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STATE AID FINANCE ACCOUNTING
MANUAL For Counties
Revised November 2017
(Left blank intentionally)
STATE AID FINANCE ACCOUNTING MANUAL
i
INTRODUCTION .............................................................................................................................................. I
PURPOSE .................................................................................................................................................... I
UPDATES .................................................................................................................................................... I
QUESTIONS................................................................................................................................................. I
STATE AID TASK FORCE MEMBERS ................................................................................................................ I
STATE AID FINANCE TEAM ............................................................................................................................. I
CHART OF ACCOUNTS OVERVIEW ................................................................................................................ II
FUND ......................................................................................................................................................... II
DEPARTMENT ............................................................................................................................................ II
OBJECT ...................................................................................................................................................... II
HIGHWAY ACCOUNTING ........................................................................................................................... II
Administration Department .................................................................................................................. II
Engineering/Construction Department ............................................................................................... III
Road Maintenance ............................................................................................................................... IV
Shop and Equipment ........................................................................................................................... VII
Inventory ............................................................................................................................................. VII
CHAPTER 1 ANNUAL ALLOTMENTS .......................................................................................................... 1
REGULAR MAINTENANCE ALLOTMENT ..................................................................................................... 1
REGULAR CONSTRUCTION ALLOTMENT ................................................................................................... 1
MUNICIPAL MAINTENANCE ALLOTMENT ................................................................................................. 2
MUNICIPAL CONSTRUCTION ALLOTMENT ................................................................................................ 2
TOWN BRIDGE ALLOTMENT ...................................................................................................................... 2
TOWN ROAD ALLOTMENT ........................................................................................................................ 3
EXAMPLES ................................................................................................................................................. 4
CHAPTER 2 REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS ....................................................... 5
NARRATIVE ................................................................................................................................................ 5
REGULAR MAINTENANCE ACCOUNT ........................................................................................................ 5
ACCOUNTS NEEDED .............................................................................................................................. 5
SEQUENCE OF EVENTS .............................................................................................................................. 6
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1ST ADVANCE PAYMENT ........................................................................................................................ 6
2ND ADVANCE PAYMENT ........................................................................................................................ 6
FINAL MAINTENANCE PAYMENT .......................................................................................................... 6
YEAR-END ENTRIES ................................................................................................................................ 6
FINAL MAINTENANCE PAYMENT .......................................................................................................... 9
EXAMPLES ........................................................................................................................................... 10
MUNICIPAL MAINTENANCE ACCOUNT ................................................................................................... 13
ACCOUNTS NEEDED ............................................................................................................................ 13
SEQUENCE OF EVENTS ............................................................................................................................ 13
1ST ADVANCE PAYMENT ...................................................................................................................... 13
2ND ADVANCE PAYMENT ...................................................................................................................... 13
FINAL MAINTENANCE PAYMENT ........................................................................................................ 13
YEAR-END ENTRIES .............................................................................................................................. 14
FINAL MAINTENANCE PAYMENT ........................................................................................................ 16
EXAMPLES ........................................................................................................................................... 17
CHAPTER 3 REGULAR AND MUNICIPAL CONSTRUCTION ACCOUNTS ................................................... 20
NARRATIVE .............................................................................................................................................. 20
SPECIAL CONSIDERATIONS ...................................................................................................................... 20
ACCOUNTS NEEDED ................................................................................................................................ 20
SEQUENCE OF EVENTS ............................................................................................................................ 21
PROJECT IS APPROVED ........................................................................................................................ 21
95% PAYMENT IS RECEIVED FOR THE PROJECT .................................................................................. 21
WORK BEGINS ON THE PROJECT ......................................................................................................... 22
PROJECT IS FINALIZED ......................................................................................................................... 23
FINAL PAYMENT TO CONTRACTOR ..................................................................................................... 24
REVOCATION OF A STATE AID ROAD .................................................................................................. 25
EXAMPLES ............................................................................................................................................... 26
Example A............................................................................................................................................ 26
Example B ............................................................................................................................................ 27
Example C ............................................................................................................................................ 28
Example D ........................................................................................................................................... 29
CHAPTER 4 TOWN BRIDGE CONSTRUCTION ACCOUNTS ....................................................................... 30
NARRATIVE .............................................................................................................................................. 30
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ACCOUNTS NEEDED ................................................................................................................................ 30
SPECIAL CONSIDERATIONS ...................................................................................................................... 30
SEQUENCE OF EVENTS ............................................................................................................................ 30
PROJECT IS AWARDED......................................................................................................................... 30
95% PAYMENT IS RECEIVED FOR THE PROJECT .................................................................................. 31
WORK BEGINS ON THE PROJECT ......................................................................................................... 31
PROJECT IS FINALIZED ......................................................................................................................... 32
FINAL PAYMENT TO CONTRACTOR ..................................................................................................... 34
EXAMPLES ............................................................................................................................................... 35
Example A............................................................................................................................................ 35
Example B ............................................................................................................................................ 36
Example C ............................................................................................................................................ 37
Example D ........................................................................................................................................... 38
NARRATIVE .............................................................................................................................................. 39
ACCOUNTS NEEDED ................................................................................................................................ 39
SEQUENCE OF EVENTS ............................................................................................................................ 39
NOTIFICATION OF SPECIAL TOWN BRIDGE ALLOCATION ................................................................... 39
RECOGNIZE SPECIAL TOWN BRIDGE ALLOCATION ............................................................................. 40
SPECIAL CONSIDERATIONS .................................................................................................................. 40
PROJECT UNDERRUNS ORIGINAL ESTIMATE WITH AN OVERPAYMENT ............................................. 40
PROJECT IS AWARDED......................................................................................................................... 40
95% PAYMENT IS RECEIVED FOR THE PROJECT .................................................................................. 40
WORK BEGINS ON THE PROJECT ......................................................................................................... 41
PROJECT IS FINALIZED ......................................................................................................................... 41
PROJECT IS COMPLETED AS ESTIMATED ............................................................................................. 42
PROJECT OVERRUNS ORIGINAL ESTIMATE ......................................................................................... 42
PROJECT UNDERRUNS ORIGINAL ESTIMATE WITH AN OVERPAYMENT ............................................. 42
REDUCTION OF SPECIAL BRIDGE ALLOTMENT .................................................................................... 43
FINAL PAYMENT TO CONTRACTOR ..................................................................................................... 43
EXAMPLES ............................................................................................................................................... 44
Example A............................................................................................................................................ 44
Example B ............................................................................................................................................ 45
Example C ............................................................................................................................................ 46
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Example D ........................................................................................................................................... 47
CHAPTER 5 SPECIAL CONSTRUCTION ACCOUNTS .................................................................................. 48
NARRATIVE .............................................................................................................................................. 48
ACCOUNTS NEEDED ................................................................................................................................ 48
SEQUENCE OF EVENTS ............................................................................................................................ 49
PROJECT IS AWARDED ............................................................................................................................. 49
WORK BEGINS ON THE PROJECT ............................................................................................................. 49
PARTIAL REIMBURSEMENT IS REQUESTED ............................................................................................. 49
PROJECT IS FINALIZED ............................................................................................................................. 50
FINAL PAYMENT TO CONTRACTOR ......................................................................................................... 51
EXAMPLES ............................................................................................................................................... 52
Example A............................................................................................................................................ 52
Example B ............................................................................................................................................ 53
Example C ............................................................................................................................................ 54
STATE PARK CONSTRUCTION ACCOUNT ................................................................................................. 55
NARRATIVE .......................................................................................................................................... 55
ACCOUNTS NEEDED ............................................................................................................................ 55
SEQUENCE OF EVENTS ............................................................................................................................ 55
PROJECT IS AWARDED ............................................................................................................................. 55
95% PAYMENT IS RECEIVED FOR THE PROJECT .................................................................................. 55
WORK BEGINS ON THE PROJECT ......................................................................................................... 56
CHAPTER 6 FEDERAL AID DELEGATED AND TRADITIONAL CONTRACT PROCESS .................................. 57
NARRATIVE .............................................................................................................................................. 57
DELEGATED CONTRACT PROCESS (COUNTY ADMINISTERS CONTRACT) ............................................ 57
TRADITIONAL PROJECTS (MnDOT ADMINISTERS CONTRACT) ............................................................ 57
SHARED FEDERAL REVENUE .................................................................................................................... 58
ADVANCE OF STATE AID FUNDS FOR FEDERAL PROJECTS ...................................................................... 58
ADVANCE RESOLUTION ........................................................................................................................... 59
STATE AID FUNDING ON DELEGATED CONTRACT PROCESS ............................................................... 59
ACCOUNTS NEEDED ................................................................................................................................ 59
SEQUENCE OF EVENTS ............................................................................................................................ 60
PROJECT IS APPROVED ........................................................................................................................ 60
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ADVANCE PAYMENT FOR STATE AID FUNDS RECEIVED FOR THE PROJECT ........................................ 60
PROJECT DEVELOPMENT, RIGHT OF WAY REIMBURSEMENT, ETC. .................................................... 60
WORK BEGINS ON THE PROJECT ......................................................................................................... 60
REIMBURSEMENT OF FEDERAL AND STATE BOND FUNDS ................................................................. 61
FINAL PAYMENT TO CONTRACTOR ..................................................................................................... 61
PROJECT IS FINALIZED ......................................................................................................................... 61
Example A............................................................................................................................................ 65
Example B ............................................................................................................................................ 66
Example C ............................................................................................................................................ 67
Example D ........................................................................................................................................... 68
ACCOUNTS NEEDED ................................................................................................................................ 69
SEQUENCE OF EVENTS ............................................................................................................................ 69
LOCAL OBLIGATION ............................................................................................................................. 69
STATE AID TRANSFER NOTICE ............................................................................................................. 69
PROJECT DEVELOPMENT, RIGHT OF WAY REIMBURSEMENT, ETC. .................................................... 70
YEAR END ADJUSTMENTS ................................................................................................................... 71
PROJECT IS FINAL ................................................................................................................................ 73
EXAMPLES ............................................................................................................................................... 77
Example A............................................................................................................................................ 77
Example B ............................................................................................................................................ 78
Example C ............................................................................................................................................ 79
Example D ........................................................................................................................................... 80
CHAPTER 7 LOCAL AGENCY BONDS AND LOCAL TRANSPORTATION REVOLVING LOAN FUND ............ 81
NARRATIVE .............................................................................................................................................. 81
ACCOUNTS NEEDED ................................................................................................................................ 82
SEQUENCE OF EVENTS ............................................................................................................................ 82
BOND ISSUE ......................................................................................................................................... 82
INVESTED FUNDS ................................................................................................................................ 83
CONTRACT PAYMENTS ARE PROCESSED............................................................................................. 84
ANNUAL PRINCIPAL AND INTEREST PAYMENTS ................................................................................. 84
STATE AID RELEASES BOND PRINCIPAL AND INTEREST ...................................................................... 85
COUNTY MAKES BOND PRINCIPAL AND INTEREST PAYMENT ............................................................ 86
APPLYING BOND FUNDS ..................................................................................................................... 86
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REFUNDING BONDS ............................................................................................................................ 87
YEAR END REPORTING ........................................................................................................................ 87
NARRATIVE .............................................................................................................................................. 87
ACCOUNTS NEEDED ................................................................................................................................ 88
SEQUENCE OF EVENTS ............................................................................................................................ 88
PRINCIPAL AND INTEREST PAYMENTS FROM STATE AID .................................................................... 88
TRLF LOAN PROCEEDS ARE RECEIVED ................................................................................................. 88
STATE AID FUNDS RECEIVED ............................................................................................................... 89
LOAN PAYMENT MADE ....................................................................................................................... 89
CHAPTER 8 ADVANCED ENCUMBRANCE ............................................................................................... 90
NARRATIVE .............................................................................................................................................. 90
ACCOUNTS NEEDED ................................................................................................................................ 90
SEQUENCE OF EVENTS ............................................................................................................................ 91
RESOLUTION ON FILE .......................................................................................................................... 91
PROJECT IS APPROVED ........................................................................................................................ 91
FUNDS ARE ADVANCED ....................................................................................................................... 91
95% PAYMENT IS RECEIVED FOR THE PROJECT .................................................................................. 91
WORK BEGINS ON THE PROJECT ......................................................................................................... 91
PROJECT IS FINALIZED ......................................................................................................................... 92
FUNDS ARE TRANSFERRED FROM MAINTENANCE ............................................................................. 93
FUNDS ARE ADVANCED FOR FINAL PAYMENT .................................................................................... 93
FINAL PAYMENT IS RECEIVED .............................................................................................................. 93
ANOTHER PROJECT IS FINAL WITH AN OVERRUN............................................................................... 93
YEAR END REVENUE REDUCTION FOR STATE AID ADVANCES ............................................................ 94
BEGIN NEW YEAR – ALLOTMENT AND REVERSING ENTRIES .............................................................. 94
EXAMPLES ............................................................................................................................................... 95
Example A............................................................................................................................................ 95
Example B ............................................................................................................................................ 96
Example C ............................................................................................................................................ 97
CHAPTER 9 RECONCILING STATE AID ACCOUNTS .................................................................................. 98
RECONCILING ACCOUNTS TO STATE AID STATUS REPORTS ................................................................... 98
NARRATIVE .............................................................................................................................................. 98
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CSAH REGULAR CONSTRUCTION............................................................................................................. 99
CSAH MUNICIPAL CONSTRUCTION ......................................................................................................... 99
COUNTY TURNBACK ................................................................................................................................ 99
STATE PARK CONSTRUCTION .................................................................................................................. 99
SPECIAL TOWN BRIDGE CONSTRUCTION ................................................................................................ 99
TOWN BRIDGE CONSTRUCTION .............................................................................................................. 99
TOWN ROAD ........................................................................................................................................... 99
CSAH REGULAR MAINTENANCE ............................................................................................................ 100
CSAH MUNICIPAL MAINTENANCE ......................................................................................................... 100
COUNTY DISASTER ................................................................................................................................ 100
RECONCILING THE UNEARNED REVENUE ACCOUNTS .......................................................................... 101
NARRATIVE ........................................................................................................................................ 101
REGULAR MAINTENANCE .................................................................................................................. 101
MUNICIPAL MAINTENANCE .............................................................................................................. 101
REGULAR, MUNICIPAL, SPECIAL TOWN BRIDGE AND TOWN BRIDGE CONSTRUCTION ................... 101
CHAPTER 10 UNALLOCATED COST DISTRIBUTION ............................................................................. 104
NARRATIVE ............................................................................................................................................ 104
ADMINISTRATIVE COSTS ....................................................................................................................... 104
FRINGE BENEFIT RATE CALCULATION ................................................................................................... 105
CONSTRUCTION COSTS ......................................................................................................................... 106
MAINTENANCE COSTS ........................................................................................................................... 106
SHOP AND EQUIPMENT COSTS ............................................................................................................. 107
NON-HIGHWAY RELATED COSTS ........................................................................................................... 108
CHAPTER 11 FIXED ASSETS ................................................................................................................. 109
NARRATIVE ............................................................................................................................................ 109
ACCOUNTS NEEDED .............................................................................................................................. 110
ASSET LISTING ....................................................................................................................................... 110
MINOR EQUIPMENT .............................................................................................................................. 110
PURCHASES ........................................................................................................................................... 111
EXAMPLE 1: NEW UNIT PURCHASED WITH A DISCOUNT ................................................................. 111
DELIVERED SERVICE READY ............................................................................................................... 111
EXAMPLE 2: NEW UNIT PURCHASED WITH TRADE-IN GAIN ............................................................. 111
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$5,000.00 LABOR & EQUIPMENT BEFORE SERVICE READY............................................................... 111
EXAMPLE 3: NEW UNIT PURCHASED WITH TRADE-IN LOSS ............................................................. 112
$5,000.00 LABOR & EQUIPMENT BEFORE SERVICE READY............................................................... 112
DEPRECIATION ...................................................................................................................................... 112
BETTERMENTS ....................................................................................................................................... 112
RENTAL RATES ....................................................................................................................................... 113
EQUIPMENT RENTAL, LEASE & LEASE BACK.......................................................................................... 113
EQUIPMENT RENTALS ....................................................................................................................... 114
EQUIPMENT LEASES .......................................................................................................................... 114
OPERATING LEASE (STRAIGHT LEASE) ............................................................................................... 115
CAPITAL LEASE (LEASE TO OWN) ...................................................................................................... 115
LEASE WITH OPTION ......................................................................................................................... 115
LEASE CONSIDERATIONS ................................................................................................................... 116
BUY BACKS ............................................................................................................................................ 116
EXAMPLE 1: BUY BACK WITH TRADE-IN GAIN ............................................................................... 117
PRESENTATION IN ANNUAL REPORT .................................................................................................... 117
USEFUL LIFE – RECOMMENDED GUIDELINES SUMMARY ..................................................................... 118
CHAPTER 12 INFRASTRUCTURE CAPITALIZATION (GASB 34) ............................................................. 119
REPORTING CAPITAL ASSETS ................................................................................................................. 119
REPORTING GENERAL INFRASTRUCTURE ASSETS AT TRANSITION ....................................................... 119
INITIAL CAPITALIZATION OF GENERAL INFRASTRUCTURE ASSETS ....................................................... 120
Determining Major General Infrastructure Assets ........................................................................... 120
Establishing Capitalization at Transition ........................................................................................... 120
Estimated Historical Cost – Current Replacement Cost .................................................................... 120
Example: Estimated Historical Cost – Current Replacement Cost .................................................... 121
Estimated Historical Cost – Existing Information .............................................................................. 121
Example: Estimated Historical Cost – Existing Information .............................................................. 121
Methods of Calculating Depreciation ............................................................................................... 121
Example: Calculating Depreciation ................................................................................................... 121
Composite Methods .......................................................................................................................... 121
MODIFIED APPROACH FOR REPORTING INFRASTRUCTURE ................................................................. 122
ANNUAL INFRASTRUCTURE REPORTING ............................................................................................... 124
CHAPTER 13 INVENTORY MANAGEMENT .......................................................................................... 125
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NARRATIVE ............................................................................................................................................ 125
ACCOUNTS NEEDED .............................................................................................................................. 125
INVENTORY STRUCTURE ....................................................................................................................... 125
INVENTORY CONTAINMENT.................................................................................................................. 126
INVENTORY CONTROL ........................................................................................................................... 126
INVENTORY VALUATION METHODS ...................................................................................................... 126
FIFO ................................................................................................................................................... 127
LIFO ................................................................................................................................................... 127
AVERAGING ....................................................................................................................................... 127
INVENTORY EXPENSES VERSUS EXPENDITURES ................................................................................... 127
SEQUENCE OF EVENTS .......................................................................................................................... 128
CHAPTER 14 MAINTENANCE COSTING .............................................................................................. 129
ROUTINE MAINTENANCE ...................................................................................................................... 129
DEFINITION: ...................................................................................................................................... 129
REPAIRS AND REPLACEMENTS .............................................................................................................. 130
DEFINITION: ...................................................................................................................................... 130
BETTERMENTS ....................................................................................................................................... 131
DEFINITION: ...................................................................................................................................... 131
SPECIAL WORK ...................................................................................................................................... 132
DEFINITION: ...................................................................................................................................... 132
CHAPTER 15 CONSTRUCTION COSTING ............................................................................................. 133
CHAPTER 16 OTHER ACCOUNTING ISSUES ........................................................................................ 134
CONSTRUCTION OF MAINTENANCE FACILITIES .................................................................................... 134
DISASTER ISSUES ................................................................................................................................... 135
FEMA/Disaster Receipts after Maintenance Costs have been reported .......................................... 135
DISASTER ASSISTANCE CONTINGENCY ACCOUNT ............................................................................ 136
NON STATE AID BONDS ......................................................................................................................... 137
Bonds Accounted for in Debt Service Fund ...................................................................................... 137
Bonds Accounted for in Highway Fund ............................................................................................. 137
SHARED FEDERAL REVENUE .................................................................................................................. 139
ADVANCE OF STATE AID FUNDS FOR FEDERAL PROJECTS .................................................................... 139
ADVANCE RESOLUTION ..................................................................................................................... 140
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TRANSFER FOR HARDSHIP CONDITION OR OTHER LOCAL USE ............................................................ 140
Hardship ............................................................................................................................................ 140
Other Local Use ................................................................................................................................. 140
REVISION OF COUNTY MAINTENANCE APPORTIONMENTS ................................................................. 141
FEDERAL FUND EXCHANGE PRGRAM (FUND SWAPS) .......................................................................... 141
FLEXIBLE HIGHWAY ACCOUNT (FLEX) EXCESS SUM FUNDS ACCOUNTS............................................... 143
ACCOUNTS NEEDED .......................................................................................................................... 144
CHAPTER 17 YEAR END ADJUSTMENTS ............................................................................................. 145
NARRATIVE ............................................................................................................................................ 145
SEQUENCE OF EVENTS .......................................................................................................................... 145
INVENTORY ADJUSTMENTS .............................................................................................................. 145
CURRENT AND DELINQUENT TAXES RECEIVABLE ............................................................................. 145
SALARIES AND WAGES PAYABLE ....................................................................................................... 146
BENEFITS PAYABLE ............................................................................................................................ 146
LONG TERM COMPENSATED ABSENCES PAYABLE ............................................................................ 146
FUND BALANCE NON-SPENDABLE FOR INVENTORY ......................................................................... 147
RESTRICTED FUNDS FOR STATE AID PROJECTS ................................................................................. 148
FUND BALANCE RESTRICTED FUNDS FOR BOND PRINCIPAL AND INTEREST .................................... 149
FUND BALANCE COMMITTED FOR COUNTY PROJECTS/PURPOSES .................................................. 149
ASSIGNED FUND BALANCE ................................................................................................................ 150
RESIDUAL FUND BALANCE ................................................................................................................ 150
CHAPTER 18 ANNUAL REPORT - SAMPLE .......................................................................................... 151
COVER PAGE .......................................................................................................................................... 151
LETTER OF TRANSMITTAL...................................................................................................................... 152
INDEX OF ANNUAL REPORT .................................................................................................................. 153
SUMMARY OF COUNTY HIGHWAY INFORMATION ............................................................................... 154
BRIEF OF ACTIVITIES, COMMENTS AND RECOMMENDATIONS ............................................................ 155
FINANCIAL STATEMENT ........................................................................................................................ 156
RECEIVABLES ......................................................................................................................................... 157
RECEIVABLES ADDENDUM .................................................................................................................... 158
TOWN ROAD ALLOTMENT .................................................................................................................... 159
INVENTORY OF MATERIALS AND SUPPLIES........................................................................................... 160
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LIABILITIES AND FUND BALANCE RESERVES ......................................................................................... 161
LIABILITIES AND FUND BALANCE RESERVES ADDENDUM (OPTIONAL PAGE) ...................................... 162
FIXED ASSETS ......................................................................................................................................... 163
FIXED ASSET BETTERMENTS .................................................................................................................. 164
LAND AND BUILDINGS ........................................................................................................................... 165
STATEMENT OF REVENUES AND EXPENDITURES .................................................................................. 166
SUMMARY OF EXPENDITURES .............................................................................................................. 169
SUMMARY OF MAINTENANCE COSTS BY FUNDS ................................................................................. 170
DETAILED MAINTENANCE COSTS BY FUNDS ......................................................................................... 171
SUMMARY OF MAINTENANCE COSTS BY ROADS – CSAH Regular ........................................................ 172
DETAILED ROUTINE MAINTENANCE COSTS BY ROADS – CSAH REGULAR ............................................ 173
SUMMARY OF MAINTENANCE COSTS BY ROADS – CSAH MUNICIPAL ................................................. 174
DETAILED ROUTINE MAINTENANCE COSTS BY ROADS – CSAH MUNICIPAL ......................................... 175
SUMMARY OF MAINTENANCE COSTS BY ROADS – COUNTY ROADS ................................................... 176
DETAILED ROUTINE MAINTENANCE COSTS BY ROADS – COUNTY ROADS ........................................... 177
SUMMARY OF CONSTRUCTION COSTS – CSAH REGULAR .................................................................... 178
STATEMENT OF CONSTRUCTION COSTS – CSAH REGULAR .................................................................. 179
SUMMARY OF CONSTRUCTION COSTS – CSAH MUNICIPAL ................................................................. 182
STATEMENT OF CONSTRUCTION COSTS – CSAH MUNICIPAL ............................................................... 183
SUMMARY OF CONSTRUCTION COSTS – COUNTY ROADS ................................................................... 185
STATEMENT OF CONSTRUCTION COSTS – COUNTY ROADS ................................................................. 186
LOCAL AGENCY BONDS ......................................................................................................................... 189
ESTIMATED BUDGET ............................................................................................................................. 190
CHAPTER 18 ANNUAL REPORT – INSTRUCTIONS ............................................................................... 191
INSTRUCTIONS ...................................................................................................................................... 191
LETTER OF TRANSMITTAL...................................................................................................................... 191
SUMMARY OF COUNTY HIGHWAY INFORMATION ............................................................................... 191
BRIEF OF ACTIVITIES, COMMENTS AND RECOMMENDATIONS ............................................................ 191
FINANCIAL STATEMENT ........................................................................................................................ 192
ASSETS ............................................................................................................................................... 192
LIABILITIES ......................................................................................................................................... 193
FUND BALANCE ................................................................................................................................. 195
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RECEIVABLES ......................................................................................................................................... 195
RECEIVABLES ADDENDUM .................................................................................................................... 197
TOWN ROAD ALLOTMENT .................................................................................................................... 197
INVENTORY OF MATERIALS AND SUPPLIES........................................................................................... 198
LIABILITIES AND FUND BALANCE RESERVES ......................................................................................... 198
LIABILITIES ......................................................................................................................................... 198
FUND BALANCE ................................................................................................................................. 200
LIABILITIES AND FUND BALANCE RESERVES ADDENDUM (OPTIONAL PAGE) ...................................... 200
FIXED ASSETS ......................................................................................................................................... 200
FIXED ASSETS BETTERMENTS ................................................................................................................ 202
LAND AND BUILDINGS ........................................................................................................................... 203
STATEMENT OF REVENUES AND EXPENDITURES .................................................................................. 204
REVENUES ......................................................................................................................................... 204
EXPENDITURES .................................................................................................................................. 207
YEAR-END CASH RECONCILIATION ........................................................................................................ 207
YEAR-END FUND BALANCE RECONCILIATION ....................................................................................... 207
SUMMARY OF EXPENDITURES .............................................................................................................. 208
SNOW AND ICE CONTROL ................................................................................................................. 208
RIGHT OF WAY .................................................................................................................................. 208
ENGINEERING .................................................................................................................................... 208
CONSTRUCTION ................................................................................................................................ 208
BUILDING AND EQUIPMENT (CAPITAL OUTLAY) ............................................................................... 208
SUMMARY OF MAINTENANCE COSTS BY FUNDS ................................................................................. 209
DETAILED MAINTENANCE COSTS BY FUNDS ......................................................................................... 209
SUMMARY OF MAINTENANCE COSTS BY ROADS - CSAH REGULAR ..................................................... 209
DETAILED ROUTINE MAINTENANCE COSTS BY ROADS - CSAH REGULAR (OPTIONAL PAGE) ............... 210
SUMMARY OF MAINTENANCE COSTS BY ROADS - CSAH Municipal ..................................................... 210
DETAILED ROUTINE MAINTENANCE COSTS BY ROADS - CSAH Municipal (OPTIONAL PAGE) .............. 210
SUMMARY OF MAINTENANCE COSTS BY ROADS - COUNTY ROADS .................................................... 210
DETAILED ROUTINE MAINTENANCE COSTS BY ROADS - COUNTY ROADS (OPTIONAL PAGE) .............. 211
SUMMARY OF CONSTRUCTION COSTS - CSAH Regular ........................................................................ 211
STATEMENT OF CONSTRUCTION COSTS - CSAH REGULAR ................................................................... 211
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SUMMARY OF CONSTRUCTION COSTS - CSAH Municipal ..................................................................... 212
STATEMENT OF CONSTRUCTION COSTS - CSAH Municipal .................................................................. 212
SUMMARY OF CONSTRUCTION COSTS - COUNTY ROADS .................................................................... 212
STATEMENT OF CONSTRUCTION COSTS - COUNTY ROADS .................................................................. 213
STATE AID BONDS ................................................................................................................................. 213
ESTIMATED BUDGET ............................................................................................................................. 213
CHAPTER 19 ANNUAL SUMMARY OF HIGHWAY INFORMATIoN SAMPLE ......................................... 214
INSTRUCTIONS ...................................................................................................................................... 215
APPENDIX .............................................................................................................................................. A
NOTICE OF ANNUAL APPORTIONMENT ................................................................................................ A
AGENCY FUND LEDGER – FEDERAL AID PROJECTS ............................................................................... B
AGENCY FUND LEDGER (CONTINUED) .................................................................................................. C
INDEX ............................................................................................................................................................ 1
CHART OF ACCOUNTS OVERVIEW
I
PURPOSE
The purpose of this manual is to provide consistent cost accounting procedures for reporting purposes.
