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Revenue Bonds Legal Basis Accounting
2
Enterprise Fund Operations in State
• Pre-Revenue Management Program.• Except for Dorm Construction Fund balance, now
only spend-down.• Campus collects fees for service provided,
deposits them to State Treasury bank account and remits to the State Controller’s Office (SCO).• To pay vendors, the campus cuts a check that
are initially backed by revolving fund resources. • A claim schedule must be issued and submitted
to the SCO to draw funds from remitted resources to replenish the revolving fund.
3
Enterprise Fund Operations in State
• The SCO maintains transactional detail by campus agency, but centralizes the trial balance. • The Chancellor’s Office picks up the net activity
by campus and any other central transactions to mimic the SCO structure.• To eliminate doubling up the reporting of
investment balances, the campuses reflect their balance in the state using fund balance clearing.• When the Chancellor’s Office picks up the net
activity, they mirror or show the opposite balance in the fund balance clearing account for each campus.
4
What is Fund Balance Clearing?
• Fund balance clearing is used to reflect the receipts and disbursements that flow through the State Controller’s Office. • In governmental or appropriated funds, the
change in equity or revenues/expenses for the year also close to fund balance clearing.
• However, in enterprise funds, it is only used to record receipts/disbursements.
• For all funds, period 1-12 activity in fund balance clearing must match the State’s postings to stay in synch with State’s ledgers. • Timing differences are okay until June 30.
5
Sample Enterprise Fund Activity
Chancellor’s Office CampusLegal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0583-000-301
Account Description Debit Credit
101004 Cash in State Treasury 1,800
305022 Fund Balance Clearing 1,800
To Record Campus A Activity f or the Month
102001 Deposits in SMI F 1,700
101004 Cash in State Treasury 1,700
To Record State Sweep f or I nvestment Activity
Legal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0583-000-301
Account Description Debit Credit
101001 Cash 2,200
504003 Parking Permits 2,200
To Record Parking Fees Collected
305022 Fund Balance Clearing 2,200
101001 Cash 2,200
To Record Remittance
660003 Supplies & Services 400
101001 Cash 400
To Record Vendor I nvoice & Payment
101001 Cash 400
305022 Fund Balance Clearing 400
To Record Claim Schedule
6
Sample Enterprise Fund Trial Balance
Chancellor’s Office CampusLegal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0583-000-301
Account Description Debit Credit
101004 Cash in State Treasury 100
102001 Deposits in SMI F 1,700
305022 Fund Balance Clearing 1,800
1,800 1,800
Legal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0583-000-301
Account Description Debit Credit
305022 Fund Balance Clearing 1,800
504003 Parking Permits 2,200
660003 Supplies & Services 400
2,200 2,200
Legal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0583-000-301
Account Description Debit Credit
101004 Cash in State Treasury 100
102001 Deposits in SMI F 1,700
504003 Parking Permits 2,200
660003 Supplies & Services 400
2,200 2,200
7
What is SRB?
• SRB – Systemwide Revenue Bond Program• It is a systemwide program that issues bonds to
provide funding for board approved construction projects.• Depending on timing, it uses temporary financing,
via Bond Anticipation Notes (BANs) or commercial paper. If used, the temporary financing is gathered into a Bond issuance that pays off the temporary funding and can include additional funds for the project.
• Revenue is pledged to pay the bond, so program is restricted to specific programs.
• Housing, Parking, CERF, Health Facility and Auxiliary
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What makes SRB accounting activity unique?
• Pre-RMP: Nothing unique about Program Operations Funds• Housing, Parking, CERF and Health Facility
• Only Chancellor’s Office records the debt on Legal basis records.• Only Chancellor’s Office records activity in 0578 - Interest
& Redemption Fund• The State Treasurer is the trustee of the SRB proceeds.
0576 – Dorm Construction Fund holds proceeds• The Chancellor’s Office records the activity in cash &
investments• Campuses given an allocation or a budget to spend
against
9
How does the process start? - Summarized
• A project is identified by the campus. The campus works with Finance & Treasury (F&T) to develop a Financial Plan.• The plan will identify funding sources for the
project.• The non-financial paperwork is submitted to
CPDC. There are approvals that must be gained from F&T and CPDC for the project to move forward.• Once the project is initially approved by CPDC,
they request a project number.• Project is placed on the Board of Trustee’s
agenda for approval.
