improvement plan. • Signed resolution creating the Long-term Capital Improvement Trust Fund or official minutes documenting the creation of the fund. • Documentation that confirms the existence of a segregated bank/investment account and initial deposit.

  22. CONSIDERATIONS

  23. Capital Expansion Fund (F41) • Provides a method for districts to set aside funds for capital projects. • Requires identification of projects and purpose of tax. • May be used to reduce the single year expense for shared cost as the expense is divided by the years levied. • Amount of revenue determined when the levy is set.

  24. Long-term Capital Improvement Trust Fund(F46) • Provides a method for districts to set aside funds for capital projects • Requires planning for capital facility needs and improvements including care and maintenance. • May be used to level out expenses for shared cost (rather than a large project expenditure in Fund 10) • Provides an option for fiscal year end expenditure of unused budgeted amounts. • Initial five year waiting period to access funds.

  25. Capital Projects Funds 4x Identifying capital assets and outlays

  26. Federal Reporting Handbook Capital expenditures relate to the acquisition of capital assets. Such expenditures may be recorded in the general fund, special revenue funds, or capital projects funds, depending on the source of funding. Purchases of personal property, such as furniture and equipment, are usually recorded as expenditures in the general fund if they are financed from operating budgets (or in the general fund or special revenue funds, if they are financed from grants). Major projects, such as the construction of a school building financed by the proceeds of debt, should be accounted for in a capital projects fund. http://nces.ed.gov/pubs2015/2015347.pdf

  27. Capital Assets Per the Federal Reporting Handbook: • Long-lived • Of a significant value at the the time of purchase or acquisition • Reasonably identified and controlled through a physical inventory system • Land, buildings, and improvements • Vehicles, machinery, and equipment • IT network equipment http://nces.ed.gov/pubs2015/2015347.pdf

  28. Capital Expenditures (outlay) Consider the following: • Enduring and Permanent in nature • Outside the regular operational budget • Occasional and large expenditure • Purchase, Improvement or Replacement of capitalized assets • Assets the district intends to hold or continue to use over a long period of time

  29. Capital Projects Funds 4x Additional information

  30. Long-term Capital Improvement Trust Fund Capital Improvement Plan • A school board may establish a “trust” to fund capital improvement projects per their ten year long-term capital improvement plan. • Basic Components of a Capital Improvement Plan • Describe nature of each capital improvement project. (Capitalization per GASB 34) • Identify the project location • Provide a cost estimate • Provide a timeline The Board may approve changes to the Plan

  31. Requirements Review (Fund 41) • Action required at Annual Meeting (Common School District) • Tax Levy must be used for sites and buildings. • Tax levy and investment interest must held in a segregated bank/investment. • Vote required at succeeding meeting to change the project or purpose for use of funds. May have a residual transfer out. • Report establishment and changes in purpose to DPI.

  32. Requirements Review (Fund 46) • Board approved long-term capital improvement plan (minimum of 10 years) • Funds may only be accessed five years after the establishment of the “trust” fund. • Funds must be physically deposited and held in a segregated bank/investment (separate and distinct from other district accounts) until they are expended for capital improvement projects per the district’s plan. • Funds invested as per sec. 66.0603, Wis. Stats. • Timing Requirements • Reporting to DPI-documenting establishment

  33. Capital Projects Funds • Carey Bradley, Consultant ..……608-267-3752 • Gene Fornecker, Auditor ……….608-267-7882