The manual is divided into sections that generally start with a short narrative describing the funds or accounts within
the section. The narrative is followed by any special considerations that you should be aware of, a list of accounts
required to make the necessary accounting entries and a description of the events that take place within the
accounts. Lastly each section contains a worksheet which enables the user to see all the required accounting entries
at a glance. The last section of the manual, the Appendix, contains the forms that are referenced throughout the
manual.
UPDATES
The State Aid Finance Office, along with the members of the Accounting Task Force, will update the Accounting
Manual as changes occur or updates are necessary.
QUESTIONS
Please feel free to contact the individuals on either of these links, when necessary.
http://www.dot.state.mn.us/safinance/saas.html
http://www.dot.state.mn.us/safinance/contactus.html
CHART OF ACCOUNTS OVERVIEW
II
County Governments, generally, have a chart of accounts set up based on the guidance of the Unified Chart of
Accounts found in the Minnesota County Accounting and Financial Reporting Standards (COFARS). It usually follows
a Fund, Department, Object format; sometimes adding a program and/or service code to further detail a
department’s financial information. Ultimately it is the specifics of the county’s operations and policies that will
drive the chart of accounts but these are guidelines that are widely used.
FUND
Funds are set up by the county based on statute or the county’s need to track specific activities or revenues. The
Road and Bridge or Highway Fund is a Special Revenue Fund. This type of fund consists of a set of self-balancing
accounts restricted in use for the specific purpose of tracking expenditures and revenues related to the county’s
system of roads and bridges. Under the Unified Chart of Accounts these funds are to be a two digit number from 02
– 29. Since the entire highway department will be contained in a single fund this number rarely is used in the
departmental cost accounting systems.
DEPARTMENT
Departments are the second division of county funding. The highway department is most often broken into
Administration, Engineering, Road Maintenance, and Shops & Equipment. Additional departments of Highway
Construction, Traffic Control, and Other may also be utilized. Under the Unified Chart of Accounts these are to be a
three digit number from 300-389. They are used in the departmental cost accounting system to assign costs to
specific areas and are usually part of the cost account codes.
OBJECT
Object codes vary widely between counties and are used to track specific expenditure types and revenue streams.
The Unified Chart of Accounts has set ranges and examples of what can be put into them. It is prescribed that they
are a four digit number with expenditures in the 6000’s and revenues in the 5000’s. For further guidance, you can
reference the Minnesota State Auditor’s Office webpage at and search for “COFARS”.
HIGHWAY ACCOUNTING
There are many activities that the highway departments are required to track for annual state reporting and others
that each county tracks for their own purposes. Most counties utilize a cost accounting system that allocates the
costs to different construction projects, roads, shops or units of equipment. Regardless of the type of accounting
software the county uses the general layout of the chart of accounts should be similar, but will rarely be identical.
Administration Department
This area catches all the costs that are not able to be allocated to a cost center such as a road, unit of equipment or
construction project. Some of these costs can be related to the road system, construction projects as a whole, or all
equipment units. Some of these costs are spread at the end of the year to better show the costs incurred. Examples
of the object costs that are generally found in the Administration Department are:
Engineer’s Salary Administrative Salaries Miscellaneous
Employee Benefit Time Office Supplies Commissioner’s Expense
Utilities Admin Training Admin Travel Expense (Meals, Mileage,
Lodging)
CHART OF ACCOUNTS OVERVIEW
III
Engineering/Construction Department
In the Engineering Department costs are gathered that can be tied to specific construction projects. Some
accounting software includes construction costing that incorporates the contracting spec item listing so engineer’s
estimates can be entered in the software. This creates the need for a more detailed list of activities under this
department.
Examples of some of the project related object costs are:
Grading
Clearing and Grubbing Excavation
Drainage and Structures Seeding & Sodding
Graveling
Pit Stripping Crushing, Screening, and Loading
Hauling Aggregate Materials
Checking Spreading
Culverts
Excavation Concrete
Steel Removal of Old Structure
Temporary By-Pass
Bridges
New Structure Removal of Old Structure
Temporary By-Pass
Stabilized Base
Gravel Material Binder Soil Material
Shaping and Compacting Gravel Pit Stripping
Binder Soil Pit Stripping Loading Binder Soil
Crushing, Screening, and loading Gravel Hauling Gravel
Hauling Binder Soil Stabilizing
Water
Bituminous Surfacing
Bituminous Material for Prime Bituminous Material for Mix
Bituminous Material for Seal Mineral Aggregate for Mix
Mineral Aggregate for Seal Mixing and Laying
Other
Inspection – Construction Inspection - Bridges
Preliminary Engineering Construction Engineering
ROW – Permanent ROW Temporary
Property – Other Than ROW Damages
Construction Permits
CHART OF ACCOUNTS OVERVIEW
IV
There will also be costs in this department that are not directly related to a specific project. In some counties these
are grouped together in the Administration Department and some are spread back to the projects at the end of the
year. Examples of some of the object costs that are not project related are:
Engineer’s Salary Engineering Salaries
Engineering Field Supplies Engineering Office Supplies
Eng. Training Eng. Travel Expense (Meals, Mileage, Lodging)
Research - Not Project Miscellaneous
Road Maintenance
This department tracks the cost of maintaining the roads through the year so these costs can be tied to specific
roads and bridges within the county. Annual reporting to the State of Minnesota requires that this information be
broken down by the road systems Regular County State Aid Highway (CSAH), Municipal State Aid Highway (CSAH
Municipal), and County Roads. Many counties also track costs by road surface type for historical cost reference as
well.
Historically maintenance costs have been separated into four major categories with the object costs under them.
These were not set up in the program or service code format as described in the current COFARS, but their
origination is in an early version of the document. Because COFARS no longer references this set up a new chart of
accounts would not be required to follow it. However, since it is in place in several counties and works fine there is
no need to amend this system if it exists. The format is two letters, “M” for Maintenance and then A, B, C, and D
indicating the sequence only.
Most counties have a maintenance chart of accounts with the four major categories and the accounts that fall under
them are those used by each county that fits the brief descriptions that follow:
Routine Maintenance (MA)
Smoothing Surface (MA1)
- Blading or dragging the earth or gravel roads
- Scarifying for purpose of mixing gravel with binder & removing washouts
Minor Surface Repair (MA2)
- Bituminous patching
- Crack filling
- Repair concrete pavement and crack sealing
- Patch sealing
- Repair sand pockets
Roadside and Drainage (MA3)
- Clean/thaw culverts
- Minor ditch cleaning except for brush
- Repair to tile lines on ROW
- Lower/raise culverts
- Marking culvert ends
- Pick rock off roadside & roadbed
CHART OF ACCOUNTS OVERVIEW
V
Brush and Weed Control (MA4)
- Mowing of grass and weeds on roadsides, around guard rails and bridge ends
- Spraying weeds and brush
- All clearing and grubbing not in connection with construction work (where clearing and grubbing is
done in advance of a grading project then this work should be given a project number, and charged
to Construction.)
Snow and Ice control (MA5)
- Erecting, removing, repairing snow fence, including cost of new fence, posts, and tie wire
- Snow plowing and winging
- Sanding and application of salt and calcium chloride for ice control, including the cost of material
used
- Cleaning snow from bridges and around guardrails
Traffic Services (MA6)
- Erecting and repairing signs and markers, including cost of signs and posts, and erecting and
removing signs for road restrictions
- Traffic signals, maintenance and repair work
- Installation of new traffic signals and railroad grade crossing signals should be a construction item
- Traffic guidelines, center line, stripping
- Flag men on maintenance work
- Road inspection, looking for washouts, etc.
- Road patrol for load restrictions
Repairs and Replacements (MB)
Reshaping (MB1)
- Cutting shoulders and shoulder slopes
- Reshaping roadbed, backsloping, where no appreciable amount of material is added to the roadbed
and ditch bottoms are not changed or deepened appreciably
Resurfacing (MB2)
- All re-graveling of gravel roads, whether spot graveling or a continuous coat
- Gravel for newly graded roads shall be charged to construction, this may be applied in two coats in
succeeding years, but should be charged to construction, including the cost of materials
- Includes addition of clay or binder to the surface, this also can be an item under construction
- Includes water, rolling, spreading if gravel is stabilized, this work is included in some construction
projects
Culverts, Bridges, & Guard Rails (MB3)
- Includes replacement of deteriorated or damaged culverts by one of like diameter, this shall include
labor and materials, if a culvert is replaced with one of larger diameter, this should be under MC1,
including labor and materials
- Includes all bridge repairs and painting
- Repair of guard rails including labor and materials
CHART OF ACCOUNTS OVERVIEW
VI
Washouts (MB4)
- Includes all washouts on shoulders, ditches, backslopes and road bed. If a culvert is washed out and
a new culvert is installed, the cost of the culvert should be under MB3 or MC1, labor and backfilling
under washouts
Betterments (MC)
New Culverts, Guard Rails & Tiling (MC1)
- Includes new culvert installation where culvert was not previously in place, include labor and
material
- Replacement of old culvert with a culvert of larger diameter, include labor and material
- Includes new guard rail, labor and material
- Includes new tile, labor and material
- Rip Rap, labor and material
- Erosion control structures, labor and materials
- New approaches and driveways fill material and culvert
Cuts and Fills (MC2)
- Includes reshaping work where the road grade and ditch bottoms are materially changed
- Correction of sight distance
- Swamp fills or embankment construction not under contract
Sodding and Seeding (MC3)
- Includes labor and materials on all sodding and seeding
- Tree Planting
Bituminous Treatment (MC4)
- Includes spot treatments, complete retreatments and seal coating
Special Work (MD)
Dust Treatments (MD1)
- Calcium Chloride or other applications to settle dust
Prospecting for Gravel (MD2)
Mud Jacking and Frost Boils Mud Jacking
- Frost boils include sub-grade excavation, sand and gravel backfill
There will also be costs in this department that are not directly related to a specific road. In some counties these
are grouped together in the Administration Department and some are spread back to the roads at the end of the
year. Examples of some of the object costs that are not related to a specific road are:
Maintenance Superintendent Salaries Maintenance Worker Salaries
Maintenance Road Supplies Maintenance Office Supplies
Maintenance Training Maintenance Travel Expense (Meals, Mileage, Lodging)
Miscellaneous
CHART OF ACCOUNTS OVERVIEW
VII
Shop and Equipment
Capital outlay and equipment for all departments is generally tracked and accounted for in this area, as well as costs
associated with the purchase and maintenance of equipment. Examples of some of the equipment and capital
improvement related object costs are:
Equipment Buildings & Grounds
Purchases Purchase
Repair Labor Additions and Betterments
Repair Service Gas & Diesel
Repair Parts (may break out major parts such as tires to better track)
There will also be costs in this department that are not directly related to a specific equipment unit. In some counties
these are grouped together in the Administration Department and some are spread back to the units at the end of
the year. Examples of some of the object costs that are not related to a specific unit are:
Mechanic/Building Maintenance Salaries Shop Supplies
Shop Office Supplies Shop Training
Shop Utilities Shop Maintenance
Miscellaneous Shop Travel Expense (Meals, Mileage, Lodging)
Inventory
Highway departments generally purchase their major materials used and keep them in a separate set of accounts.
The cost to purchase the inventory is a budget item but does not enter the actual departmental costs until it is
utilized. Each county varies widely in what and how they inventory materials. A few things to consider when
determining inventory items are:
Unit Cost: Each unit under an inventory number should be valued the same to provide an accurate value of
the total items quantity x cost = total value (example: headlights can vary widely in unit price). This does not
refer to a price increase for all units under a number.
Item Value: There should be a cost benefit to tracking the cost item by item. Nuts & bolts would be an
example. Do the cost of tracking the quantity monthly and the labor to do an annual count add value or
should they be shop supplies?
Usage History: Is this item something you will want to know how many were used and where? Cutting edges
come in sets and each unit will use a predetermined number of edges at each change, will you want to be
able to look into inventory and determine when a unit had the edges changed?
Availability: If you keep a supply on hand it should be inventoried, but if you have a readily available source
you may want to charge each one to the unit as purchased to reduce overhead.
Urgency: If this is an item that may be needed immediately if it fails or wears out and provides little notice
of pending failure you may want to inventory the item. (Flat tire on a plow truck at 3:00 a.m.)
When deciding if there is merit in keeping inventory of an item it is good practice to talk to the end users and have
some of these questions addressed.
CHAPTER 1 – ANNUAL ALLOTMENTS
1
In compliance with the Department of Transportation State Aid Rules Chapter 8820.1200, Subp.2, the
Commissioner shall certify the annual apportionment to each respective county or urban municipality no
later than January 25th of each year. The Commissioner’s Order and Annual Distribution Letters are
available at the State Aid Finance Website:
Commissioner’s Order
Distribution Letters
Example A
REGULAR MAINTENANCE ALLOTMENT
The Notice of Annual Apportionment will show the amount of the current year's Regular Maintenance
Allotment. If your county receives Trunk Highway Turnback Maintenance the amount is included in the
allotment amount.
Trunk Highway Turnback Maintenance information is available at the State Aid Finance website.
EXAMPLES of these entries.
Accounting Entry: to post annual apportionment
Date: MM/DD/YYYY
Explanation: YYYY Regular Maintenance Allotment
Debit Account: (asset) Regular Maintenance Allotment
Credit Account: (liability) Regular Maintenance Unearned Revenue
Amount: From Notice of Annual Apportionment
REGULAR CONSTRUCTION ALLOTMENT
The Notice of Annual Apportionment will show the allotment amount for the current year’s Regular
Construction. This allotment is not considered receivable or current revenue at this time. The funds will
become a receivable when they are requested from the state to fund a Regular Construction Project and
current revenue will be recognized when the actual work is completed on the project. EXAMPLES of these
entries.
Accounting Entry: to post annual apportionment
Date: MM/DD/YYYY
Explanation: YYYY Regular Construction Allotment
Debit Account: (asset) Regular Construction Allotment
Credit Account: (liability) Regular Construction Unearned Revenue
Amount: From Notice of Annual Apportionment
CHAPTER 1 – ANNUAL ALLOTMENTS
2
MUNICIPAL MAINTENANCE ALLOTMENT
The Notice of Annual Apportionment will show the amount of the current year's Municipal Maintenance
Allotment. If your county receives Trunk Highway Turnback Maintenance the amount is included in the
allotment amount.
Trunk Highway Turnback Maintenance information is available at the State Aid Finance website: EXAMPLE
of these entries.
Accounting Entry: to post annual apportionment
Date: MM/DD/YYYY
Explanation: YYYY Municipal Maintenance Allotment
Debit Account: (asset) Municipal Maintenance Allotment
Credit Account: (liability) Municipal Maintenance Unearned Revenue
Amount: From Notice of Annual Apportionment
MUNICIPAL CONSTRUCTION ALLOTMENT
The Notice of Annual Apportionment will show the allotment amount for the current year’s Municipal
Construction. This allotment is not considered a receivable or current revenue at this time. The funds will
become a receivable when they are requested from the state to fund a Municipal Construction Project
and current revenue will be recognized when the actual work is completed on the project. EXAMPLE of
these entries.
Accounting Entry: to post annual apportionment
Date: MM/DD/YYYY
Explanation: YYYY Municipal Construction Allotment
Debit Account: (asset) Municipal Construction Allotment
Credit Account: (liability) Municipal Construction Unearned Revenue
Amount: From Notice of Annual Apportionment
TOWN BRIDGE ALLOTMENT
The Town Bridge Allotment should be accounted for in the same way as CSAH/MSAH Construction
Allotment. This means the Town Bridge Allotment (asset), Town Bridge Unearned Revenue (liability),
Town Bridge Receivable (asset), and Town Bridge Construction Revenue (revenue) Accounts should be
used in the same manner as the Regular and Municipal Accounts. You may need to set these four accounts
up in your Chart of Accounts.
Accounting Entry: to post annual apportionment
Date: MM/DD/YYYY
Explanation: YYYY Town Bridge Allotment
Debit Account: (asset) Town Bridge Allotment
Credit Account: (liability) Town Bridge Unearned Revenue
Amount: From Notice of Annual Apportionment
CHAPTER 1 – ANNUAL ALLOTMENTS
3
TOWN ROAD ALLOTMENT
The Town Road Allotment represents funds specifically earmarked for use by Minnesota townships. The
Notice of Annual Apportionment will show the allotment amount for the current years Town Road
Allotment. The total allotment is sent to each county at the beginning of each year per State Aid Rules
Chapter 8820.1400, Subp. 5A. The County is responsible to apportion these funds to each township per
M.S. 162.081, Subp. 2 and 4. The county is required to distribute the funds to each township annually by
March 1, per M.S. 162.081, Subp. 3.
If the money is receipted into the General Revenue Fund, it is up to the County Auditor to record it. If the
money is receipted into the Road and Bridge Fund, the following entries should be made to reflect both
the receipt and the disbursements. EXAMPLES of these entries.
When the Notice of State Aid Annual Apportionment is received:
No entry is really needed at this time. You may wait until the money is actually received from the State.
When the money is actually received from the State:
Accounting Entry: to post annual apportionment
Date: MM/DD/YYYY
Explanation: YYYY Town Road Allotment
Debit Account: (asset) Cash
Credit Account: (revenue) Town Road Allotment Revenue
Amount: Amount of State Warrant
When the money is apportioned and sent to the townships:
Accounting Entry: (one entry per township)
Date: MM/DD/YYYY
Debit Account: (expense) Town Road Expense
Credit Account: (asset) Cash
Vendor Number 1: Vendor number you use for each township
Voucher Number 1: Voucher or Warrant number used to pay
Contract Number 1: No entry needed
Quantity Purchased 1: No entry needed
Amount: Dollar amount sent to this township
1 The entry above may be made through adjustment or purchase channels; however, use of a purchase
entry will allow the system to keep track of each of these disbursements by township and warrant number
for a better audit trail.
NOTE: The annual report should include a page with the amount of Town Road money sent to each
township.
CHAPTER 1 – ANNUAL ALLOTMENTS
4
EXAMPLES
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
5
NARRATIVE
The Maintenance Allotment is used to fund county performed maintenance activities on state aid
highways. Annually, each Minnesota County Highway Department is issued a Notice of Annual
Apportionment that shows the new year allotment amount for each maintenance account. The Annual
Apportionment Letters are available at the State Aid Finance Website:
There are two maintenance accounts that have specific purposes.
County State Aid Highway (CSAH Regular) or Regular Maintenance which means activity performed on rural roads. Municipal State Aid Highway (CSAH Municipal) or Municipal Maintenance which means activity performed on roads within the city limits of cities with a population of less than 5,000.
The state will only reimburse the county for the amount of actual maintenance expenses incurred. The state does, however, advance maintenance funds to the county based on the payment schedule as described in the State Aid Operations Rules, Chapter 8820.1400, Subp. 5 to 8. A portion of the maintenance allotment is withheld pending a completed Annual Summary of Highway Information Report. Example
If a county has State Aid bond (Chapter 7) interest obligations due in the current year, the amount will be
deducted and reserved for that purpose prior to advancing maintenance funds.
Many counties will spend their entire maintenance allotment. If a county does not spend their entire
allotment, the remaining balance in their account is transferred to their respective construction account.
In some cases, the county may be overpaid, in these cases the overpayment will be applied to the next
construction project that is requested.
REGULAR MAINTENANCE ACCOUNT
ACCOUNTS NEEDED
(revenue) - REGULAR MAINTENANCE REVENUE
(asset) - CASH
(asset) - REGULAR MAINTENANCE RECEIVABLE
(asset) - REGULAR MAINTENANCE ALLOTMENT
(asset) - REGULAR CONSTRUCTION ALLOTMENT
(liability) - REGULAR MAINTENANCE UNEARNED REVENUE
(liability) - REGULAR CONSTRUCTION UNEARNED REVENUE
(liability) - DUE TO STATE AID - OVERPAYMENTS
NOTE: It is not necessary to use separate accounts to distinguish between regular and municipal
funds. One general account may be used to account for the two funds, if desired.
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
6
SEQUENCE OF EVENTS
Payments from the state are received in the form of an EFT (Electronic Fund Transfer). Notice of the EFT
is received by the County Auditor/Treasurer Office. If you have authorization to view payments received
from the state, you may access the information at Vendor Payments.
1ST ADVANCE PAYMENT
In accordance with the State Aid Operations Rules Chapter 8820.1400, Subp 5, the county is advanced
50% of its current year’s Regular Maintenance Allotment at the earliest practical date after the allotments
have been determined. The 50% is calculated after reducing the allotment by any State Aid Bond Interest
due that year. Example A
Accounting Entry: 1st State Aid Regular Maintenance Payment
Debit Account: (asset) Cash
Credit Account: (asset) Regular Maintenance Allotment
2ND ADVANCE PAYMENT
In accordance with the State Aid Operations Rules Chapter 8820.1400, Subp 6, the county is advanced the
remaining 40% of the Regular Maintenance Allotment minus any State Aid Bond Interest due that year,
this payment will be received the end of the first week in July. To adjust the percentage to 50%, a request
must be submitted to State Aid Finance prior to January 1st. The Annual Summary of Highway Information
report must be filed by August 1st of the following year. Example A
Accounting Entry: 40% State Aid Regular Maintenance Payment
Debit Account: (asset) Cash
Credit Account: (asset) Regular Maintenance Allotment
FINAL MAINTENANCE PAYMENT
In the following calendar year, if State Aid owes the county money from its previous year’s Allotment
Account, (Examples 3A and 3B), the money will be sent as soon as the Annual Summary of Highway
Information Report has been submitted and approved.
YEAR-END ENTRIES
Three different situations can occur at year-end. They are described below:
Actual Regular Maintenance Expenses, including State Aid Bond Interest charges, are GREATER THAN the original allotment amount. Example A, # 3(A1) and 3(A2)
Recognize revenue earned during the current year for Regular Maintenance.
Accounting Entry: For total amount of State Aid Allotment
Debit Account: (liability) Regular Maintenance Unearned Revenue
Credit Account: (revenue) Regular Maintenance Revenue
NOTE: The amount recognized as revenue may not exceed the Regular Maintenance Unearned
Revenue Account.
Recognize unpaid balance of Regular Maintenance from State Aid for the original allotment amount.
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
7
Accounting Entry: for amount currently remaining in the county's Regular Maintenance
Allotment Account
Debit Account: (asset) Regular Maintenance Receivable
Credit Account: (asset) Regular Maintenance Allotment
NOTE: After these entries, the county's Regular Maintenance Allotment and Regular
Maintenance Unearned Revenue Accounts should be 0, while its Regular Maintenance
Receivable Account should be the amount of the unpaid State Aid Regular Maintenance
funds.
Actual Regular Maintenance Expenses, including State Aid Bond Interest charges, are LESS THAN the original allotment amount, BUT GREATER THAN the cash already received from State Aid. Example B, # 3(B1), 3(B2) and 3(B3)
Recognize revenue earned during the current year for Regular Maintenance including bond interest
charges.
Accounting Entry: For revenue based on Regular Maintenance Expense plus Bond Interest
Charges.
Debit Account: (liability) Regular Maintenance Unearned Revenue
Credit Account: (revenue) Regular Maintenance Revenue
Recognize unpaid balance of Regular Maintenance from State Aid.
Calculate the amount owed to the county:
Actual Regular Maintenance Expenses
Plus: Bond Interest Expense
Minus: State Aid Payments Received
Minus: Bond Interest Received (if any)
Equals: Amount owed to County from State Aid
Accounting Entry: for amount owed to the county as calculated above.
Debit Account: (asset) Regular Maintenance Receivable
Credit Account: (asset) Regular Maintenance Allotment
NOTE: After these entries, the county should have the same amount in both its Regular
Maintenance Allotment Account and its Regular Maintenance Unearned Revenue
Account. These amounts represent the unused Regular Maintenance Allotment which
needs to be transferred to the Regular Construction Accounts as shown (B3).
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
8
Transfer the unused balance of Regular Maintenance from the Regular Maintenance Accounts to the
Regular Construction Accounts.
Calculate the amount to be transferred to the construction account:
Original Regular Maintenance Allotment
Minus: Bond Interest Expenses
Minus: Actual Regular Maintenance Expenses
Equals: Amount of remaining Regular Maintenance Allotment
Accounting Entry: to reduce Regular Maintenance Accounts
Debit Account: (liability) Regular Maintenance Unearned Revenue
Credit Account: (asset) Regular Maintenance Allotment
Accounting Entry: to increase Regular Construction Accounts
Debit Account: (asset) Regular Construction Allotment
Credit Account: (liability) Regular Construction Unearned Revenue
Actual Regular Maintenance Expenses, including State Aid Bond Interest charges, are LESS THAN the original allotment amount, AND LESS THAN the cash already received from State Aid. Thus, the state has made an OVERPAYMENT to the county for Regular Maintenance. Example C, # 3(C1), 3(C2) and 3(C3)
Recognize revenue earned during the current year for Regular Maintenance including bond interest
charges.
Accounting Entry: for revenue based on Regular Maintenance Expense plus Bond Interest
Charges
Debit Account: (liability) Regular Maintenance Unearned Revenue
Credit Account: (revenue) Regular Maintenance Revenue
Recognize State Aid OVERPAYMENT of Regular Maintenance and transfer the OVERPAYMENT amount to
the Regular Construction Allotment Account to be used on future construction projects.
State Aid Payments Received
Plus: Bond Interest Received
Minus: Bond Interest Expenses
Minus: Actual Regular Maintenance Expenses
Equals: Overpaid Amount Regular Maintenance Allotment
Accounting Entry: for amount overpaid to county as calculated above.
Debit Account: (asset) Regular Construction Allotment
Credit Account: (liability) SA Regular Construction Overpayments
AND
Debit Account: (liability) Regular Maintenance Unearned Revenue
Credit Account: (liability) Regular Construction Unearned Revenue
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
9
NOTE: After these entries, the county should have the same amount in both its Regular
Maintenance Allotment Account and its Regular Maintenance Unearned Revenue
Account. These amounts represent the unused Regular Maintenance Allotment which
needs to be transferred to the Regular Construction Accounts (C3). The state does not
recognize this overpayment or transfer until they receive the Annual Summary of Highway
Information Report.
Transfer the unused balance of Regular Maintenance from the Regular Maintenance Accounts to the
Regular Construction Accounts.
Calculate the amount to be transferred to the construction account:
Original Regular Maintenance Allotment
Minus: Amount Received from State Aid (Includes Bond Interest)
Equals: Balance to Transfer to Regular Construction
Accounting Entry: to reduce Regular Maintenance Accounts
Debit Account: (liability) Regular Maintenance Unearned Revenue
Credit Account: (asset) Regular Maintenance Allotment
Accounting Entry: to increase Regular Construction Accounts
Debit Account: (asset) Regular Construction Allotment
Credit Account: (liability) Regular Construction Unearned Revenue
FINAL MAINTENANCE PAYMENT
If State Aid owes the county money from its previous year's Allotment Account, as in examples 3A and 3B,
the money will be sent as soon as the Annual Summary of Highway Information Report has been
submitted and approved. This assumes the county made the correct year end adjustment entries as
outlined in steps above. Example A, # 4
Accounting Entry: for amount of State Aid payment
Debit Account: (asset) Cash
Credit Account: (asset) Regular Maintenance Receivable
If dollars remain in the Regular Maintenance Account (Examples 3B and 3C above.) State Aid (upon receipt
of the county’s Annual Summary of Highway Information Report) will transfer the funds from the Regular
Maintenance Allotment to the Regular Construction Allotment. This transfer will appear on the Status
Report in the SAAS (State Aid Accounting System).
NOTE: Since the county has already made these transfers during its year-end adjustment entries
(see previous accounting entries), no additional entries are needed at this time. The state
transfer notice should be verified against the money actually transferred at year-end by
the county.
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
10
EXAMPLES
Example A
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
11
Example B
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
12
Example C
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
13
MUNICIPAL MAINTENANCE ACCOUNT
ACCOUNTS NEEDED
(revenue) - MUNICIPAL MAINTENANCE REVENUE
(asset) - CASH
(asset) - MUNICIPAL MAINTENANCE RECEIVABLE
(asset) - MUNICIPAL MAINTENANCE ALLOTMENT
(asset) - MUNICIPAL CONSTRUCTION ALLOTMENT
(liability) - MUNICIPAL MAINTENANCE UNEARNED REVENUE
(liability) - MUNICIPAL CONSTRUCTION UNEARNED REVENUE
(liability) - DUE TO STATE AID - OVERPAYMENTS
SEQUENCE OF EVENTS
Payments from the state are received in the form of an EFT (Electronic Fund Transfer). Notice of the EFT
is received by the County Auditor/Treasurer Office. If you have authorization to view payments received
from the state you may access the information at Vendor Payments.