10
Two Separate BOT Approvals
• It is important to understand that there are two separate approvals that must be gained from the Board of Trustee’s. • Until the second approval
has been granted all the costs of the project to that point are funded by the campus.• The F&T non-state bond
funded flowchart shows all of the steps.
11
Once the project is a go…
• The Chancellor’s Office will open accounts at the SCO for BAN or bond proceeds, revenue and transfer accounts, and project expense accounts• Once State accounts are established, FNAT keys
are created, project expense accounts will include project number.• F&T will execute the CP or bond sale.• Chancellor’s Office will remit and transfer funds.
12
BAN Sale- Remit Proceeds & Transfer
Chancellor’s Office CampusLegal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0576-200-227
Account Description Debit Credit
101004 Cash in State Treasury 4,307,000
190012 Amount to be Provided 4,307,000
201005 Note Payable 4,307,000
509002 Proceeds f rom Bonds 4,307,000
To Record Proceeds f rom BAN Sale & Debt
680026 Transf er Out 4,307,000
101004 Cash in State Treasury 4,307,000
To Record Transf er Out to Upf ront Accounts
0576-700-222
Account Description Debit Credit
101004 Cash in State Treasury 4,307,000
506026 Transf er I n 4,307,000
To Record Transf er I n f rom Clearing Accounts
Legal Basis Ledgers
SCO Fund - Subf und - CSU Fund
Account Description Debit Credit
13
Issue Allocation Order
• Chancellor’s Office will issue an Allocation Order to establish Budget or spending authority in campus project expense account.
14
Pay Vendors and Cash Transfer Letters
Chancellor’s Office CampusLegal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0576-700-222
Account Description Debit Credit
680026 Transf er Out 853,520
101004 Cash in State Treasury 853,520
To Record Transf er Out to Project Accounts
0576-000-222
Account Description Debit Credit
6070xx Construction Expense 22,637
101004 Cash in State Treasury 22,637
To Record Bond or Central Expense
101004 Cash in State Treasury 853,520
506026 Transf er I n 853,520
To Record Transf er f rom Upf ront Accounts
305022 Fund Balance Clearing 830,883
101004 Cash in State Treasury 830,883
To Record Campus Activity in Project Account
Legal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0576-000-222
Account Description Debit Credit
6070xx Construction Expense 830,883
305022 Fund Balance Clearing 830,883
To Record Vendor Payment
15
Bond Sale
• A sources and uses schedule is prepared by bond counsel. This nails down all of the details of the transaction.
16
Bond Sale- Remit Proceeds & Transfer
Chancellor’s Office CampusLegal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0576-201-227
Account Description Debit Credit
101004 Cash in State Treasury 23,956,418
509002 Proceeds f rom Bonds 23,956,418
To Record Proceeds f rom Bond Sale
680011 Transf er Out DI RF 1,746,532
101004 Cash in State Treasury 1,746,532
To Record Transf er of Capitalized I nterest to DI RF
680026 Transf er Out 22,209,886
101004 Cash in State Treasury 22,209,886
To Record Transf er Out to Upf ront Accounts
0576-300-222
Account Description Debit Credit
101004 Cash in State Treasury 22,209,886
506026 Transf er I n 22,209,886
Legal Basis Ledgers
SCO Fund - Subf und - CSU Fund
Account Description Debit Credit
17
Bond Sale- Remit Proceeds & Transfer
Chancellor’s Office CampusLegal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0948-000-472
Account Description Debit Credit
190012 Amount to be Provided 23,730,000
262003 Bond Payable 23,730,000
To Record Bond Payable
0578-000-246
Account Description Debit Credit
101004 Cash in State Treasury 1,746,532
506010 Transf er I n - DCF 1,746,532
To Record Receipt Capitalized I ntrest f rom Bond Proceeds
Legal Basis Ledgers
SCO Fund - Subf und - CSU Fund
Account Description Debit Credit
18
Issue Allocation Order for the Bond
• Chancellor’s Office will issue an Allocation Order to establish Budget or spending authority in campus project expense account.
