Reconciling State Aid Accounts: It's Worth the Wait

We are all anxiously awaiting the Near Final Summary of Finances, which typically makes it appearance in mid-September. Fiscal year 2022 will be the third year in a row that we have had unusual adjustments to State Aid. With that, it’s important that we wait to reconcile State Aid accounts to the Near Final Summary of Finances and Payment Ledgers issued by the Texas Education Agency (TEA). Auditors and auditees alike should not rush to the finish line when it comes to State Aid. Here are a few reminders:

1. If the Legislative Planning Estimate (LPE) Average Daily Attendance (ADA) is greater than the Near Final ADA amount, then you have been overpaid and you will need to record unearned revenue, a liability.
2. For school districts that have a June 30^th year-end, make sure you record your cash receivable for the July and August 2022 payments attributable to the 2022 allotments. It’s easier to record the gross amount versus netting the overpayment against this receivable.
3. Don’t rely solely on the Summary of Finances to determine your balance sheet items (Due from TEA and/or Unearned Revenue). Use the payment ledger as a guide to determine your overpayment.
4. Remember that when you are overpaid, TEA will move that overpayment to next year’s allotment payment ledger. The “zero” you see in the current year, for example, in the Foundation School Program payment ledger doesn’t mean that nothing is owed. Follow, the “settle-up” amount, which is your check figure for the amount overpaid by TEA to your Local Education Agency (LEA).
5. Although some adjustments have been made in August 2022, the mid-September adjustment will incorporate the Operational Minutes Adjustment (OMA), which helps districts with low attendance rates. What does this mean for the state allotment spending requirements? On slide 14 of the TEA OMA presentation, TEA states “For state allotment spending compliance purposes, LEAs should use actual attendance for special instructional settings from summer PEIMS submission #3...LEA’s will be able to reference a specific Summary of Finances run ID at near-final settle up in September 2022 containing this information.

These days, our lives are not complete without mentioning ESSER or any other COVID-19 related funding. So let me make your day complete. As we completed interim audit fieldwork, I noticed that many school districts charged their software subscriptions to ESSER II and III. Many of you need these SBITAs because they’re critical to fulfilling the learning loss initiatives as required by ESSER III. Please note that GASB No. 96 Subscription-Based Information Technology Agreements (SBITAs) has changed the way we account for qualifying SBITAs. That is, prior to fiscal year 2023, we recorded subscriptions or licenses in their respective function and object code. Now GASB No. 96, paragraph 59 stipulates that the payments on qualifying SBITAs must be treated as debt service payments (i.e. XXX-71-65xx). This is the same requirement applicable to leases under GASB No. 87. I know this gives you some heart burn because object code 65xx is not available on the ESSER applications. However, please know that that TEA is aware of the issue and will provide us with a solution. Let’s stay in tune with both TASBO and TEA and always know that it’ll be worth the wait.