1ST ADVANCE PAYMENT
In accordance with State Aid Operations Rules Chapter 8820.1400, Subp. 5, the county is advanced 50%
of its current year Municipal Maintenance Allotment at the earliest practical date after the allotments
have been determined. To adjust the percentage lower than 50%,, a request must be submitted to State
Aid Finance prior to January 1st. Example A, # 1
Accounting Entry: 1st State Aid Municipal Maintenance Payment
Debit Account: (asset) Cash
Credit Account: (asset) Municipal Maintenance Allotment
2ND ADVANCE PAYMENT
In accordance with State Aid Operations Rules Chapter 8820.1400, Subp. 6, the county may be advanced
40% or the remaining 50% of the Municipal Maintenance Allotment, this payment will be received the
end of the first week in July. In order to receive the remaining 50% a request must be submitted to State
Aid Finance prior to January 1st and the Annual Summary of Highway Information Report must be filed by
August 1st of the following year. Example A, # 2
Accounting Entry: 2nd State Aid Municipal Maintenance Payment
Debit Account: (asset) Cash
Credit Account: (asset) Municipal Maintenance Allotment
FINAL MAINTENANCE PAYMENT
In the following calendar year, if State Aid owes the county money from its previous year’s Allotment
Account, (Examples 3A and 3B), the money will be sent as soon as the Annual Summary of Highway
Information Report has been submitted and approved. This assumes the county made the correct year
end adjustment entries as outlined in steps above.
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
14
YEAR-END ENTRIES
Three different situations can occur at year-end. They are described below:
Actual Municipal Maintenance Expenses are GREATER THAN the original allotment amount. Example A, # 3(A1) and 3(A2)
Recognize revenue earned during the current year for Municipal Maintenance.
Accounting Entry: total amount of State Aid Municipal Maintenance Allotment
Debit Account: (liability) Municipal Maintenance Unearned Revenue
Credit Account: (revenue) Municipal Maintenance Revenue
NOTE: The amount recognized as revenue may not exceed the Municipal Maintenance
Unearned Revenue Account.
Recognize unpaid balance of Municipal Maintenance from State Aid for the original allotment amount.
Accounting Entry: for amount currently remaining in the county's Municipal Maintenance
Allotment Account
Debit Account: (asset) Municipal Maintenance Receivable
Credit Account: (asset) Municipal Maintenance Allotment
NOTE: After these entries, the county's Municipal Maintenance Allotment and Municipal
Maintenance Unearned Revenue Accounts should be, while its Municipal Maintenance
Receivable Account should be the amount of the unpaid State Aid Municipal
Maintenance funds.
Actual Municipal Maintenance Expenses are LESS THAN the original allotment amount, BUT GREATER THAN the cash already received from State Aid. Example B, # 3(B1), 3(B2) and 3(B3)
Recognize revenue earned during the current year for Municipal Maintenance.
Accounting Entry: for revenue based on Municipal Maintenance Expense
Debit Account: (liability) Municipal Maintenance Unearned Revenue
Credit Account: (revenue) Municipal Maintenance Revenue
Recognize unpaid balance of Municipal Maintenance from State Aid.
Calculate the amount owed to the county:
Actual Municipal Maintenance Expenses
Minus: State Aid Payments Received
Equals: Amount owed to County from State Aid
Accounting Entry: for amount owed to the county as calculated above.
Debit Account: (asset) Municipal Maintenance Receivable
Credit Account: (asset) Municipal Maintenance Allotment
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
15
NOTE: After these entries, the county should have the same amount in both its Municipal
Maintenance Allotment Account and its Municipal Maintenance Unearned Revenue
Account. These amounts represent the unused Municipal Maintenance Allotment which
needs to be transferred to the Municipal Construction Accounts as shown below in entry.
(B3)
Transfer the unused balance of Municipal Maintenance from the Municipal Maintenance Accounts to the
Municipal Construction Accounts.
Calculate the amount to be transferred to the construction account:
Original Municipal Maintenance Allotment
Minus: Actual Municipal Maintenance Expenses
Equals: Amount of remaining Municipal Maintenance Allotment
Accounting Entry: to reduce Municipal Maintenance Accounts
Debit Account: (liability) Municipal Maintenance Unearned Revenue
Credit Account: (asset) Municipal Maintenance Allotment
Accounting Entry: to increase Municipal Construction Accounts
Debit Account: (asset) Municipal Construction Allotment
Credit Account: (liability) Municipal Construction Unearned Revenue
Actual Municipal Maintenance Expenses are LESS THAN the original allotment amount, AND LESS THAN the cash already received from State Aid. Thus, the state has made an OVERPAYMENT to the county for Municipal Maintenance. Example C, # 3(C1), 3(C2) and 3(C3)
Recognize revenue earned during the current year for Municipal Maintenance.
Accounting Entry: for revenue based on Municipal Maintenance Expenses
Debit Account: (liability) Municipal Maintenance Unearned Revenue
Credit Account: (revenue) Municipal Maintenance Revenue
Recognize State Aid OVERPAYMENT of Municipal Maintenance and transfer the OVERPAYMENT amount
to the Municipal Construction Allotment Account to be used on future construction projects.
State Aid Payments Received
Minus: Actual Municipal Maintenance Expenses
Equals: Overpaid Amount Municipal Maintenance Allotment
Accounting Entry: for amount overpaid to county as calculated above.
Debit Account: (asset) Municipal Construction Allotment
Credit Account: (liability) SA Municipal Construction Overpayments
AND
Debit Account: (liability) Municipal Maintenance Unearned Revenue
Credit Account: (liability) Municipal Construction Unearned Revenue
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
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NOTE: After these entries, the county should have the same amount in both its Municipal
Maintenance Allotment Account and its Municipal Maintenance Unearned Revenue
Account. These amounts represent the unused Municipal Maintenance Allotment which
needs to be transferred to the Municipal Construction Accounts as shown in entry (C3).
The state does not recognize this overpayment or transfer until they receive the Annual
Summary of Highway Information Report.
Transfer the unused balance of Municipal Maintenance from the Municipal Maintenance Accounts to the
Municipal Construction Accounts.
Calculate the amount to be transferred to the construction account:
Original Municipal Maintenance Allotment
Minus: Amount Received from State Aid
Equals: Balance to Transfer to Municipal Construction
Accounting Entry: to reduce Municipal Maintenance Accounts
Debit Account: (liability) Municipal Maintenance Unearned Revenue
Credit Account: (asset) Municipal Maintenance Allotment
Accounting Entry: to increase Municipal Construction Accounts
Debit Account: (asset) Municipal Construction Allotment
Credit Account: (liability) Municipal Construction Unearned Revenue
FINAL MAINTENANCE PAYMENT
In the following calendar year, if State Aid owes the county money from its previous year's Allotment
Account, as in examples 3A and 3B, the money will be sent as soon as the Annual Summary of Highway
Information Report has been submitted and approved. This assumes the county made the correct year
end adjustment entries as outlined in steps above. Example A, # 4
Accounting Entry: for amount of State Aid payment
Debit Account: (asset) Cash
Credit Account: (asset) Municipal Maintenance Receivable
If dollars remain in the Municipal Maintenance Account, as in examples 3B and 3C above. State Aid (upon
receipt of the county’s Annual Summary of Highway Information Report) will transfer the funds from the
Municipal Maintenance Allotment to the Municipal Construction Allotment. This transfer will appear on
the Status Report in the SAAS (State Aid Accounting System).
NOTE: Since the county has already made these transfers during its year-end adjustment entries
(see previous accounting entries), no additional entries are needed at this time. The state
transfer notice should be verified against the money actually transferred at year-end by
the county.
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
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EXAMPLES
Example A
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
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Example B
CHAPTER 2 – REGULAR AND MUNICIPAL MAINTENANCE ACCOUNTS
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Example C
CHAPTER 3 – REGULAR AND MUNICIPAL CONSTRUCTION ACCOUNTS
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NARRATIVE
Construction Allotments are used to fund county construction projects on State Aid Highways. Annually,
each Minnesota County Highway Department is issued a Notice of Annual Apportionment; this document
shows the New Year allotments for each construction account. The Annual Apportionment Letters are
available at the State Aid Finance Website.
There are two primary construction allotments for construction projects; this chapter will discuss these
two allotments. Both allotments will be discussed together because the accounting rules are the same in
each instance. The two allotments are, CSAH Regular Construction Allotment and CSAH Municipal
Construction Allotment.
SPECIAL CONSIDERATIONS
When reviewing the Examples on the following pages, please note the following special items that you
might encounter from time to time.
The account used in our example is for a Municipal Construction situation. When accounting for a Regular Construction Project, the accounting would be identical; however, the Regular Construction accounts would be used instead of Municipal.
Note in Example D, regarding an Underrun with an Overpayment that we show the use of an account called Due to State Aid – Overpayments. Note the way in which this account is used to keep track of Overpayments due to project underruns from State Aid. Note also the awarding of Project 088-603-003 and how this account is affected when State Aid applies the overpayment to this newly let project.
Overpayment Report Website – Put in password to get at the report (which is reports1), the go to State
Aid County and Municipality Reports and click on the SAAS Overpayments report.
ACCOUNTS NEEDED
(const exp) REGULAR CONSTRUCTION EXPENSES (there may be numerous of these)
(const exp) MUNICIPAL CONSTRUCTION EXPENSES (there may be numerous of these)
(revenue) REGULAR CONSTRUCTION REVENUE
(revenue) MUNICIPAL CONSTRUCTION REVENUE
(asset) CASH
(asset) REGULAR CONSTRUCTION RECEIVABLE
(asset) MUNICIPAL CONSTRUCTION RECEIVABLE
(asset) REGULAR CONSTRUCTION ALLOTMENT
(asset) MUNICIPAL CONSTRUCTION ALLOTMENT
(liability) CONTRACTS PAYABLE
(liability) DUE TO STATE AID REGULAR CONSTRUCTION – OVERPAYMENTS
(liability) DUE TO STATE AID MUNICIPAL CONSTRUCTION – OVERPAYMENTS
(liability) REGULAR CONSTRUCTION UNEARNED REVENUE
(liability) MUNICIPAL CONSTRUCTION UNEARNED REVENUE
CHAPTER 3 – REGULAR AND MUNICIPAL CONSTRUCTION ACCOUNTS
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The following accounts are needed only if there are allotment transfers between maintenance and
construction accounts:
(asset) REGULAR MAINTENANCE ALLOTMENT
(asset) MUNICIPAL MAINTENANCE ALLOTMENT
(liability) REGULAR MAINTENANCE UNEARNED REVENUE
(liability) MUNICIPAL MAINTENANCE UNEARNED REVENUE
SEQUENCE OF EVENTS
PROJECT IS APPROVED
Your allotments are reduced throughout the year as construction contracts are let and payment requests
are sent in for State Aid Funding Approval. When State Aid approves the funding you will need to recognize
the State Aid Receivable. Example A, # 1
Recognize receivable from State Aid and reduce the allotment.
Accounting Entry: for amount of State Aid Construction Obligation ONLY
Debit Account: (asset) State Aid Receivable
Credit Account: (asset) State Aid Allotment
NOTE: Counties can request and receive Project Development (which includes Preliminary Engineering
and/or Construction Engineering), Utility Relocation and Right of Way funds from State Aid Funds.
Be sure the above entry is only in the amount of the State Aid Construction Obligation as stated
on the State Aid Partial Payment Request Form. See the next step to post the amounts for Project
Development, Utility Relocation and Right of Way.
95% PAYMENT IS RECEIVED FOR THE PROJECT
After the State Aid Partial Payment Request has been approved you will receive the actual payment for
the project. State Aid advances 95% of the total State Aid Construction Obligation. The remaining 5% is
encumbered and will be paid to you when the project is complete and all costs are verified. In addition, if
requested, you will receive Project Development, Utility Relocation and Right of Way. Requests for actual
Project Development costs are submitted along with the Report of Final Estimate. Example A, # 2A, 2B, &
2C
Be sure to break up the entry as suggested below if you are being paid for Project Development, Utility
Relocation and/or Right of Way.
Recognize the receipt of the State Aid Payment.
Accounting Entry: for 95% of State Aid obligation only
Debit Account: (asset) Cash
Credit Account: (asset) State Aid Receivable
CHAPTER 3 – REGULAR AND MUNICIPAL CONSTRUCTION ACCOUNTS
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Recognize receipt of Project Development, Utility Relocation and Right of Way.
Accounting Entry: for the amount of the Project Development, Utility Relocation and/or
Right of Way, if any
Debit Account: (asset) Cash
Credit Account: (asset) State Aid Construction Allotment
Recognize revenue for Project Development, Utility Relocation and/or Right of Way.
Accounting Entry: for the amount of the Project Development, Utility Relocation and/or
Right of Way, if any
Debit Account: (liability) State Aid Unearned Revenue
Credit Account: (revenue) State Aid Construction Revenue
WORK BEGINS ON THE PROJECT
Sometime after State Aid approval, work actually begins on the contract. Your county inspectors verify that the work is indeed done according to specifications and a partial payment is paid to the contractor. There are two things to be aware of:
Amount of Work Certified ($ amount of work actually performed) minus: Any retainage ($ withheld as an insurance factor)
equals: Cash paid to Contractor ($ amount of actual disbursement)
The following entries will need to be made to recognize the construction expense, the earned State Aid
revenue, and the disbursement to the contractor. Example A, # 3A, 3B & 3C
Recognize the construction expense.
Accounting Entry: recognize expenses as work is certified on contract.
Debit Account: (const exp) Construction Expenses
Credit Account: (liability) Contracts Payable
Recognize the amount of the State Aid Allotment that can now be considered Current Year Earned
Revenue.
Accounting Entry: recognize revenue for amount of work certified.
Debit Account: (liability) State Aid Unearned Revenue
Credit Account: (revenue) State Aid Construction Revenue
Recognize the disbursement to the contractor.
Accounting Entry: for amount of contractor disbursement.
Debit Account: (liability) Contracts Payable
Credit Account: (asset) Cash
CHAPTER 3 – REGULAR AND MUNICIPAL CONSTRUCTION ACCOUNTS
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PROJECT IS FINALIZED
Numerous partial payments may be made to the contractor following the same sequence as in the step above. When the contract is completed and a State Aid Final Payment Request is submitted, the State will issue a final payment. State Aid Finance - SAAS Reports
Select State Aid County and Municipality Reports / SAAS Payment Document - Construction to view the
payment information on the project. This document outlines the total project costs and shows any
increase or decrease to the Construction Allotment Account. Four different situations can occur. These
are:
Project is Completed as Estimated
The State will send the original encumbered amount to the county which we already have booked as a State Aid receivable. Example A, # 4A
Accounting Entry: for amount of State Aid receipt
Debit Account: (asset) Cash
Credit Account: (asset) State Aid Receivable
Project overruns original estimate
The State will send the original encumbered amount to the county as well as additional State Aid
allotment funds that are due and available in the allotment. The Final Notice will inform you of
the total project costs. Remember costs that were not previously recorded against your allotment
must be recorded at this time. Example B, # 4(B1) through 4(B4)
Recognize overrun and reduce allotment
Accounting Entry: for amount of overrun
Debit Account: (asset) State Aid Receivable
Credit Account: (asset) State Aid Construction Allotment
Record receipt of the State Aid Obligation.
Debit Account: (asset) Cash
Credit Account: (asset) State Aid Receivable
Recognize receipt of Project Development (if requested).
Debit Account: (asset) Cash
Credit Account: (asset) State Aid Construction Allotment
Recognize revenue for Project Development (if requested).
Debit Account: (liability) State Aid Construction Unearned Revenue
Credit Account: (revenue) State Aid Construction Revenue
CHAPTER 3 – REGULAR AND MUNICIPAL CONSTRUCTION ACCOUNTS
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Project underruns original estimate without an overpayment
This means that State Aid has encumbered too much and will only reimburse the portion of the
encumbered amount that covers the actual project costs. The Final Payment document will
provide total project costs. Remember that the amount of the over-estimate will reduce your
receivable and increase your allotment. Example C, # 4(C1) and 4(C2)
Recognize the underrun.
Accounting Entry: for amount of underrun
Debit Account: (asset) State Aid Allotment
Credit Account: (asset) State Aid Receivable
Record receipt of the State Aid Obligation.
Accounting Entry: for amount of State Aid receipt
Debit Account: (asset) Cash
Credit Account: (asset) State Aid Receivable
Project underruns original estimate with an overpayment
This means that State Aid has encumbered too much and also advanced too much cash to the
county. As a result, the county owes State Aid a refund. State Aid usually does not request the
money back. It is usually recorded as an overpayment and applied against the next construction
project that is submitted for State Aid Funding. This money should be posted to a liability account
(Due to State Aid – Overpayments) until you are notified of its use on another project. Example
D, # 4(D1) and 4(D2)
The allotment balance must be increased by both the overpayment and the original encumbered
amounts.
Recognize the overpayment.
Accounting Entry: for amount of overpayment
Debit Account: (asset) State Aid Allotment
Credit Account: (liability) Due to State Aid - Overpayments
Reduce the receivable and increase the allotment for the original encumbered amount.
Accounting Entry: for amount of State Aid encumbered
Debit Account: (asset) State Aid Allotment
Credit Account: (asset) State Aid Receivable
FINAL PAYMENT TO CONTRACTOR
When the project is FINALIZED, the county will pay the retainage withheld to the contractor and authorize
the Certificate of Final Acceptance. Examples A – D, # 5
CHAPTER 3 – REGULAR AND MUNICIPAL CONSTRUCTION ACCOUNTS
25
Recognize final disbursement to the contractor.
Accounting Entry: for amount of contractor disbursement
Debit Account: (liability) Contracts Payable
Credit Account: (asset) Cash
REVOCATION OF A STATE AID ROAD
When a county revokes a State Aid Route for which State Aid Construction Funds have previously been
spent, the District State Aid Engineer determines the remaining life of the project and computes the value
of the items that were financed with State Aid Funds. This value is considered an overpayment to the
county and will be subtracted from the next State Aid contract let by the county. The revenue from prior
years must also be reduced due to the revocation. Example D, # 6
Recognize State Aid Overpayment for revoked State Aid Road.
Accounting Entry:
Debit Account: (asset) State Aid Construction Allotment
Credit Account: (liability) Due to State Aid Overpayments
Accounting Entry: reduce prior year revenue due to revocation
Debit Account: (equity) Fund Balance
Credit Account: (liability) State Aid Construction Unearned Revenue
CHAPTER 3 – REGULAR AND MUNICIPAL CONSTRUCTION ACCOUNTS
26
EXAMPLES
Example A
CHAPTER 3 – REGULAR AND MUNICIPAL CONSTRUCTION ACCOUNTS
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Example B
CHAPTER 3 – REGULAR AND MUNICIPAL CONSTRUCTION ACCOUNTS
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Example C
CHAPTER 3 – REGULAR AND MUNICIPAL CONSTRUCTION ACCOUNTS
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Example D
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
30
TOWN BRIDGE ALLOTMENT
NARRATIVE
There are grant monies available from State Aid which is specific to Town Bridge Construction. Each year
the Minnesota County Highway Departments receive a Notice of Annual Apportionment which shows that
year’s allotment for Town Bridge Construction.
Township cost participation is required, an accounts receivable entry may be needed to recognize the
township local funding obligation, or more information refer to:
http://www.dot.state.mn.us/stateaid/local-bridge-replacement-program.html
The accounting procedures and spreadsheet examples are identical to the section for Municipal and
Regular Construction. The account names have been changed to reflect Town Bridge Allotment Accounts.
ACCOUNTS NEEDED
(const exp) - TOWN BRIDGE CONSTRUCTION EXPENSES
(There will be numerous construction accounts)
(revenue) - TOWN BRIDGE CONSTRUCTION REVENUE
(asset) - CASH
(asset) - TOWN BRIDGE CONSTRUCTION RECEIVABLE
(asset) - TOWN BRIDGE CONSTRUCTION ALLOTMENT
(liability) - CONTRACTS PAYABLE
(liability) - DUE TO STATE AID - OVERPAYMENTS
(liability) - TOWN BRIDGE CONSTRUCTION UNEARNED REVENUE
SPECIAL CONSIDERATIONS
It is recommended to keep Town Bridge overpayments segregated from other State Aid overpayments
(Regular and Municipal), set up separate overpayment accounts. These might be set up as follows:
(liability) - Due to State Aid - Regular Overpayments
(liability) - Due to State Aid - Municipal Overpayments
(liability) - Due to State Aid - Town Bridge Overpayments
SEQUENCE OF EVENTS
PROJECT IS AWARDED
Your allotment is reduced throughout the year as construction contracts are let and sent in for Town
Bridge Funding approval. Go to State Aid Finance – SAAS Reports:
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
31
Select State Aid County and Municipality Reports/SAAS Payment Document – Construction to view the
payment information on the project. The appropriate entries need to be made to recognize the receivable
from Town Bridge as well as the reduction to the Town Bridge Construction Allotment. Only the Town
Bridge Obligation amount should be used for the following entry. Example A, # 1
Accounting Entry: for amount of State Aid obligation only
Debit Account: (asset) Town Bridge Receivable
Credit Account: (asset) Town Bridge Allotment
95% PAYMENT IS RECEIVED FOR THE PROJECT
After the State Aid Partial Payment Request has been approved, the county will receive the actual
payment for the project. State Aid advances 95% of the total State Aid Construction Obligation; the
remaining 5% is encumbered. In addition, if requested, Engineering, Force Account and Right of Way will
be received. Requests for actual Engineering costs are submitted along with State Aid Final Payment
Request. Example A, # 2
Recognize the receipt of the Town Bridge Payment
Accounting Entry: for the 95% of Town Bridge obligation only
Debit Account: (asset) Cash
Credit Account: (asset) Town Bridge Receivable
Recognize the receipt of Engineering, Force Account and Right of Way
Accounting Entry: for the Engineering and/or Force accounting and/or Right of Way, if any
Debit Account: (asset) Cash
Credit Account: (asset) Town Bridge Allotment
Recognize revenue for Engineering, Force Account and Right of Way
Accounting Entry: for the 95% of Town Bridge obligation only
Debit Account: (liability) Town Bridge – Deferred Revenue
Credit Account: (asset) Town Bridge Revenue
WORK BEGINS ON THE PROJECT
Sometime after State Aid approval, work actually begins on the contract. County inspectors verify that the
work is indeed done according to specifications, and a partial payment is paid to the contractor. Example
A, # 3A, 3B & 3C
Amount of Work Certified ($ amount of work actually performed)
minus: Any retainage ($ withheld as an insurance factor)
equals: Cash paid to Contractor ($ amount of actual disbursement)
As work is certified on contract.
Accounting Entry: for actual work certified
Debit Account: (const exp) Town Bridge Construction Expenses
Credit Account: (liability) Contracts Payable
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
32
Recognize revenue earned.
Make the following adjustment entry to recognize the amount of the Town Bridge Allotment which can
now be considered Current Year Earned Revenue (for the amount of work certified only).
Accounting Entry: recognize revenue for amount of work certified.
Debit Account: (liability) Town Bridge – Deferred Revenue
Credit Account: (revenue) Town Bridge Construction - Revenue
Recognize disbursement to contractor.
Accounting Entry: for amount of contractor disbursement.
Debit Account: (liability) Contracts Payable
Credit Account: (asset) Cash
PROJECT IS FINALIZED
Numerous partial payments may be made to the contractor following the same sequence as in the step
above. When the contract is completed and a State Sid Final Payment Request is submitted, the State will
issue a final payment. Go to State Aid Finance – SAAS Reports.
Select State Aid County and Municipality Reports/SAAS Payment Document – Construction to view the
payment information on the project. This document outlines the total project costs and shows any
increase or decrease to the Town Bridge Construction Allotment Account.
Four different situations can occur. These are:
Project is completed exactly as estimated
Project overruns original estimate
Project Underruns original estimate without a State Aid overpayment
Project Underruns original estimate with a State Aid overpayment
Project Completed as Estimated
The State will send the original encumbered amount to the county which has already been booked as a
State Aid Receivable. Example A, # 4A
Accounting Entry: for amount of State Aid receipt
Debit Account: (asset) Cash
Credit Account: (asset) Town Bridge – Receivable
Project Overruns Original Estimate
The State will send the original encumbered amount to the county as well as additional Town Bridge
allotment monies that are due and available in the allotment. Example B, # 4(B1) and 4(B2)
Recognize overrun and reduce allotment
Accounting Entry: for amount of overrun
Debit Account: (asset) Town Bridge – Receivable
Credit Account: (asset) Town Bridge Construction – Allotment
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
33
Record receipt of the State Aid Obligation
Debit Account: (asset) Cash
Credit Account: (asset) Town Bridge Construction – Receivable
Project Underruns Original Estimate Without an Overpayment
This means that State Aid has encumbered too much and will only reimburse the portion of the
encumbered amount which covers the actual project costs. The amount of the underrun will reduce the
Town Bridge Receivable and increase the allotment accounts. Example C, # 4(C1) and 4(C2)
Recognize the underrun
Accounting Entry: for amount of underrun
Debit Account: (asset) Town Bridge – Allotment
Credit Account: (asset) Town Bridge – Receivable
Record receipt of the State Aid Obligation
Accounting Entry: for amount of Town Bridge Construction –receipt
Debit Account: (asset) Cash
Credit Account: (asset) Town Bridge – Receivable
PROJECT UNDERRUNS ORIGINAL ESTIMATE WITH AN OVERPAYMENT
This means that State Aid has encumbered too much and has also advanced too much cash to the
county. As a result, the county owes State Aid a refund; however, State Aid usually does not request the
money back. Usually the State records the overpayment and applies it against the next construction
project that is submitted for State Aid Funding. The county should post the overpayment amount to a
liability account (Due to State Aid – Overpayments) until notified of its application to another project.
Example D, # 4(D1) and 4(D2)
The allotment balance must be increased by both the overpayment amount and the original
encumbered amount.
Recognize the overpayment.
Accounting Entry: for amount of overpayment
Debit Account: (asset) Town Bridge – Allotment
Credit Account: (liability) Due to State Aid – Town Bridge Overpayments
Reduce the receivable and increase the Town Bridge Allotment for the original encumbered amount
Accounting Entry: for amount of Town Bridge encumbered
Debit Account: (asset) Town Bridge Construction – Allotment
Credit Account: (asset) Town Bridge Construction – Receivable
If the County elects to return the overpayment
Accounting Entry: for amount of Town Bridge overpayment returned
Debit Account: (asset) Due to State Aid – Town Bridge Overpayments
Credit Account: (asset) Cash
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
34
FINAL PAYMENT TO CONTRACTOR
When the project is FINALIZED, the county will pay the retainage to the contractor and authorize the
Certificate of Final Acceptance. Examples A – D, # 5
Recognize final disbursement to the contractor.
Accounting Entry: for amount of contractor disbursement
Debit Account: (liability) Contracts Payable
Credit Account: (asset) Cash
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
35
EXAMPLES
Example A
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
36
Example B
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
37
Example C
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
38
Example D
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
39
SPECIAL TOWN BRIDGE ALLOTMENT
NARRATIVE
Periodically, the county may exceed their Town Bridge Allotment, if this occurs the county may receive a
Special Town Bridge Allotment. This additional allocation may not be required to be paid back to the State.