19
Move Project Expenses from BAN to Bond
Chancellor’s Office CampusLegal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0576-700-222
Account Description Debit Credit
101004 Cash in State Treasury 1,457,262
506026 Transf er I n 1,457,262
To Record Transf er I n f rom Project Accounts
0576-000-222
680026 Cash in State Treasury 1,457,262
101004 Transf er I n 1,457,262
To Record Transf er to Upf ront Accounts
101004 Cash in State Treasury 1,457,262
305022 Cash in State Treasury 1,395,886
607xxx Construction Expense 61,376
To Record Clearing of BAN Project Account
0576-300-222
680026 Transf er Out 1,457,262
101004 Cash in State Treasury 1,457,262
To Record Transf er I n f rom Project Accounts
0576-600-222
101004 Cash in State Treasury 1,457,262
506026 Transf er I n 1,457,262
To Record Transf er f rom Upf ront Accounts
305022 Fund Balance Clearing 1,395,886
607xxx Construction Expense 61,376
101004 Cash in State Treasury 1,457,262
To Record Campus Activity in Project Account
Legal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0576-000-222
Account Description Debit Credit
305022 Fund Balance Clearing 1,395,886
607xxx Construction Expenses 1,395,886
To Record Clear Out of Expenses in BAN Account
0576-600-222
607xxx Construction Expenses 1,395,886
305022 Fund Balance Clearing 1,395,886
To Record BAN Expenses in Bond Project Account
20
Issue De-Allocation Order for the BAN
• Chancellor’s Office will issue an De-Allocation Order to removing the Budget or spending authority in campus project expense account.
21
Pay Off BAN
Chancellor’s Office CampusLegal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0576-700-222
Account Description Debit Credit
680026 Transf er Out 4,350,161
101004 Cash in State Treasury 4,350,161
To Record Transf er Out to Pay Off Debt
0576-200-227
Account Description Debit Credit
101004 Cash in State Treasury 4,350,161
506026 Transf er I n 4,350,161
To Record Transf er f rom Upf ront Accounts
660006 I nterest Expense 39,278
660007 Principal 4,310,883
101004 Cash in State Treasury 4,350,161
To Record BAN Pay Off
201005 Note Payable 4,350,161
190012 Amount to be Provided 4,350,161
To Remove BAN Debt
Legal Basis Ledgers
SCO Fund - Subf und - CSU Fund
Account Description Debit Credit
22
Pay Vendors and Cash Transfer Letters
Chancellor’s Office CampusLegal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0576-300-222
Account Description Debit Credit
680026 Transf er Out 3,182,454
101004 Cash in State Treasury 3,182,454
To Record Transf er Out to Project Accounts
0576-600-222
Account Description Debit Credit
6070xx Construction Expense 44,317
101004 Cash in State Treasury 44,317
To Record Bond or Central Expense
101004 Cash in State Treasury 3,182,454
506026 Transf er I n 3,182,454
To Record Transf er f rom Upf ront Accounts
305022 Fund Balance Clearing 3,138,137
101004 Cash in State Treasury 3,138,137
To Record Campus Activity in Project Account
Legal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0576-600-222
Account Description Debit Credit
6070xx Construction Expense 3,138,137
305022 Fund Balance Clearing 3,138,137
To Record Vendor Payment
23
Transfer Debt Service
Chancellor’s Office CampusLegal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0948-000-472
Account Description Debit Credit
108090 I nvestments 1,559,733
571000 I nteragency Transf er I n 1,559,733
To Record Campus Debt Service Transf er
680011 Transf er Out to 0578 1,559,733
108090 I nvestments 1,559,733
To Record Debt Service Transf er to 0578
0578-000-246
Account Description Debit Credit
101004 Cash in State Treasury 1,559,733
506025 Transf er I n f rom 0948 1,559,733
To Record Transf er f rom 0948 and Remittance
Legal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0948-000-472
Account Description Debit Credit
671000 I nteragency Transf er Out 1,559,733
108090 I nvestments 1,559,733
To Record Debt Service Transf er
24
Debt Service Payment
Chancellor’s Office CampusLegal Basis Ledgers
SCO Fund - Subf und - CSU Fund
0578-000-246
Account Description Debit Credit
660006 I nterest Expense 1,064,733
660007 Principal on Debt 495,000
101004 Cash in State Treasury 1,559,733
To Record Debt Service Payment
0948-000-472
Account Description Debit Credit
262003 Bond Payable 495,000
190012 Amount to be Provided 495,000
To Reduce Bond Payable f or Principal Payment
Legal Basis Ledgers
SCO Fund - Subf und - CSU Fund
Account Description Debit Credit
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