ACCOUNTS NEEDED
(const exp) - TOWN BRIDGE EXPENSES (there will be numerous of these)
(revenue) - SPECIAL TOWN BRIDGE CONSTRUCTION – REVENUE
(asset) - CASH
(asset) - SPECIAL TOWN BRIDGE CONSTUCTION – RECEIVABLE
(asset) - SPECIAL TOWN BRIDGE CONSTRUCTION – ALLOTMENT
(liability) - CONTRACTS PAYABLE
(liability) - TOWN BRIDGE UNEARNED REVENUE
SEQUENCE OF EVENTS
NOTIFICATION OF SPECIAL TOWN BRIDGE ALLOCATION
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
40
RECOGNIZE SPECIAL TOWN BRIDGE ALLOCATION
Recognize the amount from the “Notification of Change to State Aid Town Bridge Allocation”. This
notification is based on the engineer’s estimate and not the awarded bid. Changes to the Special Town
Bridge Account may be view on the SAAS Status report:
Select State Aid County and Municipality Reports/SAAS Status, enter the county to view, review the
Special Town Bridge Allocation changes by clicking on the Allocation Amount. Example A, # 1
Accounting Entry: Special Town Bridge – Allocation
Debit Account: (asset) Special Town Bridge – Allotment
Credit Account: (liability) Special Town Bridge – Deferred Revenue
SPECIAL CONSIDERATIONS
In the case of Special town Bridge overpayment, the county will be billed by the state for the excess funds,
an overpayment account is recommended to keep track of these excess funds. Example D
PROJECT UNDERRUNS ORIGINAL ESTIMATE WITH AN OVERPAYMENT
For further discussion
PROJECT IS AWARDED
The allotment is reduced throughout the year as construction contracts are let and sent in for Special
Town Bridge Funding approval. Go to State Aid Finance – SAAS Reports:
Select State Aid County and Municipality Reports / SAAS Payment Document - Construction to view the payment information on the project. The appropriate entries need to be made to recognize the receivable from Special Town Bridge as well as the reduction to the Special Town Bridge Construction Allotment. Only the Special Town Bridge Obligation amount should be used for the following entry. Example A, # 2
Accounting Entry: for amount of Special Town Bridge obligation only
Debit Account: (asset) Special Town Bridge – Receivable
Credit Account: (liability) Special Town Bridge – Allotment
95% PAYMENT IS RECEIVED FOR THE PROJECT
After the State Aid Partial Payment Request has been approved, the county will receive the actual payment for the project. State Aid advances 95% of the total Special Town Bridge Construction Obligation; the remaining 5% is encumbered. In addition, if requested, Engineering, Force Account and Right of Way will be received. Requests for actual Engineering costs are submitted along with the State Aid Final Payment Request. Example A, # 3
Recognize the receipt of the Special Town Bridge Payment
Accounting Entry: for the 95% of Special Town Bridge Obligation only
Debit Account: (asset) Cash
Credit Account: (liability) Special Town Bridge – Receivable
Recognize the receipt of Engineering, Force Account, and Right of Way
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
41
Accounting Entry: for the of the Engineering and/or Force Account and/or Right of way, if
any
Debit Account: (asset) Cash
Credit Account: (liability) Special Town Bridge – Allotment
Recognize revenue for Engineering, Force Account, and Right of Way
Accounting Entry: for the of the Engineering and/or Force Account and/or Right of way, if
any
Debit Account: (asset) Special Town Bridge – Deferred Revenue
Credit Account: (liability) Special Town Bridge – Revenue
WORK BEGINS ON THE PROJECT
Sometime after State Aid approval, work actually begins on the contract. County inspectors verify that the work is indeed done according to specifications, and a partial payment is paid to the contractor. Example A, #4A, 4B & 4C
Amount of Work Certified ($ amount of work actually performed)
Minus: Any retainage ($ withheld as an insurance factor) Equals: Cash paid to contractor ($ amount of actual disbursement)
As work is certified on contract
Accounting Entry: for actual work certified
Debit Account: (const exp) Special Town Bridge Construction – Expenses
Credit Account: (liability) Contracts Payable
Recognize revenue earned
Allotment which can now be considered Current Year Earned Revenue (for the amount of work certified only).
Accounting Entry:
Debit Account: (liability) Special Town Bridge – Deferred Revenue
Credit Account: (revenue) Special Town Bridge – Revenue
Recognize disbursement to contractor
Accounting Entry: for actual work certified
Debit Account: (liability) Contracts Payable
Credit Account: (asset) Cash
PROJECT IS FINALIZED
Numerous partial payments may be made to the contactor following the same sequence as in the step above. When the contract is completed and a State Aid Final Payment Request is submitted, the State will issue a final payment. Go to State Aid Finance – SAAS Reports.
Select State Aid County and Municipality Reports/SAAS Payment Document – Construction to view the payment information on the project. This document outlines the total project cost and shows an increase or decrease to the Special Town Bridge Construction Allotment Account.
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
42
Four Different situations can occur:
Project is completed as estimated Project overruns original estimate Project underruns original estimate without an overpayment Project underruns original estimate with an overpayment
PROJECT IS COMPLETED AS ESTIMATED
The State will send the original encumbered amount to the county which has already been booked as a Special Town Bridge Construction Receivable. Example A, # 5A
Accounting Entry: for amount of Special Town Bridge receipt
Debit Account: (asset) Cash
Credit Account: (asset) Special Town Bridge Construction – Receivable
PROJECT OVERRUNS ORIGINAL ESTIMATE
The State will send the original encumbered amount to the county as well as additional Special Town Bridge Construction Allotment monies that are due and available in the allotment. The SAAS Payment Document – Construction report will outline the total project costs and should be reviewed, so that any costs which were not previously recorded against the allotment are recorded at this time. Example B, # 5(B1) and 5(B2)
Recognize the underrun
Accounting Entry: for amount of underrun
Debit Account: (asset) Special Town Bridge Construction – Allotment
Credit Account: (asset) Special Town Bridge Construction – Receivable
Record receipt of the State Aid Obligation
Accounting Entry: for amount of Special Town Bridge Construction receipt
Debit Account: (asset) Cash
Credit Account: (asset) Special Town Bridge Construction – Receivable
PROJECT UNDERRUNS ORIGINAL ESTIMATE WITH AN OVERPAYMENT
This means that State Aid has encumbered too much and has also advanced too much cash to the county. As a result, the county owes State Aid a refund; however, State Aid will send a bill for the excess funds paid to the county. Example D, # 5(D1), 5(D2) and 5(D3)
The allotment balance must be increased by both the overpayment amount and the original encumbered amount.
Recognize the overpayment
Accounting Entry: for amount of Special Town Bridge Construction receipt
Debit Account: (asset) Cash
Credit Account: (asset) Special Town Bridge Construction – Receivable
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
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Reduce the receivable and increase the Special Town Bridge Allotment of the original encumbered amount
Accounting Entry: for amount of Special Town Bridge Construction receipt
Debit Account: (asset) Cash
Credit Account: (asset) Special Town Bridge Construction – Receivable
Payment to State Aid for overpayment
Accounting Entry: for amount of Special Town Bridge Construction receipt
Debit Account: (asset) Cash
Credit Account: (asset) Special Town Bridge Construction – Receivable
If another active project needs to be finalized at the same time and the payment due is equal to or greater than this project overpayment, the overpayment may be applied to the second project. Check the SAAS Payment Document – Construction report to verify the transactions posted to each project. The allotment balance will be decreased by the underrun project.
Recognize the overpayment
Accounting Entry: for amount of Special Town Bridge Construction receipt
Debit Account: (asset) Cash
Credit Account: (asset) Special Town Bridge Construction – Receivable
Reduce the receivable and increase the Special Town Bridge Allotment of the original encumbered amount
Accounting Entry: for amount of Special Town Bridge Allotment
Debit Account: (asset) Cash
Credit Account: (asset) Special Town Bridge Construction – Receivable
REDUCTION OF SPECIAL BRIDGE ALLOTMENT
When the project is FINALIZED, the state will reduce the Special Town Bridge Allotment for the finalized project if the allotted amount was greater than the finalized amount of the project. Changes to the Special Town Bridge Account may be viewed on the SAAS Status Report.
Select State Aid County and Municipality Reports / SAAS Status, enter the county to view, review the Special Town Bridge Allocation changes by clicking on the Allocation Amount. Examples A – D, # 6
Accounting Entry: for amount of Special Town Bridge Allotment Reduction
Debit Account: (liability) Special Town Bridge Construction – Deferred Revenue
Credit Account: (asset) Special Town Bridge Construction – Allotment
FINAL PAYMENT TO CONTRACTOR
When the project is FINALIZED, the county will pay the retainage to the contractor and authorize the Certificate of Final Acceptance. Examples, A – D, # 7
Recognize final disbursement to the contractor.
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EXAMPLES
Example A
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
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Example B
CHAPTER 4 – TOWN BRIDGE CONSTRUCTION ACCOUNTS
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Example C
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Example D
CHAPTER 5 – SPECIAL CONSTRUCTION ACCOUNTS
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STATE TRANSPORTATION BONDS FOR THE LOCALS (Bridge, LRIP, & Disaster)
NARRATIVE
The State of Minnesota operates on a two year budget cycle called a biennium, and although there are
laws passed and financial changes in the second year they are less certain. The state legislature typically
passes a bonding bill the first year of the biennium, (even number years). This would include bridge and
local road improvement bonds. Disaster bonds are generally passed as needed and triggered by a
substantial disaster.
State Aid uses input from the counties to document the “need” for a bonding bill. In the case of bridge
bonds this is done through county resolution. Annually each county should pass a “Bridge Priority
Resolution” providing a list of all their deficient bridges and a rough estimate of the cost to repair or
replace them. This resolution is submitted to State Aid and the bridges are added to the state wide master
bridge spreadsheet. This spreadsheet serves as documentation for the bonding need. Once a bonding bill
is passed, the counties apply for the funding project by project.
In the case of disaster bonds, local agency estimates are paramount in initiating a bill. If a disaster occurs
that impacts the county’s roads and bridges, the District State Aid Engineer (DSAE) should be notified
immediately. Preliminary estimates need to be compiled and provided to the DSAE as well as a request
for financial assistance. The request is not a formal document but a letter from the County Engineer or
County Board to document the request. A request for assistance will not insure a bond issue, but if the
possibility is eminent, having this information in hand helps State Aid for Local Transportation (SALT) to
proceed.
Bond funds are limited in supply so counties must submit approved plans to SALT for consideration. Bond
funds are rarely the sole source of funding and the county is required to have the balance of the project
funding in place prior to a bond award. Projects that are listed in the Statewide Transportation
Improvement Plan (STIP) are given priority so federal funding is not lost.
Once approved for bond funds the county will receive a “Funding Letter” for SALT. This letter provides the
estimated bond grant award, the bond agreement number and the bond account number. This letter
should be kept in the project file for reference later. At this time the bond funds are also allocated to the
project in the State Aid Accounting System (SAAS).
ACCOUNTS NEEDED
(const exp) - STATE BOND CONSTRUCTION EXPENSES
(revenue) - STATE BOND CONSTRUCTION - REVENUE
(asset) - CASH
(asset) - STATE BOND CONSTRUCTION - RECEIVABLE
(liability) - CONTRACTS PAYABLE
CHAPTER 5 – SPECIAL CONSTRUCTION ACCOUNTS
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SEQUENCE OF EVENTS
PROJECT IS AWARDED
Once the project is awarded the abstract is submitted to SALT with the bond eligible items identified.
When the encumbrance letter is returned to the county, the bond agreement and board resolution can
be executed. Following the instructions on the SALT website.
Complete three original agreement documents, insert the board resolution, and submit all to SALT.
The initial State Aid Payment Request (SAPR) is submitted to State Aid indicating all funding sources for
the project. If there is Regular State Aid funding on the project, entries for the receivable can be made.
Bond funds are not paid out until work has been certified, so no entries will be made or payments received
as a result of the SAPR if the project is funded entirely by bonds. However, if the county chooses to track
the bond grant as an asset, an entry can be made at this time to record the bond grant. These entries will
be covered after this section as “OPTIONAL ENTRY METHOD”. The county can determine the method to
be used.
WORK BEGINS ON THE PROJECT
Work progresses and bond eligible items are certified. Payments are made to the contractor less retained
funds in the same manner as a regular construction project. The following entries will need to be made to
recognize the construction expense, contract payable, and the disbursement to the contractor. Example
A, # 2A, & 2B
Accounting Entry: Recognize expense for work certified and record payable
Debit Account: (const exp) State Bond Expense
Credit Account: (liability) Contracts Payable
Accounting Entry: Record disbursement to contractor
Debit Account: (liability) Contracts Payable
Credit Account: (asset) Cash
PARTIAL REIMBURSEMENT IS REQUESTED
Once the county has incurred and paid certified work, reimbursement can be requested using a SAPR and
revenue can be recognized. Example A, # 3A and #3B
Accounting Entry: Recognize state bond revenue for work certified
Debit Account: (asset) State Bond - Receivable
Credit Account: (revenue) State Bond – Revenue
Accounting Entry: Record receipt of state bond funds
Debit Account: (asset) Cash
Credit Account: (asset) State Bond - Receivable
NOTE: According to Minn. Stat. §15.72, the public contracting agency may retain up to 5% from any
progress payment. Typically the public contracting agency withholds 5% retainage until final;
however, it’s not required. If the public contracting agency retains 5%, State Aid would not
pay the last 5% until the final payment is made to the contractor. State Aid will release actual
bond funds paid, up to 100% of the bond, through reimbursement.
CHAPTER 5 – SPECIAL CONSTRUCTION ACCOUNTS
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Special exceptions: for bond funds expiring in the current year, 100% bond funds may be paid if
the public contracting agency requests or agrees, but the public contracting
agency has to retain 5% of other funding.
For out-of-state contractors review Minn. Stat. §290.9705 SURETY DEPOSITS REQUIRED FOR
CONSTRUCTION CONTRACTS.
If a portion of the retainage is released before the project is final, a request for this portion may
be made. Revenue for these funds would be booked at the time it becomes certain and
determinable, when work is certified.
CAUTION: State bond revenue can only be recognized up to the grant amount. In cases where the bond
eligible items over run the grant amount, they become county expense and no revenue can
be recognized. In special cases it may be possible to request and receive additional grant
funds, and then revenue could be increased.
PROJECT IS FINALIZED
Numerous partial payments may be made to the contractor and SAPRs completed following the same
process as in the steps above. The final SAPR must indicate that the project is final and request any
remaining unpaid bond funds equal to the value of eligible work certified or the bond grant whichever is
less. Upon final three main situations can occur relating to the bond funds. These are:
Project is completed exactly as estimated
Project overruns the original estimate
Project underruns the original estimate
Project is Completed Exactly as Estimated
The remaining unpaid bond funds are released to the county upon the receipt of the executed SAPR.
Example A, # 6A and #6B
Accounting Entry: Record receipt of state bond funds
Debit Account: (asset) Cash
Credit Account: (asset) State Bond - Receivable
Project Overruns Original Estimate
The remaining bond funds up to the original grant amount are released to the county upon the receipt of
the executed SAPR. The county is responsible to absorb the amount of the bond eligible costs over the
bond grant. The State will not reimburse the county for overruns out of the State Bond Account, unless
the county specifically applies for and is granted additional State Bond funds. These expenditures will be
recognized as county expense at the time they are incurred. Example B, # 6A and #6B
Accounting Entry: Recognize expense greater than bond grant
Debit Account: (expense) Construction Expense
Credit Account: (liability) Contracts Payable
Accounting Entry: Record receipt of state bond funds
Debit Account: (asset) Cash
Credit Account: (asset) State Bond - Receivable
CHAPTER 5 – SPECIAL CONSTRUCTION ACCOUNTS
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Project Underruns Original Estimate
The remaining bond funds (up to an amount equal to the value of eligible work certified) are released to
the county upon the receipt of the executed SAPR; if no further bond eligible costs remain, any retained
funds will be released to the county. Example C, # 6A, and #6B
Accounting Entry: Record receipt of state bond funds
Debit Account: (asset) Cash
Credit Account: (asset) State Bond - Receivable
NOTE: As soon as it becomes evident that all of a bond grant will not be spent, State Aid should
be notified so those funds can be allocated to another project. This will not reduce the
original bond eligibility should the costs increase later.
NOTE: In cases when an adjustment to bond eligible contract expenditures is made after the
county has received payment, the county may be required to repay those funds.
FINAL PAYMENT TO CONTRACTOR
When the project is final and all the required documentation is received from the contractor, the county
will release the retained funds to the contractor. Example C, # 6A, and #6B
Accounting Entry: Record disbursement to contractor
Debit Account: (liability) Contracts Payable
Credit Account: (asset) Cash
CHAPTER 5 – SPECIAL CONSTRUCTION ACCOUNTS
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EXAMPLES
Example A
CHAPTER 5 – SPECIAL CONSTRUCTION ACCOUNTS
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Example B
CHAPTER 5 – SPECIAL CONSTRUCTION ACCOUNTS
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Example C
CHAPTER 5 – SPECIAL CONSTRUCTION ACCOUNTS
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STATE PARK CONSTRUCTION ACCOUNT
NARRATIVE
A portion of the Highway User Tax Distribution (HUTD) is set aside to fund public accesses to outdoor
recreation areas within a county. These projects must be applied for and final projects are determined
through the Department of Natural Resources.
When a project is let a State Aid Payment Request can be submitted for 95% of the state park eligible
work. The remaining 5% is encumbered and will be paid when the project is complete and all costs are
verified. Upon final any unspent funds will need to be returned to State Aid. Since this is a special
allocation and not an annual allocation this cannot be applied to another project and you will be billed for
this overpayment. Any unspent funds that remain encumbered will be released back to the State Park
Fund.
ACCOUNTS NEEDED
(const exp) - STATE PARK CONSTRUCTION EXPENSES (there will be numerous construction
accounts)
(revenue) - STATE PARK CONSTRUCTION - REVENUE
(asset) - CASH
(asset) - STATE PARK CONSTRUCTION - RECEIVABLE
(liability) - CONTRACTS PAYABLE
(liability) - STATE PARK CONSTRUCTION - UNEARNED REVENUE
SEQUENCE OF EVENTS
PROJECT IS AWARDED
Once a State Park project is approved an encumbrance will be set up for the estimated project cost. After
the project is let the county can set up State Park Construction Receivable and State Park Unearned
Revenue Accounts. Example A, # 1
Accounting Entry: Record State Park Receivable for awarded contract amount
Debit Account: (asset) State Park - Receivable
Credit Account: (liability) State Park - Unearned Revenue
95% PAYMENT IS RECEIVED FOR THE PROJECT
After the initial SAPR has been approved you will receive the requested percentage payment, up to 95%
for the project. State Aid advances 95% of the total State Park Construction Obligation and the remaining
5% remains encumbered. Example A
CHAPTER 5 – SPECIAL CONSTRUCTION ACCOUNTS
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To keep contract costs clear it is a good idea to make two entries if you are being paid for engineering,
force account work and/or Right of Way (ROW). # 2A & 2B for a graphic display of the following entries.
Accounting Entry: Record receipt of State Park contract funds
Debit Account: (asset) Cash
Credit Account: (asset) State Park - Receivable
Accounting Entry: Record receipt of State Park engineering, force account and ROW funds
Debit Account: (asset) Cash
Credit Account: (revenue) State Park Construction - Revenue
WORK BEGINS ON THE PROJECT
Work progresses and bond eligible items are certified. Payments are made to the contractor less retained
funds in the same manner as a regular construction project. 7The following entries will need to be made
to recognize the construction expense, earned State Park revenue, and the disbursement to the
contractor. Example A, # 3A, 3B & 3C
Accounting Entry: Recognize expense for work certified
Debit Account: (expense) State Park Construction Expense
Credit Account: (liability) Contracts Payable
Accounting Entry: Recognize State Park revenue for work certified
Debit Account: (liability) State Park - Unearned Revenue
Credit Account: (revenue) State Park Construction - Revenue
Accounting Entry: Record contractor disbursement
Debit Account: (liability) Contract Payable
Credit Account: (asset) Cash
CHAPTER 6 – FEDERAL AID DELEGATED AND TRADITIONAL CONTRACT PROCESS
57
NARRATIVE
Federal Aid Construction projects are projects that are funded in part with federal funds. The matching
funds can be from many sources including State Aid Regular or Municipal funds, State Transportation
Bond for Locals Funds (which includes Bridge Bonding, LRIP, and Disaster Bonds), County local funds, or
those of townships, cities or private enterprises within the county who are participating in the funding of
the project.
The two types of Federal Aid construction projects are Delegated Contract Process (County let projects)
and Traditional Contracts (MnDOT let projects).
An important difference between the Delegated Contract Process and Traditional Contracts is the way the
funds are handled.
DELEGATED CONTRACT PROCESS (COUNTY ADMINISTERS CONTRACT)
The county lets the project, makes payments to the contractor and collects the necessary funds. The
county must submit a DCP payment request to MnDOT for the Federal Funds after contract payments are
made. Contact your DSAE to determine if they want to be copied on partial payments. When a county
submits a DCP final payment to MnDOT, the DSAE must be copied. Federal Funds are on a reimbursement
basis only; they cannot be advanced at the beginning of the project. State Aid Funds can be advanced to
the county at the beginning of the project similar to non-federal projects. The county pays any local share
(county, township, individuals, etc.) as the contract payments are made.
Since the accounts used and the entries to record transactions are different for the two processes, the
following pages are broken into 2 sections; DELEGATED CONTRACT PROCESS (County let projects) and
TRADITIONAL PROJECTS (MnDOT let projects). In both cases the state will encumber 5% of the total State
Aid share. This amount is removed from the Counties available State Aid balance. With TRADITIONAL
PROJECTS (MnDOT let projects) the 5% is held in an account identified as Anticipated Federal Transfers.
This account is similar to the Receivable Account used for County let projects. However, since the county
does not receive the funds it is not a receivable. Similar to the Receivable Account, the Anticipated
Federal Transfers Account is set up to record the encumbered portion of the State Aid funds until the
project is final.
The DCP Payment Request Guide may be found on the State Aid Finance website, along with the DCP
Checklist and the DCP Final Payment sample packet.
TRADITIONAL PROJECTS (MnDOT ADMINISTERS CONTRACT)
MnDOT, as an agent for the county, administers the contract for the county. MnDOT lets the project,
makes the payments to the contractor and collects Federal, State Aid or local reimbursement. Federal
Funds are collected and deposited into the Federal County Road & Bridge Account with MnDOT. The
matching State Funds ARE NOT disbursed to the county. State Aid Finance transfers the funds directly
into the Agency Account from the county’s appropriate State Aid Account. A copy of the TRANSFER
NOTICE can be found on State Aid Finance’s website in the SAAS Reports – State Aid County and
Municipality Reports – SAAS Payment Document – Construction. Enter the SP # and click View Report to
CHAPTER 6 – FEDERAL AID DELEGATED AND TRADITIONAL CONTRACT PROCESS
58
make the appropriate entries to your records. Local funds (county, township, individuals, etc.) are billed
to the county up front before the project can be awarded.
DELEGATED CONTRACT PROCESS (COUNTY ADMINISTERS CONTRACT)
Using the Delegated Contract Process, the County lets the project, makes payments to the contractor and
collects the necessary funds.
Federal and State Transportation Bond for Locals Funds are paid on a reimbursement basis only; they
cannot be advanced at the beginning of the project. State Aid funds can be advanced to the County at the
beginning of the project similar to non-federal projects. The county pays any local share (county,
township, individuals, etc.) as the contract payments are made.
The county may submit a DCP payment request for the Federal and State Transportation Bond for Locals
Funds once the expenses have been incurred provided they have an approved payment process assuring
the contractor is paid promptly upon receiving reimbursement of the Federal share.
SHARED FEDERAL REVENUE
When more than one local government has a project as part of a DCP it is the administering government
that recognizes all federal revenue from the DCP. The administering government does not capitalize the
projects for the other governments.
State Aid funds that are forwarded to the administering government from the other participating
governments are to be recognized as reimbursements, these funds may be posted to revenues, and they
are not required to be netted to expenditure accounts.
ADVANCE OF STATE AID FUNDS FOR FEDERAL PROJECTS
If the county has funds available in their State Aid Construction Accounts they may use these funds in lieu
of Federal funds on a DCP. The state aid payments are recognized in the following examples:
For State Aid Construction funds that are received in lieu of federal funds:
Accounting Entry: for amount of payment
Debit Account: (asset) Cash
Credit Account: (liability) Due to State Aid Federal Funds
Debit Account: (liability) State Aid - Unearned Revenue (Reg. or Muni. Const.)
Credit Account: (asset) State Aid - Allotment (Reg. or Muni. Const.)
If Federal funds become available, SAF will transfer the amount of the Federal reimbursement back to the
county’s State Aid construction account and the following entries will be required. This transfer may occur
within the same year or in future years.
CHAPTER 6 – FEDERAL AID DELEGATED AND TRADITIONAL CONTRACT PROCESS
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For transfer of Federal funds to State Aid construction account to reimburse State Aid funds and recognize
federal revenue.
Accounting Entry: for amount of Federal transfer notice
Debit Account: (liability) Due to State Aid Federal Funds
Credit Account: (revenue) Federal Construction - Revenue
Debit Account: (asset) State Aid - Allotment (Reg. or Muni. Const.)
Credit Account: (liability) State Aid - Unearned Revenue (Reg. or Muni. Const.)
If the county does not have funds available in their State Aid Construction Account they may advance
State Aid funds. The entries for recognizing State Aid revenues for Federal funds would be the same as
those discussed above. The discussion below describes the entries required to recognize the State Aid
Advance of funds.
ADVANCE RESOLUTION
If the county needs to borrow State Aid Funds in excess of their account balance it is mandatory for the
county board to pass a resolution. A copy of the resolution must be sent to the SAF. The county engineer
will be notified upon receipt of the resolution.
A resolution is not required when using State Aid funds in lieu of federal funds if there are sufficient funds
available in the State Aid Account.
STATE AID FUNDING ON DELEGATED CONTRACT PROCESS
ACCOUNTS NEEDED
(const exp) - REGULAR CONSTRUCTION - EXPENSE
(const exp) - MUNICIPAL CONSTRUCTION - EXPENSE
(const exp) - FEDERAL CONSTRUCTION - EXPENSE
(const exp) - STATE BOND CONSTRUCTION - EXPENSE
(revenue) - REGULAR CONSTRUCTION - REVENUE
(revenue) - MUNICIPAL CONSTRUCTION - REVENUE
(revenue) - FEDERAL CONSTRUCTION - REVENUE
(revenue) - STATE BOND CONSTRUCTION - REVENUE
(asset) - CASH
(asset) - REGULAR CONSTRUCTION - RECEIVABLE
(asset) - MUNICIPAL CONSTRUCTION - RECEIVABLE
(asset) - FEDERAL - RECEIVABLE
(asset) - STATE BOND - RECEIVABLE
(asset) - REGULAR CONSTRUCTION - ALLOTMENT
(asset) - MUNICIPAL CONSTRUCTION - ALLOTMENT
(liability) - CONTRACTS PAYABLE
(liability) - DUE TO STATE AID - OVERPAYMENTS
(liability) - REGULAR CONSTRUCTION - UNEARNED REVENUE
(liability) - MUNICIPAL CONSTRUCTION - UNEARNED REVENUE
CHAPTER 6 – FEDERAL AID DELEGATED AND TRADITIONAL CONTRACT PROCESS
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SEQUENCE OF EVENTS
PROJECT IS APPROVED
State Aid Allotments are reduced throughout the year as construction contracts are let and sent in for
State Aid funding approval. At the time State Aid funding is approved by the State Aid Office you will need
to recognize the State Aid Receivable. Example A, # 1
For State Aid Regular and/or Municipal Construction Obligation
Accounting Entry: for amount of State Aid obligation only
Debit Account: (asset) State Aid Receivable (Reg. or Muni. Const.)
Credit Account: (asset) State Aid Allotment (Reg. or Muni. Const.)
ADVANCE PAYMENT FOR STATE AID FUNDS RECEIVED FOR THE PROJECT
After the State Aid Funding has been approved, you will receive the actual payment for the project. The
State advances 95% of the total State Aid Construction Obligation. The remaining 5% is encumbered and
will be paid to you when the project is complete and all costs are verified. Example A, # 2A
Accounting Entry: recognize the receipt of the State Aid payment
Debit Account: (asset) Cash
Credit Account: (asset) State Aid Receivable (Reg. or Muni. Const.)
PROJECT DEVELOPMENT, RIGHT OF WAY REIMBURSEMENT, ETC.
The process for reimbursement of Project Development, Right of Way, etc. is the same whether a project
is a Traditional or Delegated Project. Refer to page 62 of this chapter for details.
WORK BEGINS ON THE PROJECT
After State Aid approval, work actually begins on the contract. Your county inspectors verify that the work
is done according to specifications, and a partial payment is paid to the contractor. The amount of Work
Certified (total actual work performed) MINUS retainage (funds withheld from contractor) EQUALS cash
paid to the Contractor (actual disbursement).
The following entries will need to be made to recognize the Construction Expense, the earned State Aid,
Federal and/or State Bond Revenue, and the Disbursement to the Contractor. Example A, # 3 A, 3B, 4, 5A
and 5B
Recognize the construction expense.
Accounting Entry: as work is certified on contract
Debit Account: (const exp) Construction Expenses (Regular, Municipal, Federal, State
Bond, & Local)
Credit Account: (liability) Contracts Payable
Recognize Revenue earned
For the State Aid Allotment that can now be considered Current Year’s Earned Revenue.
Accounting Entry: recognize State Aid Revenue (amount of work certified)
Debit Account: (liability) State Aid Unearned Revenue (Reg or Muni. Const.)
Credit Account: (revenue) State Aid Construction Revenue (Reg. or Muni. Const.)
CHAPTER 6 – FEDERAL AID DELEGATED AND TRADITIONAL CONTRACT PROCESS
61
For the Federal Funds as reported on DCP Payment Request
Accounting Entry: recognize Federal and/or State Bond Revenue
Debit Account: (asset) Federal Receivable
Credit Account: (revenue) Federal Construction Revenue
Debit Account: (asset) State Bond Receivable
Credit Account: (revenue) State Bond Construction Revenue
Recognize the disbursement to the contractor.
Accounting Entry: recognize payment to contractor
Debit Account: (liability) Contracts Payable
Credit Account: (asset) Cash
REIMBURSEMENT OF FEDERAL AND STATE BOND FUNDS
Once expenses have been incurred and paid, the County can submit invoices to MNDOT TO OBTAIN
REIMBURSEMENT FOR THE Federal and/or State Bond portion of the project. The DCP payment request
can be found at the State Aid Finance website, by selecting SAAS Reports. After logging in, select Delegated
Contract Process (DCP) Payment Request. The instructions for making a DCP Payment Request can be
found at DCP Process. The following entries need to be made. Example A, # 6 A and 6B
Accounting Entry: recognize receipt of Federal and/or State Transportation Bond for
Locals Funds
Debit Account: (asset) Cash
Credit Account: (asset) Federal Receivable
Debit Account: (asset) Cash
Credit Account: (asset) State Bond Receivable
FINAL PAYMENT TO CONTRACTOR
When the project is final, the county will pay the retainage to the contractor. Example A, # 8
Accounting Entry: recognize payment to contractor
Debit Account: (liability) Contracts Payable
Credit Account: (asset) Cash
PROJECT IS FINALIZED
Numerous partial payments may be made to the contractor following the same sequence as in the steps
described above. When the contract is completed a Report of Final Estimate must be submitted to the
State for final approval of the State Aid funds. Once approved, you will either receive an EFT (if there is an
amount due) or a State Aid Overpayment will be processed which will be applied to your next State Aid
Project. A DCP Final Payment Request will also need to be submitted to the state for any final Federal
and/or State Bond funds that are due.
CHAPTER 6 – FEDERAL AID DELEGATED AND TRADITIONAL CONTRACT PROCESS
62
Four different situations can occur when the project is Final. They are described below:
Project is completed as estimated
Project overruns original estimate
Project underruns original estimate without a State Aid Overpayment
Project underruns original estimate with a State Aid Overpayment
PROJECT IS COMPLETED AS ESTIMATED
You will also need to submit a DCP Final Payment Request to the State for any additional Federal and /or
State Bond funds that are due; copying the DSAE. This must be submitted even if there are no additional
funds due to you. When the cash is received you will need to record the cash receipt. Example A, # 9A,
9B, 10A, and 10B
Accounting Entry: recognize invoice for Federal and/or State Bond Funds
Debit Account: (asset) Federal Receivable
Credit Account: (revenue) Federal Construction Revenue
Debit Account: (asset) State Bond Receivable
Credit Account: (revenue) State Bond Construction Revenue
Accounting Entry: recognize receipt of Federal and/or State Bond Funds
Debit Account: (asset) Cash
Credit Account: (asset) Federal Receivable
Debit Account: (asset) Cash
Credit Account: (asset) State Bond Receivable
The State will send the original encumbered amount to the county which has already been recorded
as a State Aid Receivable. Example A, # 11
Accounting Entry: recognize receipt of encumbered amount
Debit Account: (asset) Cash
Credit Account: (asset) State Aid Receivable (Reg. or Muni. Const.)
PROJECT OVERRUNS ORIGINAL ESTIMATE
The State will send the original encumbered amount to the County as well as any additional State Aid
Allotment Funds that are due and available in the allotment. The Final Notice will inform you of the total
final project costs. Remember costs that were not previously recorded against your allotment must be
recorded at this time. Example B, # 7A, 7B, 7C, and 8
Accounting Entry: reduce the State Aid Allotment Account to recognize the amount of the
State Aid overrun.
Debit Account: (asset) State Aid Receivable (Reg. or Muni. Const.)
Credit Account: (asset) State Aid Allotment (Reg. or Muni. Const.)
CHAPTER 6 – FEDERAL AID DELEGATED AND TRADITIONAL CONTRACT PROCESS
63
Accounting Entry: recognize remaining State Aid Construction Revenue, total revenue will
equal State Aid Obligation for the project.
Debit Account: (liability) State Aid Unearned Revenue (Reg. or Muni. Const.)
Credit Account: (revenue) State Aid Revenue (Reg. or Muni. Const.)
Accounting Entry: recognize receipt of Final Payment for State Aid Obligation.
Debit Account: (asset) Cash
Credit Account: (asset) State Aid Receivable (Reg. or Muni. Const.)
Under normal circumstances the Federal and/or State Bond entries are not affected by overruns since
funds are requested on a reimbursable basis. You will also need to submit a DCP Final Payment Request
to the State for any additional Federal and/or State Bond Funds that are due. This must be submitted even
if there are no additional funds due to you. The entries would be identical to those described in Example
A.
PROJECT UNDERRUNS ORIGINAL ESTIMATE WITHOUT AN OVERPAYMENT
This means that the State has encumbered too much and will only reimburse the portion of the
encumbered amount that covers the total actual project amount. The Final Notice will inform you of the
final project costs. Remember that the amount over-estimated which previously reduced your allotment
must be restored to your allotment. Example C, # 7A, 7B, 7C, and 8
Accounting Entry: for amount of underrun
Debit Account: (asset) State Aid Allotment (Reg. or Muni. Const.)
Credit Account: (asset) State Aid Receivable (Reg. or Muni. Const.)
Accounting Entry: for amount of State Aid receipt
Debit Account: (asset) Cash
Credit Account: (asset) State Aid Receivable (Reg. or Muni. Const.)
Under normal circumstances the Federal and/or State Bond entries are not affected by overruns since
funds are requested on a reimbursable basis. You will also need to submit a final invoice (Form DCP 14)
to the State for any additional Federal and/or State Bond Funds that are due. The entries would be
identical to those described in Example A.
PROJECT UNDERRUNS ORIGINAL ESTIMATE WITH AN OVERPAYMENT
This means that the State has encumbered too much and also advanced too much cash to the county. As
a result, the county owes the State a refund. The State usually does not request this money back. It is
usually recorded as an overpayment and applied against the next construction project you submit for
State Aid funding. This money should be posted to a Liability Account (Due to State Aid - Overpayments)
until you are notified of its use on another project. Example D, # 7A, 7B, 7C, and 7D
Recognize the overpayment.
Accounting Entry: for amount of overpayment
Debit Account: (asset) State Aid Allotment
Credit Account: (liability) Due to State Aid - Overpayments
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Reduce the receivable and increase the allotment for the original encumbered amount.
Accounting Entry: for amount of State Aid encumbered
Debit Account: (asset) State Aid Allotment
Credit Account: (asset) State Aid Receivable
Under normal circumstances the Federal and/or State Bond entries are not affected by an underrun since
funds are requested on a reimbursable basis. A DCP Final Payment Request needs to be submitted to the
State for the final contract costs. In the case an overpayment has occurred for Federal and/or State Bond
Funds an invoice will be received by the local agency for the overpayment amount.
Recognize the Federal and/or State Bond overpayment.
Accounting Entry: recognize payment to State for amount of Federal overpayment
Debit Account: (revenue) Federal Construction - Revenue
Credit Account: (asset) Cash
Accounting Entry: recognize payment to State for amount of State Bond overpayment
Debit Account: (revenue) State Bond - Revenue
Credit Account: (asset) Cash
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EXAMPLES
Example A
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Example B
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Example C
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Example D
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TRADITIONAL PROJECTS (MNDOT ADMINISTERS CONTRACT)
ACCOUNTS NEEDED
(const exp) - REGULAR CONSTRUCTION - EXPENSE
(const exp) - MUNICIPAL CONSTRUCTION - EXPENSE
(const exp) - FEDERAL CONSTRUCTION - EXPENSE
(const exp) - STATE TRANSPORTATION BOND CONSTRUCTION - EXPENSE
(revenue) - REGULAR CONSTRUCTION - REVENUE
(revenue) - MUNICIPAL CONSTRUCTION - REVENUE
(revenue) - FEDERAL CONSTRUCTION - REVENUE
(revenue) - STATE TRANSPORTATION BOND CONSTRUCTION - REVENUE
(asset) - REGULAR CONSTRUCTION - ANTICIPATED FEDERAL TRANSFERS
(asset) - MUNICIPAL CONSTRUCTION - ANTICIPATED FEDERAL TRANSFERS
(asset) - REGULAR CONSTRUCTION - ANTICIPATED EXPENSE
(asset) - MUNICIPAL CONSTRUCTION - ANTICIPATED EXPENSE
(asset) - PREPAID FEDERAL - CONSTRUCTION EXPENSE
(asset) - CASH
(asset) - REGULAR CONSTRUCTION - ALLOTMENT
(asset) - MUNICIPAL CONSTRUCTION - ALLOTMENT
(liability) - REGULAR CONSTRUCTION - UNEARNED REVENUE
(liability) - MUNICIPAL CONSTRUCTION - UNEARNED REVENUE
SEQUENCE OF EVENTS
LOCAL OBLIGATION
If the project is funded in part with local funds, the county will be required to submit 100% of the local
contribution to MnDOT before the project can be awarded. The following entry would be used to record
this transaction. Example A, # 1
Recognize Prepaid Federal Construction Expense
Accounting Entry:
Debit Account: (asset) Prepaid Federal Construction Expense
Credit Account: (asset) Cash
STATE AID TRANSFER NOTICE
When a Federal Aid construction project is let and a portion of the funding is from State Aid funds, the
county will receive a PARTIAL STATE AID TRANSFER NOTICE when the funds have been transferred from
their account. Under the current procedures, these dollars now represent Grant Revenue and
Construction Expenses. The accounting entries associated with the initial Partial State Aid Transfer Notice
are below.
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NOTE: This example has both State Aid and State Transportation Bond for Locals Funds on the project.
Unlike the State Aid Funds, State Transportation Bond for Locals Funds CAN NOT be transferred
until actual expenditures have been incurred and paid. For this reason, partial transfers may be
processed periodically or not until the end of the project. Example A, # 2A and 2B
For State Aid Obligation
Accounting Entry: reduce the State Aid Allotment by the State Aid obligation
Debit Account: (asset) Anticipated State Aid Transfers (Reg. or Muni. Const.)
Credit Account: (asset) State Aid - Allotment (Reg. or Muni. Const.)
Recognize Partial State Aid Transfer
Accounting Entry: 95% of State Aid obligation to Federal Project
Debit Account: (asset) Anticipated State Aid Construction - Expense
Credit Account: (asset) Anticipated State Aid Transfers (Reg. or Muni. Const.)
PROJECT DEVELOPMENT, RIGHT OF WAY REIMBURSEMENT, ETC.
The process to receive reimbursement for Project Development, Right of Way, Utility Relocation, etc. is
different if part of the costs are funded with Federal Funds or if no Federal Funds are involved (strictly
State Aid Funds).
If Federal Funds are involved, an agreement must be written and the funds must be approved with the
Federal Highway Administration. The matching funds are generally local or Fund 29, but it is possible to
have State Aid. Invoices are submitted to MnDOT for reimbursement once costs have been incurred and
paid by the county. The county absorbs the local funds as the costs are incurred.
If Federal Funds are not involved, the process is easier. The county submits the request for reimbursement
on the Report of State Aid Contract.
The entries below reflect the different types of entries required for the different types of requests.
A) COSTS WITH FEDERAL AID FUNDS
When the county submits an invoice to MnDOT, the county records a receivable and the revenue earned
for the amount of the invoice. The cash receipt is recorded when the county receives the money. Example
A, # 3 A1 and 3A2
Record Receivable (for invoice amount)
Accounting Entry: State Transportation Bond Grant (if any)
Debit Account: (asset) State Transportation Bond Grant - Receivable
Credit Account: (revenue) State Transportation Bond Construction - Revenue
Accounting Entry: Federal Funds
Debit Account: (asset) Federal - Receivable
Credit Account: (revenue) Federal Construction – Revenue
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Record cash receipt
Accounting Entry: State Transportation Bond Grant (if any)
Debit Account: (asset) Cash
Credit Account: (asset) State Transportation Bond Grant - Receivable
Accounting Entry: Federal funds
Debit Account: (asset) Cash
Credit Account: (asset) Federal - Receivable
COSTS WITHOUT FEDERAL AID FUNDS (STATE AID FUND)
Example A, # 3 B1 and 3B2
Recognize receipt of Project Development, Construction Engineering, Utility Relocation and Right of Way.
Accounting Entry:
Debit Account: (asset) Cash
Credit Account: (asset) State Aid - Allotment (Reg. or Muni. Const.)
Recognize Revenue (for the amount of State Aid Receipt)
Accounting Entry:
Debit Account: (liability) State Aid - Unearned Revenue (Reg. or Muni. Const.)
Credit Account: (revenue) State Aid - Revenue (Reg. or Muni. Const.)
YEAR END ADJUSTMENTS
Run the “FCRB Ledger By Card Summary” from SAAS Reports for all your SP projects to view the deposits,
federal reimbursements, and contract and engineering payments. Also run the “FCRB Payment Summary”
report.
The Total row represents project payments that have been processed on behalf of the county. According
to CAFR, COFARS and the MN State Auditor, the current year funds must be declared as revenue and
expenses for each type of funding for the project. (You must deduct any revenues and expenses declared
in prior years from the totals in this section.)
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The following entries should be made for EACH FCRB PROJECT SUMMARY. Example A, # 4A, 4B, 4C, 4D,
and 4E
Recognize Federal Construction Expense and Revenue (deduct prior years expenses and revenues).
Accounting Entry:
Debit Account: (const exp) Federal Construction - Expense
Credit Account: (revenue) Federal Construction - Revenue
Recognize State Transportation for Locals Bond Construction Expense and Revenue (deduct prior years
expenses and revenues).
Accounting Entry:
Debit Account: (const exp) State Transportation Bond Construction - Expense
Credit Account: (revenue) State Transportation Bond Construction - Revenue
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Recognize State Aid Construction Expense and Revenue (deduct prior years expenses and revenues)
Accounting Entry:
Debit Account: (const exp) State Aid Construction - Expense (Reg. or Muni. Const.)
Credit Account: (asset) Anticipated Expense (Reg. or Muni. Const.)
Debit Account: (liability) State Aid - Unearned Revenue (Reg. or Muni. Const.)
Credit Account: (revenue) State Aid - Revenue (Reg. or Muni. Const.)
NOTE: The Anticipated Expense accounts may carry a credit balance if construction expenses exceed the
original 95% transfer. This will be corrected by future transfers on the project.
Recognize local construction expense (deduct prior years expenses)
Accounting Entry:
Debit Account: (const exp) Federal Construction - Expense
Credit Account: (asset) Prepaid Federal Construction - Expense
PROJECT IS FINAL
Unless more State Aid funds are transferred for the federal project (in which case the entries would be
identical to those described in State Aid Transfer Notice). The county will generally not receive any notices
from State Aid until the project is final. Once the project has been final by MnDOT, the county will receive
a Final State Aid Transfer Notice. This notice indicates the final amount of State Aid Funds transferred for
the federal project.
The situations that could occur at this point are:
Project is completed as estimated
Project is completed with an OVERRUN
Project is completed with an UNDERRUN where the initial State Aid transfer is LESS THAN final
contract amount
Project is completed with an UNDERRUN where the initial State Aid transfer is MORE THAN final
contract amount
PROJECT IS COMPLETED AS ESTIMATED
Example A, # 5A, 5B, 5C, 5D, 5E and 5F
Recognize remaining State Aid Construction Expense.
Accounting Entry:
Debit Account: (const exp) State Aid Construction - Expense (Reg. or Muni. Const.)
Credit Account: (asset) Anticipated Expense (Reg. or Muni. Const.)
Recognize remaining State Aid Revenue.
Accounting Entry:
Debit Account: (liability) State Aid - Unearned Revenue (Reg. or Muni. Const.)
Credit Account: (revenue) State Aid - Revenue (Reg. or Muni. Const.)
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Recognize final transfer of State Aid Funds.
Accounting Entry:
Debit Account: (asset) Anticipated Expense (Reg. or Muni. Const.)
Credit Account: (asset) Anticipated State Aid Transfers (Reg. or Muni. Const.)
NOTE: Previous entries have recognized State Aid Construction Expenses, the Anticipated Expense
account will have a credit balance since expenses will exceed the original 95% transfer. The
final transfer will net the balance of the Anticipated Expense and Anticipated State Aid
Transfer accounts to zero.
PROJECT OVERRUNS ORIGINAL ESTIMATE
Example B, # 5A - 5G
Reduce the State Aid Allotment (for the amount of the State Aid OVERRUN - the difference between the
transfer and the encumbered amount).
Accounting Entry:
Debit Account: (asset) Anticipated Federal Transfers (Reg. or Muni. Const.)
Credit Account: (asset) State Aid - Allotment (Reg. or Muni. Const.)
Recognize remaining Construction Expense.
Accounting Entry:
Debit Account: (const exp) State Aid Construction - Expense (Reg. or Muni. Const.)
Credit Account: (asset) Anticipated Expense (Reg. or Muni. Const.)
Recognize remaining Revenue.
Accounting Entry:
Debit Account: (liability) State Aid - Unearned Revenue (Reg. or Muni. Const.)
Credit Account: (revenue) State Aid - Revenue (Reg. or Muni. Const.)
Recognize final transfer of State Aid Funds.
Accounting Entry:
Debit Account: (asset) Anticipated Expense (Reg. or Muni. Constr.)
Credit Account: (asset) Anticipated State Aid Transfers (Reg. or Muni. Constr.)
NOTE: Previous entries have recognized State Aid Construction Expenses. The Anticipated Expense
account will have a credit balance since expenses will exceed the original 95% transfer. The final
transfer will net the balance of the Anticipated Expense and Anticipated State Aid Transfer
accounts to zero.
UNDERRUN – INITIAL TRANSFER IS LESS THAN FINAL CONTRACT AMOUNT
Example C, # 5A – 5G
Increase the State Aid Allotment (for the amount of the State Aid UNDERRUN - the difference between
the transfer and the encumbered amount).
Accounting Entry:
Debit Account: (asset) State Aid - Allotment (Reg. or Muni. Constr.)
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75
Credit Account: (asset) Anticipated State Aid Transfers (Reg. or Muni. Const.)
Recognize remaining Construction Expense.
Accounting Entry:
Debit Account: (const exp) State Aid Construction - Expense (Reg. or Muni. Const.)
Credit Account: (asset) Anticipated Expense (Reg. or Muni. Const.)
Recognize remaining Revenue.
Accounting Entry:
Debit Account: (liability) State Aid - Unearned Revenue (Reg. or Muni. Const.)
Credit Account: (revenue) State Aid - Revenue (Reg. or Muni. Const.)
Recognize final transfer of State Aid Funds.
Accounting Entry:
Debit Account: (asset) Anticipated Expense (Reg. or Muni. Constr.)
Credit Account: (asset) Anticipated State Aid Transfers (Reg. or Muni. Constr.)
NOTE: Previous entries have recognized State Aid Construction Expenses. The Anticipated
Expense account will have a credit balance since expenses will exceed the original 95%
transfer. The final transfer will net the balance of the Anticipated Expense and Anticipated
State Aid Transfer accounts to zero.
Recognize refund of remaining Local Funds (if any).
Accounting Entry:
Debit Account: (asset) Cash
Credit Account: (asset) Prepaid Federal Construction Expense
D) UNDERRUN – INITIAL TRANSFER IS MORE THAN FINAL CONTRACT AMOUNT
Example D, # 5 A - 5G
Increase the State Aid Allotment (for the amount of the State Aid UNDERRUN - the difference between
the transfer and the encumbered amount).
Accounting Entry:
Debit Account: (asset) State Aid - Allotment (Reg. or Muni. Const.)
Credit Account: (asset) Anticipated State Aid Transfers (Reg. or Muni. Const.)
Recognize remaining Construction Expense.
Accounting Entry:
Debit Account: (const exp) State Aid Construction - Expense (Reg. or Muni. Const.)
Credit Account: (asset) Anticipated Expense (Reg. or Muni. Const.)
Recognize remaining Revenue.
Accounting Entry:
Debit Account: (liability) State Aid - Unearned Revenue (Reg. or Muni. Const.)
Credit Account: (revenue) State Aid - Revenue (Reg. or Muni. Const.)
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Recognize the difference between actual expenses and the initial transfer amount, decrease the
Anticipated Expense Account.
Accounting Entry:
Debit Account: (asset) Anticipated State Aid Transfers (Reg. or Muni. Const.)
Credit Account: (asset) Anticipated Expense (Reg. or Muni. Const.)
NOTE: The difference between the actual expenses and the initial transfer amount will net the
balance of the Anticipated Expense and Anticipated State Aid Transfer accounts to zero.
Recognize refund of remaining Local Funds (if any).
Accounting Entry:
Debit Account: (asset) Cash
Credit Account: (asset) Prepaid Federal Construction Expense
CHAPTER 6 – FEDERAL AID DELEGATED AND TRADITIONAL CONTRACT PROCESS
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EXAMPLES
Example A
CHAPTER 6 – FEDERAL AID DELEGATED AND TRADITIONAL CONTRACT PROCESS
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Example B
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Example C
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Example D
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LOCAL AGENCY BONDS
NARRATIVE
Periodically, due to a cash flow need, the county may sell debt (bonds) with the assistance of financial
advisers to finance one or more projects. The State of Minnesota is not a party to any bond issue made
by a local government agency, but the annual State Aid Allotments can sometimes be used for repayment
of the debt.
It is important to understand that there are accounting guidelines to be followed to accurately record the
bond proceeds, bond expenditures, and any revenue that may be earned from interest. There are tax
implications to be tracked, public reporting that may be requested showing bond uses, and of course the
need for the Highway Department to accurately record the value added to their road system. Each county
will have their own unique set of procedures. Prior to bond issue it is important that each department
understand its responsibility in the process to avoid duplication as well as omission of important steps.
This chapter will address two types of bonds often used by counties. The difference between the two is
the pledge for the source of repayment. Determining the type of bond to be issued looks at the use of the
funds and the sources available for repayment. In both cases, once the county determines that it will
issue bonds a financial advisor is contacted and the bond issue process begins following similar steps up
through the point of sale.
General Obligation (G.O.) Bonds are backed by a pledge of the full faith and credit of the county and thus,
generally repaid with property tax levies. These bonds can be used for very broad purposes depending
on the county’s financial plan and structure. Accounting for G.O. bonds will be an internal function and
no reporting or compliance will be required by State Aid. They are included here as a part of the Highway
Department’s possible accounting entries throughout the bond’s life.
Local Agency Bonds (L.A.) are Revenue Bonds for which the county has pledged repayment with the
county’s available annual construction and maintenance allotments. These bonds must be used for the
purposes stated in MN Statute 162.181; “establishing, locating, relocating, constructing, reconstructing
and improving county state aid highways and constructing buildings and other facilities for maintaining
county state aid highways.” This statute, along with MN State Aid Rule 8820.1500 Subp. 11, also establish
a limit on the bond principal amount that can be considered for issue. State Aid requires a repayment
schedule of principal and interest be provided within 30 days of the bond issue. This schedule is used
to verify and set aside annual payments that will be released to the county for their repayment of the
bond principal and interest. Sometimes in order to secure a lower interest rate, a County will issue G.O.
Revenue Bonds, which pledge the allotments for the repayment of the bonds, but includes a secondary
pledge of the county’s taxing authority.
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ACCOUNTS NEEDED
(expenditure) - BOND INTEREST EXPENDITURES
(expenditure) - BOND ISSUANCE COSTS
(expenditure) - BOND PRINCIPAL RETIREMENT
(revenue) - APPROPRIATE CONSTRUCTION REVENUE
(revenue) - APPROPRIATE MAINTENANCE REVENUE
(revenue) - INVESTMENT INTEREST REVENUE
(asset) - CASH
(asset) - APPROPRIATE CONSTRUCTION ALLOTMENT
(asset) - APPROPRIATE MAINTENANCE ALLOTMENT
(asset) - INVESTED BOND FUNDS
(unearned inflow) - APPROPRIATE CONSTRUCTION UNAVAILABLE REVENUE
(unearned inflow) - APPROPRIATE MAINTENANCE UNAVAILABLE REVENUE
(equity) - ASSIGNED FUND BALANCE
(equity) - RESTRICTED FOR CONSTRUCTION
(equity) - RESTRICTED FOR DEBT SERVICE
(other sources/uses) - OTHER FINANCING USES – TRANSFERS OUT
- OTHER FINANCING SOURCES – TRANSFERS IN
- OTHER FINANCING SOURCES – BONDS ISSUED
- OTHER FINANCING USES – DISCOUNT ON BONDS ISSUED
- OTHER FINANCING SOURCES – PREMIUM ON BONDS ISSUED
SEQUENCE OF EVENTS
Entries are the same for both general obligation and local agency bonds from the bond issue through the
bond expenditure. The differences lie in the annual bond repayment accounting. Entries here are provided
for the Highway Department Accounts only and are provided as guidance; actual account titles will vary.
BOND ISSUE
If the bond funds are receipted in the Auditor’s Office for the bond issuance, no entries are made at the
Highway Department at this time.
When bonds are sold and the cash is received by the Highway Department it is considered an “Other
Financing Source”, not operating revenue. The bond issuance costs may or may not be a part of the
Highway Department entry. If the funds are transferred from another fund, the expense may have been
recorded there and should not be duplicated.
Accounting Entry: Record the issue of bonds and the related issue costs
Debit Account: (asset) Cash
(expense) Bond Issue Costs
Credit Account: (non-operating) Other Financing Sources – Bonds Issued
Bonds issued in a favorable market can create a “premium” meaning they sold for more than the face
value of the bonds, providing additional funds for the county. If the market is unfavorable the bond may
CHAPTER 7 – LOCAL AGENCY BONDS AND LOCAL TRANSPORTATION REVOLVING LOAN FUND
83
sell at a discount, or for less than the face value of the issue. In both cases this would be recorded with an
additional line to the journal entry above for “Other Financing Sources – Bonds Issued” as a credit for a
premium issue or a debit in the case of a discounted issue. It is required to break this amount out in the
accounting record for tracking.
The funds received from a bond issue are often recorded into a Construction Account within the Highway
Fund that tracks revenues and expenditures impacting the bond proceeds used for construction. If the
Highway Department receipted the face value of the bond funds (above) this entry would be made to
establish a Construction Account.
Accounting Entry: Record the issue of bonds and the related issue costs
Debit Account: (equity) Assigned Fund Balance
Credit Account: (equity) Restricted for Construction
INVESTED FUNDS
If invested funds that are not recorded by the Highway Department no entries would be made.
It is not uncommon for bond funds to be invested immediately to earn interest revenue until they are
expended. In the case of general obligation bonds all revenue earned is generally returned to the Debt
Service Fund to be used for future payments. This is not the case for local agency bonds as long as their
future payments are satisfactorily secured by the annual allotments.
Accounting Entry: Record the investment of bond proceeds
Debit Account: (asset) Invested Bond Funds
Credit Account: (asset) Cash
When investments earn interest income that is booked in the Highway Department’s Debt Service
Fund/Accounts.
Accounting Entry: Record the investment revenue
Debit Account: (asset) Cash
Credit Account: (revenue) Investment Interest Revenue
Accounting Entry: Record the investment revenue
Debit Account: (asset) Cash
Credit Account: (revenue) Investment Interest Revenue
Accounting Entry: Transfer interest income to the Debt Service fund
Debit Account: (Non-Operating) Other Financing Uses –Transfers
Credit Account: (equity) Restricted –Debt Service Fund
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CONTRACT PAYMENTS ARE PROCESSED
The Highway Department processes all the normal entries for contract expenditures through the project.
(see Chapters 3 and 4).
When the bond funds are held in a fund at the Auditor’s Office, it is likely that a request to transfer funds
will need to be made to reimburse the funds that the Highway Department has paid out to the contractor
or has certified.
Accounting Entry: Recognize funds transferred into the Highway Department to cover
construction expenditures
Debit Account: (asset) Cash
Credit Account: (Non-Operating) Other Financing Sources –Transfers In
When the bond funds are held in the Highway Department, no additional entries are required.
ANNUAL PRINCIPAL AND INTEREST PAYMENTS
GENERAL OBLIGATION BONDS (G.O.)
During the year, funds from a predetermined repayment source will be deposited into the Debt Service
Fund in anticipation of the payment of principal and interest due that year. There are numerous revenue
sources and variations on where and when they are recorded.
If the Debt Service Fund is recorded in the Auditor’s Office, the Highway Department will not make any
entries for the accrual of revenue throughout the year or the annual payment of interest or principal on
the bond. These accounts will be tracked in another fund.
If revenues are collected in another fund and transferred to a Debt Service Fund in the Highway
Department, it is likely that a request to transfer funds will need to be made to initiate the transfer.
Accounting Entry: Recognize funds transferred into the Highway Department to cover the
annual principal and interest
Debit Account: (asset) Cash
Credit Account: (Non-Operating) Other Financing Sources –Transfers In
When the Debt Service Fund is recorded in the Highway Department, the current portion of the bond
principal and interest will need to be paid to the bond company.
Accounting Entry: Record payment of the current portion of bond principal
Debit Account: (expense) Bond Principal Retirement
Credit Account: (asset) Cash
Accounting Entry Record payment of the current portion of bond interest
Debit Account: (expense) Bond Interest
Credit Account: (asset) Cash
CHAPTER 7 – LOCAL AGENCY BONDS AND LOCAL TRANSPORTATION REVOLVING LOAN FUND
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LOCAL AGENCY BONDS (L.A.)
In compliance with Minnesota Statute 162.181, the county can use its appropriate annual construction
allotment to make bond principal payments and its appropriate annual maintenance allotment to make
the bond interest payments. At year end the amount paid for interest will be separated from maintenance
expenditures on the Annual Summary of Highway Maintenance Expenditures.
ALLOTMENT SET ASIDE
The amount of principal and interest due annually are set aside by State Aid Finance each January when
the new allotments are issued. Any advance of construction funds from the previous year is repaid first.
From the remaining balance, if there is any, the bond principal due in the current year (March – next
February) is “set aside” from the available allotment balance and held until it is needed. If there are
insufficient funds to make the bond principal payment, funds will not be automatically advanced from the
future year’s allotment. If an advance is needed, an Advance Resolution must be submitted. The interest
payments cannot me advanced so they will be paid short if there are insufficient funds in the maintenance
allotment.
The county should book the bond set aside when it occurs in January so that it will balance monthly to the
allotment accounts.
Accounting Entry: Record the reduction of the construction allotment for the bond
principal due in the current year
Debit Account: (unearned inflow) Appropriate Construction Unavailable Revenue
Credit Account: (asset) Appropriate Construction Allotment
Accounting Entry: Record the reduction of the construction allotment for the bond
interest due in the current year
Debit Account: (unearned inflow) Appropriate Maintenance Unavailable Revenue
Credit Account: (asset) Appropriate Maintenance Allotment
STATE AID RELEASES BOND PRINCIPAL AND INTEREST
State Aid Finance will hold the set aside bond funds until the county submits the Affidavit to Request Bond
Payment. Once that form is received the payment is released to the county. The Affidavit must be
submitted about 30 days prior to each payment release, generally twice a year per bond.
CHAPTER 7 – LOCAL AGENCY BONDS AND LOCAL TRANSPORTATION REVOLVING LOAN FUND
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In many counties the payments from State Aid are receipted at the Auditor’s Office and deposited into
the Highway Fund. If the Auditor will be issuing the bond payments, the funds can be deposited directly
into the fund the payments will be made from, avoiding the need for an additional transfer. The Highway
Department would then recognize the appropriate revenue, but the interest expense and the Debt Service
Fund would be recorded in the other fund.
Accounting Entry: Record revenue earned for bond principal payment
Debit Account: (non-operating) Other Financing Uses –Transfers
Credit Account: (revenue) Appropriate Construction Revenue
Accounting Entry: Record revenue earned for bond principal interest
Debit Account: (non-operating) Other Financing Uses –Transfers
Credit Account: (revenue) Appropriate Maintenance Revenue
If the Highway Department is recording the Debt Service activity and will be issuing the bond payments,
the revenue, debt service and interest expense entries will be made on the Highway Department books.
Accounting Entry: Record cash received and corresponding revenue for the bond principal
Debit Account: (asset) Cash
Credit Account: (revenue) Appropriate Construction Revenue
Accounting Entry: Record cash received and corresponding revenue for the bond interest
Debit Account: (asset) Cash
Credit Account: (revenue) Appropriate Maintenance Revenue
COUNTY MAKES BOND PRINCIPAL AND INTEREST PAYMENT
Accounting Entry: Record the payment of the bond principal and interest to the bonding
company
Debit Account: (expense) Bond Principal
(expense) Bond Interest
Credit Account: (asset) Cash
APPLYING BOND FUNDS
In the State Aid Accounting System (SAAS) there are two balances tracked for a single bond principal. The
first is the “Outstanding Bond Principal” that will be reduced annually with the bond principal payments
and reflects the remaining debt to be paid by the county. The second is the “Unapplied Bond Principal”
that is reduced when the county submits a State Aid Payment Request and states that bond funds have
been applied to eligible project costs.
State Aid must insure that the funds paid annually for bond principal and interest from State Aid
Allotments are being spent for the legal purposes defined in MN statute 162.181. In the SAAS Reports
Menu, there is a report listing the projects and amounts that the county has paid using bond funds rather
than State Aid Funds. If a county has more than one unapplied bond, funds are applied to the oldest bond
first.
The bond is not considered completely satisfied until both the “Outstanding Bond Principal” and the
“Unapplied Bond Principal” reach zero.
CHAPTER 7 – LOCAL AGENCY BONDS AND LOCAL TRANSPORTATION REVOLVING LOAN FUND
87
REFUNDING BONDS
During the life of a bond the county may “refund” or refinance the bond for a better interest rate or to
restructure debt. In this process, the unpaid bond principal is in essence “paid in full” with the issue of
the new bond.
This is not done without a fee, and the bond issue fee is often added to the existing bond principal. If the
bond issue fees will be paid from State Aid Allotments, the county must be aware that there is additional
principal to be “Applied”.
State Aid considers a bond refund to be the same as a new bond issue and requires the same information
to be submitted
YEAR END REPORTING
On the Annual Summary of Maintenance Costs for the county, bond interest should be reported
separately in such a way that it is not added into the calculation for the county's average cost per mile
figure for road maintenance. The inclusion of these figures would inflate the county’s average
maintenance costs per mile.
TRANSPORTATION REVOLVING LOAN FUND
NARRATIVE
The Transportation Revolving Loan Fund (TRLF) is authorized in MN Statute 161.04 and was created to
finance one or more construction projects in advance of when the county’s funds would have allowed
them to do so. TRLF loans follow all the general rules of bonds as discussed in the previous section. These
loans are not sold publicly as a bond issue is, and the debt accrues as the funding is spent so annual
payments may vary. The loan funds are generally kept in the Highway Department fund because they are
disbursed out quickly. Additional governing over the TRLF is provided in Minnesota Rule 8820.1500 Subp.
11a.
The principal and interest on the TRLF loans are generally recouped annually from the county’s State Aid
Allotments, the same as local agency bonds, according to a payment schedule.
CHAPTER 7 – LOCAL AGENCY BONDS AND LOCAL TRANSPORTATION REVOLVING LOAN FUND
88
ACCOUNTS NEEDED
(expenditure) - LOAN INTEREST EXPENDITURE
(expenditure) - LOAN PRINCIPAL EXPENDITURE
(revenue) - APPROPRIATE CONSTRUCTION REVENUE
(revenue) - APPROPRIATE MAINTENANCE REVENUE
(asset) - CASH
(asset) - APPROPRIATE CONSTRUCTION ALLOTMENT
(asset) - APPROPRIATE MAINTENANCE ALLOTMENT
(unearned inflow) - APPROPRIATE CONSTRUCTION UNAVAILABLE REVENUE
(unearned inflow) - APPROPRIATE MAINTENANCE UNAVAILABLE REVENUE
(equity) - ASSIGNED FUND BALANCE
(equity) - RESTRICTED FOR CONSTRUCTION
(non-operating) - OTHER FINANCING USES - TRANSFERS OUT
- OTHER FINANCING SOURCES – TRANSFERS IN
(non-operating) - OTHER FINANCING SOURCES – LOANS ISSUED
SEQUENCE OF EVENTS
The sequence of events below describes the procedures to record the payback of a TRLF loan.
PRINCIPAL AND INTEREST PAYMENTS FROM STATE AID
The first year (and every year), approximately 2 months prior to the payment due date, MnDOT
TRLF LOAN PROCEEDS ARE RECEIVED
TRLF loan proceeds are distributed to the county as funds are requested through the program.
Accounting Entry: Record for amount of TRLF loan Proceeds
Debit Account: (asset) Cash
Credit Account: (non-operating) Other Financing Sources – Transfers In
Accounting Entry: Record for amount of TRLF loan Proceeds
Debit Account: (equity) Assigned Fund Balance
Credit Account: (equity) Restricted for Construction
If the loan funds are invested and interest is earned, entries similar to the bond investment entries would
be made.
The Highway Department processes all normal entries for contract expenditures through the project. (See
Chapter 3 and Chapter 4)
CHAPTER 7 – LOCAL AGENCY BONDS AND LOCAL TRANSPORTATION REVOLVING LOAN FUND
89
STATE AID FUNDS RECEIVED
The allotment is not automatically reduced in January as it is for bond payments, so the payment entry
will be made when the funds are paid out to the county (about a month prior to the loan due date). The
principal and interest amounts received should match the amortization schedule provided by the Public
Facilities Authority (PFA).
Generally, a payment schedule is established and provided to the county by the PFA. This schedule may
change since the amount borrowed may increase. It is important to verify that the PFA furnished an
updated schedule to State Aid Finance each time a distribution of loan funds has occurred.
Accounting Entry: Record the reduction of the construction allotment for the loan
principal
Debit Account: (liability) Appropriate Construction Unavailable Revenue
Credit Account: (asset) Appropriate Construction Allotment
Accounting Entry: Record the reduction of the construction allotment for the loan interest
Debit Account: (liability) Appropriate Maintenance Unavailable Revenue
Credit Account: (asset) Appropriate Maintenance Allotment
Accounting Entry: Record cash received from the appropriate construction allotment for
current loan principal payment due
Debit Account: (asset) Cash
Credit Account: (revenue) Appropriate Construction Revenue
Accounting Entry: Record cash received from the appropriate maintenance allotment for
current loan interest payment due
Debit Account: (asset) Cash
Credit Account: (revenue) Appropriate Maintenance Revenue
LOAN PAYMENT MADE
Accounting Entry: Record the annual payment made to the PFA for loan principal
Debit Account: (expense) Loan Principal Retired
Credit Account: (asset) Cash
Accounting Entry: Record the annual payment made to the PFA for loan interest
Debit Account: (expense) Loan Interest
Credit Account: (asset) Cash
CHAPTER 8 – ADVANCED ENCUMBRANCE
90
STATE AID ADVANCE
NARRATIVE
Periodically, the county may exceed their State Aid Allotments, if this occurs the county may get a State Aid
Advance for the funding source that is short of funds. The County Board must pass a resolution and it must be on
file with State Aid before any advance may occur. Advances on the next year’s allotment cannot be recognized as
revenue, revenues must be reduced on projects that have incurred an advance.
ACCOUNTS NEEDED
(const exp) - REGULAR CONSTRUCTION EXPENSES (there will be numerous of these)
(const exp) - MUNICIPAL CONSTRUCTION EXPENSES (there will be numerous of these)
(const exp) - TOWN BRIDGE EXPENSES (there will be numerous of these)
(revenue) - REGULAR CONSTRUCTION REVENUE
(revenue) - MUNICIPAL CONSTRUCTION REVENUE
(revenue) - TOWN BRIDGE REVENUE
(asset) - CASH
(asset) - REGULAR CONSTRUCTION RECEIVABLE
(asset) - MUNICIPAL CONSTRUCTION RECEIVABLE
(asset) - TOWN BRIDGE RECEIVABLE
(asset) - REGULAR CONSTRUCTION ALLOTMENT
(asset) - MUNICIPAL CONSTRUCTION ALLOTMENT
(asset) - TOWN BRIDGE ALLOTMENT
(asset) - REGULAR CONSTRUCTION ADVANCE
(asset) - MUNICIPAL CONSTRUCTION ADVANCE
(asset) - TOWN BRIDGE ADVANCE
(liability) - REGULAR CONSTRUCTION ADVANCE PAYABLE
(liability) - MUNICIPAL CONSTRUCTION ADVANCE PAYABLE
(liability) - TOWN BRIDGE ADVANCE PAYABLE
(liability) - REGULAR CONSTRUCTION UNEARNED REVENUE
(liability) - MUNICIPAL CONSTRUCTION UNEARNED REVENUE
(liability) - TOWN BRIDGE UNEARNED REVENUE
CHAPTER 8 – ADVANCED ENCUMBRANCE
91
SEQUENCE OF EVENTS
RESOLUTION ON FILE
It is mandatory for the county board to pass a resolution to advance funds. A copy of the resolution must be sent
to the State Aid Finance Office. The county engineer will be notified upon receipt of the resolution. Resolution to
Advance Funds
PROJECT IS APPROVED
Your allotments are reduced throughout the year as construction contracts are let and payment requests are sent
in for State Aid Funding Approval. When State Aid approves the funding, the State Aid Receivable will need to be
recognized. Example A, # 1A
Accounting Entry: for amount of State Aid Construction Obligation ONLY
Debit Account: (asset) State Aid Receivable
Credit Account: (asset) State Aid Allotment
NOTE: The allotment will have a credit balance when the amount requested on a project exceeds the remaining
balance of the allotment.
FUNDS ARE ADVANCED
The amount requested exceeds the amount of the remaining allotment and an advance occurs. The amount of
the advance will appear on the Project Payment Notice (Project Payment Notice Example.)
95% PAYMENT IS RECEIVED FOR THE PROJECT
After the State Aid Partial Payment Request has been approved you will receive the actual payment for the project.
95% of the total State Aid Construction Obligation is disbursed. The remaining 5% is NOT encumbered; State Aid
does not advance funds for the encumbrance amount. Example A, # 1B
Accounting Entry: for 95% of State Aid obligation only
Debit Account: (asset) Cash
Credit Account: (asset) State Aid Receivable
NOTE: The “Encumbrance Balance” on the Status Report will not include any projects that have been paid to the county with a State Aid Advance. The State Aid Receivable on your system will differ by the amount of the projects that have not been encumbered. The “Balance Available” on the Status Report must have the projects that have not been encumbered deducted in order to reconcile to the State Aid Allotment on the county costing system.
WORK BEGINS ON THE PROJECT
Your county inspectors verify that the work is indeed done according to specifications and a partial payment is
paid to the contractor. There are two things to be aware of:
Amount of Work Certified ($ amount of work actually performed) minus: Any retainage ($ withheld as an insurance factor)
equals: Cash paid to Contractor ($ amount of actual disbursement)
The following entries will need to be made to recognize the construction expense, the earned State Aid revenue
and the disbursement to the contractor. Example A, # 2A
CHAPTER 8 – ADVANCED ENCUMBRANCE
92
NOTE: Excess revenues from State Aid Advances will be backed out at year end.
Recognize the construction expense.
Accounting Entry: recognize expenses as work is certified on contract.
Debit Account: (const exp) Construction Expenses
Credit Account: (liability) Contracts Payable
Recognize Earned Revenue. Example A, # 2B
Accounting Entry: recognize revenue for amount of work certified.
Debit Account: (liability) State Aid Unearned Revenue
Credit Account: (revenue) State Aid Construction Revenue
Recognize the disbursement to the contractor. Example A, # 2C
Accounting Entry: for amount of contractor disbursement.
Debit Account: (liability) Contracts Payable
Credit Account: (asset) Cash
PROJECT IS FINALIZED
Numerous partial payments may be made to the contractor following the same sequence as in the process above.
When the contract is completed, and final notification is sent into the State, the State will process the Final State
Aid Payment Notice. In this example the project is completed for the contract bid.
Recognize the construction expense. Example A, # 3A
Accounting Entry: recognize expenses as work is certified on contract.
Debit Account: (const exp) Construction Expenses
Credit Account: (liability) Contracts Payable
Recognize Earned Revenue for the current year. Example A, # 3B
Accounting Entry: recognize revenue for amount of work certified.
Debit Account: (liability) State Aid Unearned Revenue
Credit Account: (revenue) State Aid Construction Revenue
Recognize the disbursement to the contractor. Example A, # 3C
Accounting Entry: for amount of contractor disbursement.
Debit Account: (liability) Contracts Payable
Credit Account: (asset) Cash
CHAPTER 8 – ADVANCED ENCUMBRANCE
93
FUNDS ARE TRANSFERRED FROM MAINTENANCE
Advances may be reduced by transfers from Regular and Municipal Maintenance when final maintenance is
posted to the SAAS System. The maintenance final from the county is received and a transfer occurs for the
remaining maintenance balance. Example A, # 4A
Accounting Entry: for amount of Maintenance Transfer
Debit Account: (asset) State Aid Allotment
Credit Account: (liability) State Aid Unearned Revenue
FUNDS ARE ADVANCED FOR FINAL PAYMENT
The final payment to the county exceeds the allotment and a State Aid Advance occurs. The amount of the advance
will appear on the Project Payment Notice. Example Final Payment Notice
FINAL PAYMENT IS RECEIVED
The final payment is received by the county. Example A, # 5A
Accounting Entry: for remaining 5%
Debit Account: (asset) Cash
Credit Account: (asset) State Aid Receivable
ANOTHER PROJECT IS FINAL WITH AN OVERRUN
Recognize the construction expense. Example A, # 7A
Accounting Entry: recognize expenses as work is certified on contract.
Debit Account: (const exp) Construction Expenses
Credit Account: (liability) Contracts Payable
Recognize Earned Revenue for the current year. Example A, # 7B
Accounting Entry: recognize revenue for amount of work certified.
Debit Account: (liability) State Aid Unearned Revenue
Credit Account: (revenue) State Aid Construction Revenue
Recognize the disbursement to the contractor. Example A, # 7C
Accounting Entry: for amount of contractor disbursement.
Debit Account: (liability) Contracts Payable
Credit Account: (asset) Cash
Recognize the Final State Aid Payment Request. Example A, # 7D
Accounting Entry: for amount of Final State Aid Payment Request.
Debit Account: (asset) State Aid Receivable
Credit Account: (asset) State Aid Allotment
CHAPTER 8 – ADVANCED ENCUMBRANCE
94
YEAR END REVENUE REDUCTION FOR STATE AID ADVANCES
The State Aid Advances that have occurred for the year must be recognized at year end.
The “Available Balance” from the State Aid Accounting System “Status Report” as of 12/31/XX is the net amount
of all State Aid Advances that have occurred for that funding type. Example A, # 7A
Accounting Entry: Recognize State Aid Advance
Debit Account: (asset) State Aid Advance
Credit Account: (liability) State Aid Advance Payable
The current year revenues must be reduced by the amount of the Unearned Revenue Balance. Example A, #7B
Accounting Entry: Reduce revenues for the amount of the State Aid Advances
Debit Account: (revenues) State Aid Construction Revenue
Credit Account: (liability) State Aid Unearned Revenue
BEGIN NEW YEAR – ALLOTMENT AND REVERSING ENTRIES
The new year allotment is received; entries are made to the appropriate allotment and unearned revenue accounts.
Example A, # 8A
Accounting Entry: New Year Allotments
Debit Account: (asset) State Aid Allotments
Credit Account: (liability) State Aid Unearned Revenues
Reverse total of State Aid Advances. Example A, # 8B
Accounting Entry: Reverse prior year State Aid Advances
Debit Account: (liability) State Aid Advance Payable
Credit Account: (asset) State Aid Advance
Recognize remaining earned revenue, the amount of the previous year STATE AID Advance. Example A, # 8C
Accounting Entry: Revenue not recognized in previous year due to State Aid Advance.
Debit Account: (liability) State Aid Unearned Revenue
Credit Account: (revenue) State Aid Construction Revenue
CHAPTER 8 – ADVANCED ENCUMBRANCE
95
EXAMPLES
Example A
CHAPTER 8 – ADVANCED ENCUMBRANCE
96
Example B
CHAPTER 8 – ADVANCED ENCUMBRANCE
97
Example C
CHAPTER 9 – RECONCILING STATE AID ACCOUNTS
98
RECONCILING ACCOUNTS TO STATE AID STATUS REPORTS
NARRATIVE
The State Aid Status Report is available on the Web at the SAAS Reports Website.
Select Status Report from the menu presented on this screen.
This report details the status of the State Aid Accounts. It is suggested that the county books are reconciled to this
report monthly.
The State Aid Accounts included in the State Aid Status Report are:
ACCT # DESCRIPTION
70 CSAH Regular Construction
71 CSAH Municipal Construction
72 County Turnback
73 State Park Construction
75 Special Town Bridge Construction
76 Town Bridge Construction
77 Town Road
80 CSAH Regular Maintenance
81 CSAH Municipal Maintenance
89 County Disaster
Multiple State Transportation Bonds for Locals (Bridge, LRIP and Disaster)
(State Aid Status Report Sample)
The following pages discuss the items on the report and offer some guidelines to reconciling accounts with this
report. If the proper accounting procedures are being followed (as detailed in the previous sections of this
manual), the State Aid Accounts from your accounting system should reconcile directly to the figures on this
reports.
The best way to track down a discrepancy is to walk through the State Aid Payment/Transfer documents for the
current year and post the entries on paper (using T-Accounts). Follow the rules and procedures as outlined in the
previous sections of this manual for the various situations. Start by posting the beginning balances as of the
beginning of the year (or from the last time the accounts were balanced to the State Aid Report) onto T-Accounts,
for all the possible affected accounts. Then, as each payment/transfer document is gone through, make all entries
to the appropriate T-Accounts on the projects which had activity since the accounts were last balanced with State
Aid.
Balance to the State Aid Status Report in this manual fashion, first. Then, trace the entries that were actually made
to your accounting system, until the ones are found that don't agree with the T-Account entries which were made
manually.
If the discrepancy cannot be found in this manner, call the MnDOT State Aid Finance Office.
CHAPTER 9 – RECONCILING STATE AID ACCOUNTS
99
CSAH REGULAR CONSTRUCTION
Disbursements should always equal the cash received and transfers processed during the year as reported
on the State Aid Payment Documents.
Encumbrances represent funds the State has not yet released to the county for outstanding projects. An
itemized listing may be obtained when the Status Report is reviewed online. The amount here should be
equal to the balances in the Regular Construction - Receivable Account (asset). Advances are not
encumbered on the State Report, the balance of the receivable will be greater by those amounts not
encumbered.
Balance Available represents funds available in the Allotment Account but not yet requested or processed.
The amount here should be equal to the balance in the Regular Construction - Allotment (asset) Account.
If the county is advancing funds from a future year, the Balance Available will not include encumbrance
for those advanced projects, the balance of the Allotment Account will be further negative by those
amounts that have not been encumbered.
CSAH MUNICIPAL CONSTRUCTION
Follow the same guidelines as for CSAH Regular Construction.
COUNTY TURNBACK
Disbursements should always equal the cash received during the year as reported on the State Aid
Payment Documents
Encumbrances represent funds the state has not yet released to the country for outstanding projects. An
itemized listing may be obtained when the Status Report is reviewed online. The amount here should be
equal to the balance in the County Turnback – Receivable Account (asset). This is the only account that is
reconciled to the State Report.
STATE PARK CONSTRUCTION
Disbursements should always equal the cash received during the year as reported on the State Aid
Payment Documents.
Encumbrances represent funds the State has not yet released to the county for outstanding projects. An
itemized listing may be obtained when the Status Report is reviewed online. The amount here should be
equal to the balances in the State Park - Receivable Account (asset). This is the only account that is
reconciled to the State Report.
SPECIAL TOWN BRIDGE CONSTRUCTION
Follow the same guidelines as for CSAH Regular Construction.
TOWN BRIDGE CONSTRUCTION
Follow the same guidelines as for CSAH Regular Construction.
TOWN ROAD
This should be zero because it is paid out.
CHAPTER 9 – RECONCILING STATE AID ACCOUNTS
100
CSAH REGULAR MAINTENANCE
If there is any unused Maintenance Allotment from the previous year, it is transferred to the Regular
Construction Account.
Disbursements should always equal the cash received this year as reported on the State Aid Payment
Documents.
Unexpended Balance and Balance Available are equal. The amounts shown here should equal the balance
in the Regular Maintenance Allotment (asset) Account, provided the Annual Summary of Highway
Information, for the previous years, has been processed by State Aid Finance. If the Annual Summary of
Highway Information has not been processed, the Beginning Balance must be deducted from the Balance
Available.
Encumbrances are always zero.
Balance available before July is usually 50% of the current year's allotment and 10% or $0.00 after July,
depending on the state payment plan (50%, 40% and 10% or 50% / 50%).
If the county has a Local Agency Bond, the payments are calculated after reducing the allotment by the
bond interest paid that year.
CSAH MUNICIPAL MAINTENANCE
If there is any unused Maintenance Allotment from the previous year, it is transferred to the Municipal
Construction Account.
Disbursements should always be equal to the cash received during the year as reported on the State Aid
Payment sheets.
Unexpended Balance and Balance available are equal. The amount shown here should equal the balance
in the Municipal Maintenance Allotment (asset) Account, provided the Annual Summary of Highway
Information, for the previous years, has been processed by State Aid Finance. If the Annual Summary of
Highway Information has not been processed, the Beginning Balance must be deducted from the Balance
Available.
Encumbrances are always zero.
Balance available will be a percentage of the current year's allotment, each county may request a different
percentage of Municipal Maintenance to be paid them during the year.
COUNTY DISASTER
Disbursements should always be equal to the cash received during the year as reported on the State Aid
Payment sheets.
Encumbrances represent funds the State has not yet released to the county for outstanding projects. An
itemized listing may be obtained when the Status Report is reviewed online. The amount here should be
equal to the balances in the County Disaster - Receivable Account (asset). This is the only account that is
reconciled to the State Report.
CHAPTER 9 – RECONCILING STATE AID ACCOUNTS
101
RECONCILING THE UNEARNED REVENUE ACCOUNTS
NARRATIVE
The county will be able to reconcile its Unearned Revenue Accounts to the Allocation Amount (Regular and
Municipal Maintenance) or the Balance Available (Regular, Municipal and Town Bridge Construction) on the State
Aid Status Report. The following explanations should hold true for the Unearned Revenue Accounts if the correct
Grant Accounting entries have been made throughout the year. Review the following to proof the Unearned
Revenue Account Balances at year end.
REGULAR MAINTENANCE
Prior to completing the year-end sequence, making the necessary adjustments to recognize the amount of Regular
Maintenance expenditures, and closing the year, the Regular Maintenance Unearned Revenue Account balance
should be the same figure as the Regular Maintenance Allocation amount on the Status Report.
NOTE: However, this figure will not be the same figure in the Regular Maintenance Allotment Account at this
time since this account is reduced by State Aid Payments during the year.
MUNICIPAL MAINTENANCE
Prior to completing the year-end sequence, making the necessary adjustments to recognize the amount of
Municipal Maintenance expenditures, and closing the year, the Municipal Maintenance Unearned Revenue
Account balance should be the same figure as the Municipal Maintenance Allocation amount on the Status Report.
NOTE: However, this figure will not be the same figure in the Municipal Maintenance Allotment Account at this
time since this account is reduced by State Aid Payments during the year.
REGULAR, MUNICIPAL, SPECIAL TOWN BRIDGE AND TOWN BRIDGE CONSTRUCTION
Both State Aid Construction Unearned Revenue Account balances should NEVER BE LESS THAN their
corresponding Allotment Account balances UNLESS a project has overrun by a large amount and the overrun
hasn't been released. Most often however, the Unearned Revenue Account balance WILL BE GREATER THAN the
Allotment Account balance.
The Unearned Revenue Account balance (either Regular, Municipal or Town Bridge) can be calculated via the
following formula:
ADD: Current Allotment Account Balance (after reconciliation with State Aid)
PLUS: Total Uncompleted Work on State Aid Projects (All years and State Aid Obligation ONLY)
MINUS: Any State Aid Project Overruns that have NOT be requested.
EQUAL: Balance in State Aid Unearned Revenue
NOTE: Unearned Revenue Accounts are normally Credit Balance Accounts.
CHAPTER 9 – RECONCILING STATE AID ACCOUNTS
102
STATE AID STATUS REPORT (NEW EXAMPLE)
CHAPTER 9 – RECONCILING STATE AID ACCOUNTS
103
CHAPTER 10 – UNALLOCATED COST DISTRIBUTION
104
NARRATIVE
Costs that cannot be directly related to a specific road, construction/engineering project, or unit of
equipment are considered unallocated costs. Every effort should be made to charge costs directly to the
appropriate cost area before using the unallocated accounts.
Unallocated costs are divided between two categories – highway related and non-highway related. The
highway related unallocated costs are divided into categories for administration, maintenance,
construction/engineering and equipment.
All engineering and administrative personnel time should be supported by timesheets to justify highway
and non-highway related costs.
ADMINISTRATIVE COSTS
Administrative costs are expenses which are not directly attributable to a specific operation. These costs
include expenses which benefit all roads currently and in the future. Any unapplied administrative costs
will be included with the maintenance reporting by road system as unallocated. Examples of
administrative costs are:
Administrative Salaries1
Engineering Computer Prog/Serv Contract
Fringe Benefits2
Minor Office Furniture/Equipment
Office Supplies and Expenses
Offsetting Fringe Benefits – applied to direct labor2
Railroad Inspection
Road Studies
Training and Education
Travel & Lodging
Utilities
1 A portion of the Engineer's salary may be moved to the construction area based on a fair estimate
of the Engineer's time. You should have documentation on file as to how you determined this
estimate. 2 Fringe Benefits should have an offsetting account to record the credit for fringe benefits applied
to direct labor. This offsetting credit is based on the fringe benefit rate calculation schedule
included in this section.
CHAPTER 10 – UNALLOCATED COST DISTRIBUTION
105
FRINGE BENEFIT RATE CALCULATION
The following steps should be followed to determine the fringe benefit rate calculation. Refer to the
example below.
Isolate and identify all benefits for full time employees that are part of the County’s employment package.
Do not include any items that are not payroll related.
Identify the total labor dollars worked for full time employees. Exclude any wages for temporary or part-
time employees that do not receive the County’s normal benefit package.
Calculate the fringe benefit rate by dividing the fringe benefits by the total labor dollars for full time
employees. Apply this rate factor to all direct labor dollars costed for the County Highway operations with
an offsetting credit to the fringe application account in the Unallocated Administrative area.
EXAMPLE
20XX Fringe Benefits
Disability Insurance 4,819.54
Health Benefits 40,285.42
Group Life Benefits 1,390.41
Accidental Death 0.00
P.E.R.A 45,858.26
Social Security 46,101.84
Unemployment Tax 4,685.60
Workers Comp. Taxes 24,007.14
Liability Insurance 98.00
Salary adjustments, premium time, shift differential 41,583.76
Leave time – vacation, sick, jury, and military 59,678.55
Total Fringe Benefit Costs $268,508.52
Total Labor Dollars $815,284.31
Labor dollars should exclude temporary or part-time employees that do not receive a benefit package. In
addition, labor dollars should not include vacation, sick leave, military leave, and jury duty that are
included within fringe benefits.
Fringe Benefit Rate = $268,508.52/$815,284.31 = 0.3294
Education and training costs related to the county engineering staff are not allowed to be prorated to
construction projects or individual roads. These costs should be included in the administrative unallocated
dollar amount on the maintenance report by road system.
CHAPTER 10 – UNALLOCATED COST DISTRIBUTION
106
CONSTRUCTION COSTS
Unallocated construction costs are expenses relating to construction operations that cannot be
identified to a particular construction project. The costs in these accounts should be prorated to
engineering based on total costs of the projects at year-end. If the County chooses, they may seek
reimbursement of these engineering costs using their State Aid allocation.
Examples of unallocated construction costs include:
Alignment Surveys Field Engineering Supplies
Cross Section Stock Piles General Permits
Drafting Supplies Road Studies
Engineering Expense Wetlands Bank/Mitigation
Engineering Field Work
Education and training costs related to the county engineering staff are not allowed to be prorated to
construction projects or individual roads. These costs should be included in the administrative unallocated
dollar amount on the maintenance report by road system.
MAINTENANCE COSTS
Unallocated maintenance costs are maintenance expenses that are difficult to associate with a
particular road. All efforts should be made to charge to the individual roads before using unallocated
maintenance accounts. Maintenance costing accounts are listed in Chapter 14.
After costs have been accumulated in each unallocated account they may be spread to the individual
roads in the appropriate maintenance account. Unallocated maintenance costs may be distributed to the
roads based on total mileage, system mileage, surface mileage, labor, or number of intersections, curves
and hills. The formula used to distribute unallocated costs will be determined by the type of unallocated
cost.
Examples of unallocated maintenance costs include:
Annual Bridge Inspections & Report
Bridge Inspections – Not related to a project
Building Barricades
Gravel (stockpiled, crushing, prospecting)
Maintenance Supplies for specific maintenance accounts (brooms for minor surface maintenance
sweeping)
Salt and Sand, materials and mixing costs
Sign Materials
Straightening Sign Posts
Traffic Studies/Counts
Weight Restrictions
Weight Scale Calibration
Most unallocated costs will be distributed by mileage, there are some costs that will be distributed based
on special distribution formulas.
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Each county should develop a method of allocating materials they choose to spread that works best for
them. Salt and sand is a good example of a special distribution formula. It is usually applied to bituminous
or concrete surfaces only at intersections, curves and hills. A survey of all road systems should be done to
determine the number of intersections, curves and hills on bituminous or concrete roads.
Example:
CSAH Regular: 120 intersections, 55 curves, 30 hills = 205
CSAH Municipal: 110 intersections, 20 curves, 3 hills = 133
County Roads: 30 intersections, 5 curves, 10 hills = 45
Based on this example, the percentage of salt and sand distributed to CSAH Regular would be 54%, CSAH
Municipal would be 35% and county roads would be 11%.
The salt and sand would be distributed to each road program based on the calculated percentages to
bituminous or concrete surfaces only. Using this formula will place more costs on the CSAH Municipal
roads since the number of CSAH Municipal miles are usually the least of the county’s road systems.
Education and training costs related to the county engineering staff are not allowed to be prorated to
construction projects or individual roads. These costs should be included in the Administrative
Unallocated dollar amount on the maintenance report by road system.
SHOP AND EQUIPMENT COSTS
Unallocated shop and equipment costs are expenses relating to shop and equipment operations that
cannot be identified to a particular unit.
Examples of unallocated equipment costs include:
Shop Overhead (Utilities)
Shop Supplies & Small Tools
Miscellaneous Repair Parts
Building & Grounds Maintenance
Inventory Adjustments for Fuel
Inventory Adjustments for Parts and Replacements
Inventory adjustment should be held to a minimum through the use of good inventory control and
management. Inventory adjustments should become part of cost added to equipment and prorated back
to the units in developing a rate or ultimately become an entry into adjustment to equalize depreciation.
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NON-HIGHWAY RELATED COSTS
Non-highway costs should be accumulated in the area for county dollars or authorized work for others.
Non-highway related activities must not be included in the unallocated costs which are distributed to the
road system.
Non-highway costs may include costs associated with:
Capital Outlay
Ditch Fund for Flood Control
Agricultural Inspection
Work for Others
Other Non-Highway Related Costs
911 Signing
CHAPTER 11 – FIXED ASSETS
109
NARRATIVE
Fixed assets are tangible and intangible property capable of being owned or controlled to produce value
to the owner. They also represent an economic value of ownership that could be converted to cash. In
the case of the Highway Department, the primary function of recording assets is to accumulate cost
information on maintenance and construction work through the year. Eligible costs are then reported to
State Aid to be reimbursed from available allotment funds.
The County Highway Department Fund is classified as a special revenue fund by COFARS. The purpose of
a special revenue fund is to track current operating revenues and expenditures, and to report on available
spendable resources that can finance the operations of the fund in the current operating period. Since
fixed assets represent long-term holdings, the Governmental Modified Accrual Basis of Accounting
(explained in the GAAFR and COFARS manuals) requires the removal of fixed assets from the balance sheet
of special revenue fund types.
Accounting for fixed assets at the highway fund level consists of recording the cash value on an ongoing
asset master listing, establishing and maintaining rental rates for cost accumulation, and depreciating
those costs over time to reflect wear and establish the need for replacement.
In 2013, the State Aid Task Force updated and re-established basic guidelines for asset valuation
previously determined in 1988. These are considered accepted practices to be followed but are not legally
required. This chapter includes:
The cash value of an asset to be recorded at purchase remains consistent with GAAP.
Reaffirmed that straight line depreciation to a zero salvage value is the standard practice.
Accounting for betterments and changes in depreciation remain consistent with GAAP.
The goal of established rental rates continues to attempt to reflect actual costs as closely as possible.
Treatment of equipment rental, leases and lease buy backs are clarified.
An equipment list showing groups of like equipment with a useful life range. See list at the end of the chapter.
Minor equipment expensing guideline.
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ACCOUNTS NEEDED
(unallocated exp) - EOY-ADJUST TO EQUAL COST VS RENTAL
(equipment exp) - EOY-ADJUST TO EQUAL COST VS RENTAL
(county exp) - CAPITAL OUTLAY - EQUIPMENT PURCHASES
(county exp) - CAPITAL OUTLAY - LAND PURCHASES
(county exp) - CAPITAL OUTLAY - BUILDING PURCHASES
(county exp) - CAPITAL OUTLAY - OTHER FIXED ASSET PURCHASES
(county exp) - CAPITAL IMPROVEMENTS - EQUIPMENT
(county exp) - CAPITAL IMPROVEMENTS - LAND
(county exp) - CAPITAL IMPROVEMENTS - BUILDINGS
(county exp) - CAPITAL IMPROVEMENTS - OTHER FIXED ASSETS
(revenue) - REVENUE FROM SALE OF EQUIPMENT
(revenue) - REVENUE FROM SALE OF LAND
(revenue) - REVENUE FROM SALE OF BUILDINGS
(revenue) - REVENUE FROM SALE OF OTHER FIXED ASSETS
(asset) - CASH
(asset) - ACCOUNTS RECEIVABLE
(liability) - ACCOUNTS PAYABLE
ASSET LISTING
The listing of assets and their useful lives in this chapter is intended to be a guideline for counties, it is not
required. The estimated useful lives stated by each piece of equipment or equipment type are based on
the varied experience of counties, manufacturer’s recommendations, and other standard tables of asset
lives. That said, if a county knows they replace a plow truck every eight years, the useful life is eight years
regardless of the life stated on the asset listing.
MINOR EQUIPMENT
Counties will have several assets that have values below the county’s threshold for depreciation, and even
values below what is cost effective to depreciate. Assets that fall into this category can be expensed in
the year purchased. However, if the asset is used in an activity that can be submitted to State Aid for
reimbursement, the asset should be listed on the master asset listing and a rental rate assigned.
The master asset listing can include every asset purchased by the department whether expensed or
depreciated, or it can include only those assets that the department needs for accumulating costs. This
master asset listing is NOT the insurance asset listing, that listing should be a more complete list of assets
with the intent to document the existence in the event of a loss. It is important to understand the
difference. It is important to determine who maintains both lists.
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PURCHASES
According to GAAP, equipment acquisition costs for accounting purposes include the full cost required to
put the asset into service. All cash or trade discounts allowed at purchase would be deducted from the
booked value of the unit. If there is a remaining book value, this should be added to the new unit. Also,
any costs to get the unit ready for service may be added to the unit cost.
The formula for calculating equipment value for depreciation purposes is:
Gross unit price including delivery, etc.
PLUS: Cost to get the unit ready for service
MINUS: Discounts, interest and trade in value
PLUS: Remaining book value of unit traded
EQUALS: Value of the new unit
EXAMPLE 1: NEW UNIT PURCHASED WITH A DISCOUNT
DELIVERED SERVICE READY
Unit Selling Price including delivery, etc.: $ 140,000.00
Vendor Discount: ($ 20,000.00)
Net Booked Unit Cost: $120,000.00
The accounting entries would be:
DR Fixed Assets (New Unit): 120,000.00
CR Accounts Payable/Cash: 120,000.00
EXAMPLE 2: NEW UNIT PURCHASED WITH TRADE-IN GAIN
$5,000.00 LABOR & EQUIPMENT BEFORE SERVICE READY
Unit Selling Price including delivery, etc.: $ 140,000.00
Cost to get ready for service: $ 5,000.00
Vendor Trade Allowance for old unit: ($ 50,000.00)
Remaining book value of old unit: $ 20,000.00
Net Booked Unit Cost: $ 115,000.00
The accounting entries would be:
DR Fixed Assets (New Unit): 115,000.00
CR Accounts Payable/Cash: 90,000.00
CR Salaries & Cash Purchases: 5,000.00
CR Fixed Assets (Old Unit): 20,000.00
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EXAMPLE 3: NEW UNIT PURCHASED WITH TRADE-IN LOSS
$5,000.00 LABOR & EQUIPMENT BEFORE SERVICE READY
Unit Selling Price including delivery, etc.: $ 140,000.00
Cost to get ready for service: $ 5,000.00
Vendor Trade Allowance for old unit: ($ 50,000.00)
Remaining book value of old unit: $ 60,000.00
Net Booked Unit Cost: $ 155,000.00
The accounting entries would be:
DR Fixed Assets (New Unit): 155,000.00
CR Accounts Payable/Cash: 90,000.00
CR Salaries & Cash Purchases: 5,000.00
CR Fixed Assets (Old Unit): 60,000.00
State Aid Finance has a worksheet to assist in fixed asset calculations, click on the link below:
State Aid Finance Fixed Asset Calculation Worksheet
Sales Tax:
Be aware that sales and use tax may apply to all purchases. The tax applied to the initial unit selling price,
or after the allowance for any discount or trade in, should be consistent with current tax laws. Be sure to
consult the Minnesota Sales and Use Tax webpage for current information.
DEPRECIATION
The straight line depreciation method using the equipment’s useful life with zero salvage value is generally
used to provide consistency in equipment costing on a statewide basis. The calculation uses the booked
value of the new unit.
BETTERMENTS
Equipment betterments are defined as any modification or extraordinary major repair which changes or
alters a unit's original function and/or extends the life of the unit. In both situations, the costs should be
capitalized and depreciated over the unit's remaining life. These costs should be identified as a county
expense and should not be included in the costs added for the current year. Major repairs which occur
early and do not extend the unit's life shall be included as part of cost added and be expensed in the year
of occurrence.
Betterment costs are compiled and added to the remaining book value. Depreciation is recalculated based
on the new book value and remaining life using the initial formula.
Book value before betterment: $ 150,000.00
Value of betterment: $ 20,000.00
Book value after betterment: $ 170,000.00
Remaining years of life:
Original life plus any increase: 8
New Annual Depreciation 170,000 / 8: $ 21,250.00
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RENTAL RATES
Equipment used to maintain or construct the roads should be recorded on the asset master listing and
assigned a Rental Rate. Rental rates are assigned to each unit based on a formula that considers the annual
depreciation and all the costs added (parts, fuels, oils, labor, etc.) during the year compared to the total
rental revenue earned by that unit or similar units. The goal is to estimate a rental rate that will come as
close to the actual cost as possible. These rates should be reviewed and changed as needed, at least
annually, to maintain records that accurately reflect the costs being charged to the roads. The rates are
used as the unit's cost basis whenever used through the year and measured either by the hour or mile
depending on the county’s preference or equipment type. Some counties choose to calculate the best or
average rate for a group of like items, like tandem trucks, and apply that rate to all tandems rather than
a different rate per truck.
Rental Rate Calculation:
Cost Added + Depreciation Expense Current New
X Rental = Rental
Rental Earned Rate Rate
The costs that have been accumulated on the roads through rental rates over the year need to be adjusted
to reflect the actual costs to operate the units. Most counties have a computerized accounting program
that computes and posts this adjustment. Essentially, if rental rates are too high the costs charged to the
roads must be reduced, if rental rates are too low the costs charged are increased. This is referred to as
the Adjustment to Equalize Depreciation and should not impact your balance sheet. Equipment rental
rates must be as close to actual costs as possible for road system reporting purposes and State Aid
maintenance reimbursement. The goal is to reduce the Adjustment to Equalize Depreciation at year end
as much as possible. In times when major costs are fluctuating widely, it may be better to adjust your
rental rates more often than once a year.
When a county does work for others a different billing rate may be applied, either higher or lower than
the county rental rate used for its road systems. That billing rate should be documented and can include
the operator's wages and fringes, equipment cost rate and appropriate county overhead.
EQUIPMENT RENTAL, LEASE & LEASE BACK
Counties often need a piece of equipment but do not have the capital available to purchase it, or only
need the equipment for a limited time so purchasing is not cost effective. In these cases it may rent or
lease the equipment.
These units have some special considerations. If the lease is a long term lease to own, the unit will be
entered into the fixed asset system as if it were purchased and the lease payments accounted for as if the
unit was purchased on installment. (See section on capital leases) If the equipment is rented, or a short
term lease, charging use and costs to the unit should be considered. The unit can be given a number on
the asset listing to allow charges to the unit as well as usage. The unit should not be given a value because
it is not truly an owned asset.
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The usage cost of the unit can be challenging. In cases where the unit is being used for a specific purpose
or project, it may be practical to allocate the cost of the monthly rent or lease payment to that purpose
or project and not to an asset number. In cases where this is not determinable, a rental rate can be
established and charged for the usage. This will allow costs to be charged to the correct areas. In this case,
the year-end adjustment to equalize depreciation will reduce the rental earned because there will be no
depreciation to offset the revenue. The result will be that final maintenance costs reported to State Aid
will be correctly reduced, but the costs throughout the year will reflect the usage costs for the unit.
Vendors sometimes offer leases at rates far below the market rate for various reasons, these are called
deep discount leases. Accounting for this type of lease can be done in the same way as a regular lease.
Again at year end, the adjustment to equalize depreciation will provide the correct maintenance cost for
the year, and the costs throughout the year will reflect the set rental rate.
If the county rents equipment often, it may be beneficial to set up a single unit number for all the units
titled “rental equipment” to which consumables may be charged. The unit would not have a rental rate
because you are paying a rental fee, but the time it’s used can still be charged to provide a tracking of
where it is used.
EQUIPMENT RENTALS
Rental is generally used when there is no long term need for the equipment. It may be needed for a season
or a project and then sit idle. In a rental agreement, the assumption of ownership remains with the rental
company as do any major repairs or malfunctions. The county is usually only responsible for the
consumables required to operate the unit such as fuels. Depending on the equipment and the county’s
policy, its liability insurance may need to be notified. The rental fee is an expense on the highway books
and consumables are charged out to the rental unit, project, or road.
Accounting Entry: Record monthly rental rate ($1,000 monthly rent)
Debit Account: (expense) Equipment Rental Expense
Credit Account: (asset) Cash
EQUIPMENT LEASES
When a county needs equipment for a long period or permanently, it may lease rather than purchase.
Leasing allows the county to try equipment to see if it is what’s needed, and it allows capital to be retained
and used for other things. Liability / property loss insurance, regardless of the lease option, should be
verified.
Leases can have one of three outcomes and each will be accounted for differently.
Operating Lease (Straight Lease) – The county leases a unit for a defined period of time then is returned.
Capital Lease (Lease to own) – The county knows when the lease is signed that it will own the unit when the last payment is made.
Lease with Option – The lease is essentially an operating lease, but there is a clause allowing the county to purchase the unit at or near the end of the lease (generally at a discounted amount).
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OPERATING LEASE (STRAIGHT LEASE)
An operating lease is very similar to a rental agreement but is generally longer in term, less flexible, and
the parties to the agreement are committed for the entire term of the lease. No long term liability is
booked. Even though the county is obligated to pay, the lease payment would be expensed through the
life of the lease. The unit is not owned by the county, but it may be listed on the fixed asset listing.
Accounting Entry: Record monthly lease ($5,000 monthly rent)
Debit Account: (expense) Equipment Rental Expense
Credit Account: (asset) Cash
CAPITAL LEASE (LEASE TO OWN)
Lease to own is very similar to actually financing an equipment unit, the ownership essentially transfers
when the lease is signed. The unit should be added to the fixed asset listing at the value of the unit as
calculated earlier in this chapter and a rental rate established.
Accounting Entry: Record asset and long term liability as book value ($150,000)
Debit Account: (asset) Fixed Assets – New Unit
Credit Account: (liability) Long Term Lease Payable
Interest paid on annual lease payments are NOT considered part of the purchase price, but is considered
the cost of retaining the capital that would have been paid at full purchase and is expensed annually. The
annual lease payments would decrease the long term liability.
Lease Principal: $ 150,000.00
Lease Term: 5 years
Annual Lease Principal Payment: $ 30,000.00
Interest Due Year 1 (varies annually): $ 4,500.00
Accounting Entry: Record current liability equal to the annual lease amount
Debit Account: (liability) Long Term Lease Payable
Credit Account: (liability) Current Lease Payable
Accounting Entry: Record payment of current liability
Debit Account: (liability) Current Lease Payable
(expense) Interest Expense
Credit Account: (asset) Cash
LEASE WITH OPTION
A lease with an Option to Buy must meet certain criteria at the beginning of the lease to determine the
accounting of the asset and the lease liability.
The first criteria is ownership. If ownership transfers upon execution of the lease, move on to the next
criteria; if not, it is an operating lease.
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The second criteria is how the option is presented. If the option is contingent upon something at the end
of the lease, it is treated as if the option does not exist and is an operating lease. If the option to buy is
certain and determinable, it becomes the final payment of the capital lease, but only if it meets one or
both of the following points. If you have a capital lease based on the criteria thus far, determination must
be made if one or both of the following are true. If so, the lease is a capital lease. If neither are true, it is
an operating lease regardless.
1. The term of the lease is greater than or equal to 75% of the unit’s average life.
AND/OR
2. The present value of the lease payments, calculated using the county’s borrowing rate,
and including the purchase option, is greater than or equal to 90% of the book value of
the unit.
The following flow chart helps to determine the lease type.
Capital VS. Operating Lease Test:
LEASE CONSIDERATIONS
Often leases contain executor costs about maintenance costs, taxes, or insurance fees charged to the unit.
When these are included as a part of the regular payment, the payment should be reduced by this amount
and the executor costs should be expensed. Tax implications always apply to leases in some way. Verify
your sales tax liability on the annual principal lease payment. The unit should be depreciated through the
term of a capital lease in the same manner other equipment is depreciated. Use caution not to depreciate
the book value to a value less than the liability value remaining on the books.
BUY BACKS
In a buy back situation, an option is available for the county to sell the equipment back to the vendor at
the end of a certain period for a specified sum.
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EXAMPLE 1: BUY BACK WITH TRADE-IN GAIN
Unit Selling Price including delivery, etc.: $ 140,000.00
Trade-in Amount: $ 50,000.00
Useful Life: 10 years
Buy Back in 5 Years: $ 80,000.00
Remaining Book Value: $ 20,000.00
Book value of new asset:
Unit Selling Price including delivery, etc.: $ 140,000.00
Remaining book value of old unit: $ 20,000.00
Vendor Trade Allowance for old unit: ($ 50,000.00)
Net Booked Unit Cost: $ 110,000.00
Depreciation Calculation: (First 5 Years):
Net Booked Unit Cost: $ 110,000.00
Buy Back Value in 5 Years: $ 80,000.00
$ 30,000.00
Annual Depreciation for First 5 years: $ 6,000.00
Depreciation Calculation: (Last 5 Years – Asset NOT sold back after 5 years):
Net Booked Unit Cost – Year 6: $ 80,000.00
Divide by remaining life: 5
Annual Depreciation for 5 years: $ 16,000.00
PRESENTATION IN ANNUAL REPORT
The equipment account presentation in the annual report should include a summary of activity or changes
in the account value during the year. The summary should identify:
BEGINNING BALANCE
BETTERMENTS AND MAJOR REPAIRS
NEW ACQUISITIONS
SALES, TRADES, ETC.
SCRAPPED
ENDING VALUE OF CAPITAL ASSETS
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USEFUL LIFE – RECOMMENDED GUIDELINES SUMMARY
This listing, a condensed version of the more specific schedule, reflects a range of estimated life
used by several counties for depreciation purposes. It is not intended to be an all-inclusive list of
specific equipment. Your county's schedule should reflect not only the purchase price but also
consideration of the rental hours and costs added for these particular types of equipment so that
expenses of such are recouped within the depreciation time period. The determination of
estimated life is based upon these tables and the County's own experience and professional
opinion.
Equipment Types Estimated Life (Years)
Attachments – Mounted and Pulled 5 – 15
ATVs – All Classes 5 – 8
Autos – Vans 5 – 8
* Bituminous Maintenance Equipment 5 – 10
Compressors 7 – 10
* Concrete Maintenance Equipment 5 – 10
Conveyors – Stackers 5 – 10
Forklifts – Skidsteers 5 – 10
Generators – Engines 5 – 10
Heavy Equipment 10 – 15
(Includes specialized equipment for specific road maintenance procedures)
Hoist / Lift – not attached to building or unit 5 – 10
Pickups 5 – 8
Plant – Crushing, Screening, Washing 12 – 20
Salt Brine Systems 8 – 10
Small Maintenance Tools 3 – 5
(Saws, Jack Hammers, etc. often holding a number just to allow cost recovery)
Steamers 5 – 8
Tractors 10 – 15
Trailers, large 8 – 15
Trailers – Pup, Belly Dump, Flatbeds 7 – 12
Trailers, small 5 – 10
Trucks 7 – 12
(Tandems and single axle trucks over 1 Ton)
* Turf Establishment & Maintenance Equipment 5 – 10
Water Tanks 6 – 8
Wood Chippers 8 – 10
* Includes specialized equipment not large enough to be considered “Heavy Equipment”
Many small equipment items that do not meet the capitalization threshold for a county are
listed on the asset list for the purpose of recouping maintenance funds. These items can be
expensed in the year purchased.
Broad categories have been used in the list to allow the list flexibility and longevity. The county
can use the categories and life spans that best fit their situation.
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119
The following section includes excerpts from “Governmental Accounting Standards Series”, Publication
No. 171-A, Statement No. 34 of the Government Accounting Standards Board (GASB 34).
REPORTING CAPITAL ASSETS
Capital assets should be reported at historical cost. The cost of a capital asset should include capitalized
charges necessary to place the asset into its intended location and condition for use. Ancillary charges
include costs that are directly attributable to asset acquisition – such as freight and transportation
charges, site preparation costs, and professional fees. Donated capital assets should be reported at their
estimated fair value at the time of acquisition plus ancillary charges, if any.
The term Capital Assets includes land, improvements to land, easements, buildings, building
improvements, vehicles, machinery, equipment, works of art and historical treasures, infrastructure, and
all other tangible or intangible assets that are used in operations and that have initial useful lives
extending beyond a single reporting period. Infrastructure Assets are long-lived capital assets that
normally are stationary in nature and normally can be preserved for a significantly greater number of
years than most capital assets. Examples of infrastructure assets include roads, bridges, tunnels, drainage
systems, water and sewer systems, dams, and lighting systems. Buildings, except those that are an
ancillary part of a network of infrastructure assets, should not be considered infrastructure assets.
Capital assets that are being or have been depreciated should be reported net of accumulated
depreciation in the statement of net assets. (Accumulated depreciation may be reported on the face of
the statement or disclosed in the notes.) Capital assets that are not being depreciated, such as land or
infrastructure assets reported using the modified approach, should be reported separately if the
government has a significant amount of these assets. Capital assets also may be reported in greater detail,
such as by major class of asset (for example, infrastructure, buildings and improvements, vehicles,
machinery and equipment).
Capital assets should be depreciated over their estimated useful lives unless they are either inexhaustible
or are infrastructure assets reported using the modified approach. Inexhaustible capital assets such as
land and land improvements should not be depreciated.
Depreciation expense should be measured by allocating the net cost of depreciable assets (historical cost
less estimated salvage value) over their estimated useful lives in a systematic and rational manner. It may
be calculated for (a) a class of assets, (b) a network of assets, (c) a subsystem of a network, or (d) individual
assets. (Composite methods may be used to calculate depreciation expense.)
REPORTING GENERAL INFRASTRUCTURE ASSETS AT TRANSITION
Prospective reporting of general infrastructure assets in the statement of net assets is required beginning
at the effective date of this Statement (GASB 34). Retroactive reporting of all major general infrastructure
assets is encouraged at that date. Phase 1 governments (total annual revenues of $100 million or more)
should retroactively report all major general infrastructure assets for the fiscal years beginning after June
15, 2005. Phase 2 governments (total annual revenues of $10 million or more but less than $100 million)
should retroactively report all major general infrastructure assets for the fiscal years beginning after June
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15, 2006. Phase 3 governments (total annual revenues of less than $10 million) are encouraged but are
not required to report major general infrastructure assets retroactively.
If determining the actual historical cost of general infrastructure assets is not practical because of
inadequate records, governments should report the estimated historical cost for major general
infrastructure assets that were acquired or significantly reconstructed, or that received significant
improvements, in fiscal years ending after June 30, 1980.
If during the transition period, information is not available for all networks of infrastructure assets, those
networks for which information is available may be reported.
INITIAL CAPITALIZATION OF GENERAL INFRASTRUCTURE ASSETS
Determining Major General Infrastructure Assets
At the applicable general infrastructure transition date, phase 1 and 2 governments are required to
capitalize and report general infrastructure assets that were acquired (purchased, constructed, or
donated) in fiscal years ending after June 30, 1980, or that received major renovations, restorations, or
improvements during that period.
The determination of major general infrastructure assets should be at the network or subsystem level and
should be based on these criteria:
The cost or estimated cost of the subsystem is expected to be at least 5 percent of the total cost of all general capital assets reported in the first fiscal year ending after June 15, 1999, or;
The cost or estimated cost of the network is expected to be at least 10 percent of the total cost of all general capital assets reported in the first fiscal year ending after June 15, 1999.
Reporting of non-major networks is encouraged but not required.
Establishing Capitalization at Transition
The initial capitalization amount should be based on historical cost. If determining historical cost is not
practical because of inadequate records, estimated historical cost may be used.
Estimated Historical Cost – Current Replacement Cost
A government may estimate the historical cost of general infrastructure assets by calculating the current
replacement cost of a similar asset and deflating this cost through the use of price-level indexes to the
acquisition year (or estimated acquisition year if the actual year is unknown). There are a number of price-
level indexes that may be used, both private- and public-sector, to remove the effects of price-level
changes from current prices. Accumulated depreciation would be calculated based on the deflated
amount, except for general infrastructure assets reported according to the modified approach.
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Example: Estimated Historical Cost – Current Replacement Cost
In 1998, a government has sixty-five lane-miles of roads in a secondary road system, and the current
construction cost of similar roads is $1 million per lane-mile. The estimated total current replacement cost
of the secondary road subsystem of a highway network; therefore, is $65 million ($1 million * 65). The
roads have an estimated weighted-average age of fifteen years; therefore, 1983 is considered to be the
acquisition year. Based on the U.S. department of Transportation, Federal Highway Administration’s
“Price Trend Information for Federal-Aid Highway Construction” (publication number FHWA-IF-99-001)
for 1983 and 1998, 1983 construction costs were 69.03% of 1998 costs. The estimated historical cost of
the subsystem, therefore, is $44,869,500 ($65 million * 0.6903). In 1998, the government would have
reported the subsystem in its financial statements at an estimated historical cost of $44,869,500 less
accumulated depreciation for fifteen years based on that deflated amount.
Estimated Historical Cost – Existing Information
Other information may provide sufficient support for establishing initial capitalization. This information
includes bond documents used to obtain financing for construction or acquisition of infrastructure assets,
expenditures reported in capital project funds or capital outlays in governmental funds, and engineering
documents.
Example: Estimated Historical Cost – Existing Information
Methods of Calculating Depreciation
Governments may use any established depreciation method. Depreciation may be based on the estimated
useful life of a class of assets, a network of assets, a subsystem of a network, or individual assets. For
estimated useful lives, governments can use (a) general guidelines obtained from professional of industry
organizations, (b) information for comparable assets of other governments, or (c) internal information. In
determining estimated useful life, a government also should consider an asset’s present condition and
how long it is expected to meet service demands.
Example: Calculating Depreciation
Assuming that, in 1998, the road subsystem had a total estimated useful life of twenty-five years from
1983 (with an estimated value of $44,869,500) and therefore has an estimated remaining useful life of
ten years. Assuming no residual value at the end of that time, straight-line depreciation expense would
be $1,794,780 per year ($44,869,500/25), and accumulated depreciation in 1998 would be $26,921,700
($1,794,780*15).
Composite Methods
Governments may also use composite methods to calculate depreciation expense. Composite methods
refer to depreciating a grouping of similar assets (for example, interstate highways in a state) or dissimilar
assets of the same class (for example, all the roads and bridges of a state) using the same depreciation
rate. Initially, a depreciation rate for the composite is determined. Annually, the determined rate is
multiplied by the cost of the grouping of assets to calculate depreciation expense.
A composite depreciation rate can be calculated in different ways. The rate could be calculated based on
a weighted average or on an unweighted average estimate of useful lives of assets in the composite. For
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example, the composite depreciation rate of three interstate highways with estimated remaining useful
lives of sixteen, twenty, and twenty-four years could be calculated using an unweighted average estimate
as follows:
1
= 5% annual depreciation rate
(16+20+24)/3
A composite depreciation rate may also be calculated based on an assessment of the useful lives of the
grouping of assets. This assessment could be based on condition of assessments or experience with the
useful lives of the grouping of assets. For example, based on experience, engineers may determine that
interstate highways generally have estimated remaining lives of approximately twenty years. In this case,
the annual depreciation rate would be 5%.
The composite depreciation rate is generally used throughout the life of the grouping of assets. However,
it should be recalculated if the composition of the assets or the estimate of average useful lives changes
significantly. The average useful lives of assets may change as assets are capitalized or taken out of service.
The annual depreciation expense is calculated by multiplying the annual depreciation rate by the cost of
the assets. For example, if the interstate highway subsystem cost $100 million and the annual depreciation
rate was 10%, then the annual depreciation would be $10 million. Accumulated depreciation should not
exceed the reported cost of the assets.
MODIFIED APPROACH FOR REPORTING INFRASTRUCTURE
Infrastructure assets that are part of a network or subsystem of a network (hereafter, eligible
infrastructure assets) are not required to be depreciated as long as two requirements are met. First, the
government manages the eligible infrastructure assets using an asset management system that has the
characteristics set forth below; second, the government documents that the eligible infrastructure assets
are being preserved approximately at (or above) a condition level established and disclosed by the
government. To meet the first requirement, the asset management system should:
Have an up-to-date inventory of eligible infrastructure assets.
Perform condition assessments of the eligible infrastructure assets and summarize the results using a measurement scale.
Estimate each year the annual amount to maintain and preserve the eligible infrastructure assets at the condition level established and disclosed by the government.
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Determining what constitutes adequate documentary evidence to meet the second requirement for using
the modified approach requires professional judgment because of variations among governments’ asset
management systems and condition assessment methods. These factors also may vary within
governments for different eligible infrastructure assets. However, governments should document that:
Complete condition assessments of eligible infrastructure assets are performed in a consistent manner at least every three years.
The results of the three most recent complete condition assessments provide reasonable
assurance that the eligible infrastructure assets are being preserved approximately at (or above)
the condition level established and disclosed by the government.
Governments may begin to use the modified approach for reporting eligible infrastructure assets as long
as at least one complete condition assessment is available and the government documents that the
eligible infrastructure assets are being preserved approximately at (or above) the condition level the
government has established and disclosed.
If eligible infrastructure assets meet the requirements as stated above and are not depreciated, all
expenditures made for those assets (except for additions and improvements) should be expensed in the
period incurred. Additions and improvements to eligible infrastructure assets should be capitalized.
Additions or improvements increase the capacity or efficiency of infrastructure assets rather than
preserve the useful life of the assets.
If the above requirements are no longer met, the depreciation requirements should be applied for
subsequent reporting periods.
Governments should present the following schedules, derived from asset management systems, as RSI
(Required Supplementary Information) for all eligible infrastructure assets that are reported using the
modified approach:
The assessed condition, performed at least every three years, for at least the three most recent complete condition assessments, indicating the dates of the assessments.
The estimated annual amount calculated at the beginning of the fiscal year to maintain and
preserve at (or above) the condition level established and disclosed by the government compared
with the amounts actually expensed for each of the past five reporting periods.
The three most recent complete condition assessments and the estimated and actual amounts to
maintain and preserve the infrastructure assets for the previous five reporting periods may not be
available initially. In these cases, the information required should be presented for as many complete
condition assessments and years of estimated and actual expenses as are available.
The following disclosures should accompany the schedules required by the statement above:
The basis for the condition measurement and the measurement scale used to assess and report condition. For example, a basis for condition measurement could be distresses found in pavement surfaces. A scale used to assess and report condition could range from zero for a failed pavement to 100 for a pavement in perfect condition.
The condition level at which the government intends to preserve it eligible infrastructure assets reported using the modified approach.
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Factors that significantly affect trends in the information reported in the required schedules,
including any changes in the measurement scale, the basis for the condition measurement, or the
condition assessment methods used during the periods covered by the schedules. If there is a
change in the condition level at which the government intends to preserve eligible infrastructure
assets, an estimate of the effect on the change on the estimated annual amount to maintain and
preserve those assets for the current period also should be disclosed.
ANNUAL INFRASTRUCTURE REPORTING
Each year the county must recognize changes to the county infrastructure. The most common source of
this information comes from the Statement of Construction Costs which is a part of the County Highway
Annual Report. The county may elect to add road segments to infrastructure as work progresses or when
all construction is complete and the segment is placed into service.
Costs that must be added to infrastructure:
Right of Way: This would include permanent easements and deeded property acquired for highway
purposes. Right of way costs generally include the purchase price from the landowner,
attorney fees in court cases, relocation fees, deed tax and reimbursement of pre-paid
real estate taxes to the former landowner. Appraisal fees and title opinions are not
considered right of way costs and should be expensed. Right of way is not to be
depreciated.
Roads: This would include construction labor, construction equipment time, materials, signs,
lighting, sewers, landscaping, bike paths overhead, etc. This would include certified
costs of major construction projects, and overlays that increase the efficiency or extend
the useful life of the road segment. A maintenance overlay which gets the road segment
to the end of its useful life will not be considered an infrastructure addition and will be
expensed in the year it occurred. If a road segment is resurfaced or reconstructed
before it is fully depreciated, the remaining value is written off in the year the new
construction is finalized.
Bridges: This would include all bridges on county roads as defined by the Minnesota Department
of Transportation. Bridge costs include construction contracts for bridge work,
approach work, guardrails, sidewalks, signage and lighting. Bridge culverts will capitalize
labor, equipment, materials and overhead costs related to the installation of the bridge
or culvert. Deck overlay and deck rehabilitation that represent a major increase in
efficiency or extend the useful life of the bridge will be capitalized, if not these costs will
be expensed in the year they occurred.
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NARRATIVE
The average Highway Department spends several thousand dollars a year on inventory items. These
purchases are often made in varying amounts through the year so the overall value may not appear as
evident as the construction project costing thousands of dollars in a single payment. In any case,
safeguarding this asset, which may be spread all across the county, is a very important aspect of financial
control. Much of the ordering, handling and storing of the inventory items are beyond the scope of the
average highway accounting position. However, verification of delivery, vendor charges, inventory system
records and the annual reconciliation of physical to inventory system counts are very much a part of it.
Each county has a different method of tracking inventory, setting up the inventory in its system, deciding
what to keep on hand and what to buy as needed. It is not the function of an accounting manual to weigh
in on these items. This chapter will provide a few points of consideration for your system and possible
financial implications for your department, outline the accepted valuation methods as well as the typical
methods of expensing your inventory items, and finally discussion on the annual physical to calculated
inventory adjustments.
ACCOUNTS NEEDED
(asset) - CASH
(asset) - INVENTORY ITEM ACCOUNT
(liability) - ACCOUNTS PAYABLE
(expense) - EXPENSE ACCOUNTS (ROAD, PROJECT, SHOP, EQUIPMENT)
(equity) - FUND BALANCE – NON-SPENDABLE FOR INVENTORY
(equity) - FUND BALANCE - ASSIGNED
INVENTORY STRUCTURE
Keeping in mind that everything has a cost in either time, money or both, and that information is only as
valuable as it is accurate, the detail of your inventory should be assessed. Consider the bin of screws in
the shop. Is the value of knowing how many screws there are on hand at year end greater than the cost
of a mechanic standing for 2 days counting each one? The point here is that although there is a substantial
cost that goes into replenishing screws each year, it is a “consumable” you will not charge to a unit as a
repair part. Or at least it would not be a suggested practice. The cost of inventorying these types of items
would cost more than the benefit.
Time spent tracking inventory items that add cost to road system or to the operation of equipment has a
true financial value. Materials placed on State Aid roads become part of the annual maintenance expense
and are reimbursed through a maintenance allotment. Repair parts and fuels add to the calculation of
equipment rates which also become a part of the reimbursable costs submitted for maintenance and
sometimes construction.
Also remember that grouping together “like” items is acceptable, but if the unit prices vary, this may
create more work than anticipated.
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It is a good idea to meet with the people who actually handle the inventory items and discuss the
practicality of including items as inventory or if some are better expensed as purchased. Discussion about
how to best track the use of items is also worthy. These are the people who are keeping record, if the
process is too cumbersome, it may be easier to skip it, or do it later when there is more time. You can see
how this could easily make or offset the annual reconciliation.
Simply consider the cost to track and the value of the information to organize in determining the level of
detail which will most efficiently and effectively allow the county to manage inventory. Changes made to
an existing system are best done when starting a new year for consistency and to document what is done
to explain any large changes in the value from one year to another.
INVENTORY CONTAINMENT
Storage of inventory items is an important consideration. The storage space should be secure from the
public or those not having access to county property. This reduces loss due to theft and the possibility of
lawsuit due to injury. Insurance value should be considered as well.
Although it is evident that inventory should be secured and kept safe from damage, it is not always fool
proof. Ensure that the county highway has insurance to cover items and in the event of a loss that the
insured value would cover the average inventory value on hand. If the insurance coverage is not
monitored by the accounting position, it may be a good idea to meet with the person who is responsible
confirm values are up to date and all items or storage areas are correct.
INVENTORY CONTROL
This generally addresses the way inventory is withdrawn. Every county has a variation of how this is done,
and these vary widely in complexity and degree of control. A large county may have an employee who
controls inventory withdrawals and does the ordering, etc. Other smaller counties may have a simple
handwritten sign-up sheet. If the physical count is close to the system count each year, you are probably
doing a good job of control and the system is working for you.
The main idea is that the county needs to establish controls that will assure, with a reasonable amount of
accuracy, that there is accurate feedback concerning the movement of inventory.
Keep in mind that there will always be inventory adjustments when a physical count is taken. There are
too many variables and human error is always present.
INVENTORY VALUATION METHODS
Since many inventory items can change their values rapidly, there are various methods for assigning the
values to inventory items when they are costed out in a cost accounting system. The three most common
methods of valuing inventory items for costing purposes are FIFO, LIFO, and Averaging. The Highway
Department can use any of these accepted methods, but once a method is adopted it should be used
consistently.
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FIFO
This simply stands for First In – First Out and means that the first item purchased (oldest on the shelf) will
be the first item used and will be cost at the rate at which it was actually purchased. Thus, it is crucial
under this system that an item by item history log is kept, showing exactly when items were purchased
and what their values are. Each item could be on file with a completely different rate and must be cost at
the appropriate rate whenever it is used.
LIFO
This simply stands for Last In – First Out and means that the last item purchased (newest on the shelf) will
be the first item used and will be cost at the rate at which it was actually purchased. Thus, similar to the
FIFO method, it is crucial under this system that an item by item history log is kept, showing exactly when
items were purchased and what their values are. Each item could be on file with a completely different
rate and must be cost at the appropriate rate whenever it is used.
AVERAGING
This is a simpler form of costing inventory, which simply costs all items out according to the current
average value of all inventory items (of that type) on-hand at the current time (or over a designated time
period). The calculation, for average unit values, is as follows:
Value of All Items on Hand
(Adding all purchase prices together to come up with a lump sum value)
EQUALS: Average Unit Rate of All Items
On Hand at the Current Time
Although the Averaging method may not provide the exact unit price, the method is easier to use over
time and may actually end up being more accurate than either FIFO or LIFO.
INVENTORY EXPENSES VERSUS EXPENDITURES
The terms expenditure and expense carry different meanings in highway costing systems.
Accepted practice is that expenditures occur when the inventory is purchased, but the actual expense
occurs when the inventory item is used or charged out. Essentially, the expenditure increases the
inventory asset value and is not reflected in the operating costs. The expense reflects operating costs in
the period. The inventory method that applies to this activity is referred to as the “Consumption Method”.
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SEQUENCE OF EVENTS
During the year inventory items are purchased to be kept in inventory until needed and expenditures
occur. Most accounting systems perform the following entries behind the scenes as purchase orders are
entered and paid.
Accounting Entry Record the purchase of inventory
Debit Account: (asset) Inventory Item Account
Credit Account: (liability) Accounts Payable
Accounting Entry Pay the vendor for the purchase
Debit Account: (liability) Accounts Payable
Credit Account: (asset) Cash
Inventory items are used during the year creating an expense in the accounting records. They are charged
out on timesheets and inventory withdrawal reports depending on the county procedure and entered
into the accounting system.
Accounting Entry Record the use of inventory
Debit Account: (expense) Expense Account (Road, Project, Shop, Equipment)
Credit Account: (asset) Inventory Item Account
During the year, usually near year end, a physical count of all items recorded in inventory is done. A
physical count is required annually to insure integrity in inventory controls. If the count is done in the fall,
adjustments for purchases and expenses can be made up to year end, or the count can be made at year
end.
The physical count is the actual quantity of inventory you have on hand, regardless of the accounting
system information. If large discrepancies occur, it may be good to recount those items to insure a
counting error is not the cause. Determine the correct unit price and adjust the inventory quantity and
value in the accounting system to match the physical count. At year end the fund balance will need to be
adjusted for the ending inventory value. See Chapter 17 – Year End Adjustments.
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ROUTINE MAINTENANCE
DEFINITION:
Maintains the status quo even though deteriorated. To keep at original condition or use.
NOTE: All items include labor and material.
Ma 1. Smoothing Surface - Strictly Gravel Roads
Blading or dragging earth or gravel roads
Scarifying for purpose of mixing gravel with binder and removing washouts on surface
Ma 2. Minor Surface Maintenance - Hard Surface Roads
Bituminous patching, crack filling
Repairing concrete pavement and crack filling
Patch sealing
Repairing sand pockets
Blading shoulders - no material added
Sweeping or cleaning surfaces
Ma 3. Roadside and Drainage
Cleaning culverts (thawing culverts)
Minor ditch cleaning, except for brush
Repair to tile lines on right of way
Marking ends of culverts
Picking up debris off roadside and roadbed including animal removal
Checking driveway and utility permits
Beaver dam removal
Locating tile lines
Ma 4. Brush and Weed Control
Mowing of grass and weeds on roadsides and around guard rail, and bridge ends
Spraying of weeds and brush
All clearing and grubbing not in connection with construction work, (Where clearing and
grubbing is done in advance of a grading project, this work should be given a project number
and charged to construction)
Ma 5. Snow and Ice Control
Erecting, removing, repairing snow fence, including cost of new fence, posts, and tie wires
Snow plowing and winging
Sanding and application of salt and calcium chloride for ice control
Cleaning snow from bridges and around guard rails
Fixing mail boxes
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Ma 6. Traffic Services
Erecting and repairing signs and markers, including cost of signs and posts
Erecting and removing signs for road restrictions
Traffic signals, maintenance and repair work, (Installation of new traffic signals and railroad
grade crossing signals should be a construction item)
Traffic guide lines, center line striping, retracing not on new construction
Road inspection, looking for washouts, etc.
Road patrol for load restrictions
Putting up barricades
NOTE: Charge any of the following costs to the activity or operation being performed:
Flagmen, Sweeping, Prospecting for gravel, Construction project, Maintenance
unallocated
REPAIRS AND REPLACEMENTS
DEFINITION:
To restore to original condition. To make the surface as it was before, even though material used is better.
Original condition or use is the key.
NOTE: All items include labor and materials.
Mb 1. Reshaping
Cutting shoulders and shoulder slopes, reshaping roadbed, backsloping, where no appreciable
amount of material is added to the roadbed, and the ditch bottoms are not changed or
deepened appreciably.
Mb 2. Resurfacing
All re-gravelling of gravel roads, whether spot groveling or a continuous coat. (Gravel for
newly graded roads shall be charged to construction; this may be applied in two coats in
succeeding years, but should be charged to construction.)
Addition of clay or binder to the surface (This also can be an item under construction)
Water, rolling, spreading if gravel is stabilized. (This work may be included in some
construction projects)
Aggregate shouldering
Any overlay of less than 1 1/2" in thickness
Mb 3. Culverts, Bridges & Guard Rails
Replacement of deteriorated or damaged culverts by one of like diameter. (If a culvert is
replaced with one of a larger diameter, this should be charged as a betterment under Mc 1)
Replacing, lowering or raising of same size culverts
All bridge repairs and painting
Repair of guard rail
Drainage ditch repair assessments
Storm sewer repair assessments
Mb 4. Washouts = Erosion Damage Storm Related
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All washouts on shoulders, ditches, backslopes and roadbeds. If a culvert is washed out and a
new culvert is installed, all labor, materials and backfilling costs shall be included. (Any
increased size culvert should be costed to Mc 1)
Mb 5. Subgrade Repair
Mud Jacking, frost boils including sub-grade excavation, sand and gravel backfill
BETTERMENTS
DEFINITION:
Any improvement over original condition or design. The first time something is done to the roadway, it is
a betterment.
NOTE: All items include labor and materials.
Mc 1. New Culverts, Guard Rails and New Tiling
New installations and delivery where not previously in place
Replacement of existing with a larger diameter or longer length
Rip Rap
Erosion control structures
Drainage ditch improvement and storm sewer assessments, including new or expanded sizes
Installation of new approaches and driveways
Mc 2. Cuts and Fills
Reshaping work where the road grade, backslope and ditch bottoms are changed beyond
original design
Correction of sight distances
Shoulder widening
Mc 3. Sodding and Seeding
Tree planting
Mc 4. Bituminous Treatment
Spot retreatments, complete retreatments and seal coating not on and approved State Aid
construction project
Railroad crossing replacements
Mc 5. Overlays
Bituminous or concrete over 1 1/2" thickness that is not an approved State Aid construction
project
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SPECIAL WORK
DEFINITION:
Any maintenance work not clearly appropriate for the previous areas.
NOTE: All items include labor and materials.
Md 1. Dust Treatments
Calcium chloride or other applications to settle dust
*Md 2.
*Md 3.
*Md 4. Construction of Bike Lanes (if not an approved State Aid construction project)
*Md 5. Construction of Turn Lanes (if not an approved State Aid construction project)
*Md 6. Special Agreements
Agreements with other entities that covers more than one activity
* These items were deliberately left blank to allow for employee reorientation and previous costing to
be cleared. In the future, other items may be included here to fill these gaps.
It is acceptable to combine Routine Maintenance with repairs and replacements within the costing
system. Betterments must be recorded separate in the costing system because of FHWA requirements on
the FHWA Form 536.
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The Construction Costs are broken down by Road System:
Highways
Examples:
Grading and shouldering
Base and surface job
Hard surfacing or resurfacing (including aggregate shouldering)
Aggregate surfacing
Newly graded roads only, may be applied in succeeding years
Any approved construction overlays
Bridges and Culverts
Any project with 50 square feet or more of open waterway
Any span exceeding 10 feet or more
Special Work
May include bituminous salvage, railroad crossings and signals
Right of Way
Includes any cost associated with R/W whether or not it's recoverable. This would include permanent
or temporary easements, utility relocation, tree removal, fencing, and appraisal fees, etc.
Engineering (All including preliminary and construction)
Engineering salaries should include the fringe benefit rate. The cutoff between preliminary and
construction engineering is defined as the letting date for State Aid purposes even though federal and
state cutoff is at the submission of the plans, specifications and estimate (P.S. & E.) package.
The cutoff point for construction engineering (CE) versus preliminary engineering (PE) is the bid opening
date of the contract. Any further breakdown or reporting will be at the county's option. State Aid
reimbursement does not require separate reporting of CE and PE expenses, it is reported as a combined
total referred to as Project Development (PD).
These construction project costs are to be reported based on the primary portion of the project. Any
projects that cross more than one category with substantial dollars should be split. Right of way and
engineering will always be reported separately.
The construction summary should include all dollars expended on the three road systems (CSAH-
Regular, CSAH-Municipal, and County Roads) separately for the calendar year of the Annual Report. All
federal aid and bridge bonding dollars should be identified as separate dollars.
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CONSTRUCTION OF MAINTENANCE FACILITIES
Maintenance Facilities are eligible for State Aid funds when approved by the District State Aid Engineer
(DSAE) and the State Aid for Local Transportation (SALT) Engineer.
A county resolution is required.
The preferred method of accounting for the Maintenance Facilities is by setting it up as a construction project using construction allotment.
Maintenance funds may be used for a small project provided the county does not anticipate using all of the maintenance allotment for road maintenance.
Facilities may be financed with Local Agency Bonds per MN Statute 162.181, Subd. 1.
Annual depreciation for this facility (as with any other facility) should not be charged to the CSAH Regular system.
Approval Process
A request for approval must be sent to the DSAE and include the following:
Information regarding the use of the facility
Total estimated cost of the facility
Indicate whether the pay requests will be made from a construction account (preferred) or a maintenance account.
What percent of the cost of the facility is attributable to State Aid? This can be justified by:
- Percent of CSAH Regular mileage to total mileage, or by
- Percent of CSAH Regular expenditures to total cost (use total CSAH Regular and Municipal Maintenance costs and divide it into the total maintenance cost from the Annual Summary of Highway Information report to calculate the percentage.)
Lump sum payment requests may be approved. If a lump sum payment is preferred, it must be equal
to or less than the amount approved based on either % method above. Identify payment as a "lump
sum" on the request.
DSAE reviews request, makes recommendation for payment and forwards to SALT Engineer for review and final approval.
SALT Engineer notifies county of the approved percent or lump sum and forwards copy of county request and approval letter to State Aid Finance (SAF).
Partial Payment Process – Using Construction Funds (Preferred Method)
1. County obtains State Aid Project number from SALT.
2. County submits State Aid Payment Request identifying the costs as Maintenance Facility in the "Other Costs" section of the form, for up to 95% of the approved estimated cost of the facility.
The amount requested should use the same percentage of total cost or lump sum amount as approved by SALT.
Follow the State Aid Payment Request process by sending the partial State Aid Payment Request to the DSAE, then the DSAE will send to [email protected]
3. If the facility is being funded with Local Agency Bonds.
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The county must submit a bond repayment schedule to SAF.
A State Aid Payment Request is required to be applied against the bond.
If the final cost is less than bond principal, the bond principal payments (in the SAAS) will be reduced to reflect the actual facility cost, and the remaining principal is paid from local funds.
Final Payment Process
Once the facility has been constructed, a final payment request must be submitted to SALT.
Follow the State Aid Payment Request process by sending the partial State Aid Payment Request to the DSAE, then the DSAE will send to [email protected]
If total cost exceeds 20% of the original approved amount, SAF will forward to the SALT Engineer for approval.
Payment Process – Using Maintenance Funds
The final costs of the Maintenance Facility must be added to the Annual Summary of Highway Information as a separate line item for Maintenance Facilities listed between Local Agency Bond Interest and Maintenance Cost. The total of these three will equal the county’s total maintenance cost.
DISASTER ISSUES
Refer to the Disaster Guidelines for Highway Accountants document:
This guide is intended to provide an overview of issues the highway accountant may be exposed to or be responsible for when dealing with a disaster event.
FEMA/Disaster Receipts after Maintenance Costs have been reported
In the event of a disaster, the county should isolate the costs related to the recovery. Recovery costs that
are not reimbursed by disaster or FEMA funds may be included in the Annual Highway Information Report.
If FEMA/Disaster reimbursements are receipted after the maintenance costs have been reported and the
reimbursement causes an overpayment of maintenance funds, the amount is most likely insignificant and
does not have to be reported.
Accounting Entry: record receipt of FEMA funds
Debit Account: (asset) Cash
Credit Account: (revenue) FEMA Revenue
This does not cover State Aid Disaster Funding refer to STATE PARK CONSTRUCTION ACCOUNT.
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DISASTER ASSISTANCE CONTINGENCY ACCOUNT
The state Disaster Assistance Contingency Account provides the full non-federal share in a major disaster
declaration and provides funds for counties not eligible for federal assistance.
Through the Presidential Disaster Declaration, the state must have a least $7.3 million in damage and
counties must meet individual county thresholds (county population times $3.50). Through the State
Disaster Declaration, the county must incur eligible damages that equal or exceed 50% of countywide per
capita impact indicator.
When the Governor declares a state disaster (State Disaster Declaration), the state will assist eligible
applicants (counties, cities, and townships) with costs to repair and replace uninsured public
infrastructure damaged in the disaster.
DISTRIBUTION:
A Disaster Assistance Contingency Account is created in the Special Revenue Fund in the state treasury
(Minn, Laws 2014 c 312 art 7 s 4). Money in this account is appropriated to the Commissioner of Public
Safety to provide cost-share of federal assistance and state public disaster assistance to eligible applicants.
The amount appropriated for cost-share for federal assistance is 100 % of any nonfederal share for state
agencies and local governments which may be used to pay all or a portion of the nonfederal share for
publicly owned capital improvement projects. The amount appropriated to state public disaster assistance
to eligible applicants is the amount required to fully pay all eligible claims. Funds appropriated or
transferred to the Disaster Assistance Contingency Account do not lapse but remain in the account until
appropriated. Funds appropriated from the Disaster Assistance Contingency Account do not lapse and are
available until expended.
PROCESS:
1. The County Board requests a formal state disaster declaration from the Minnesota Department of Public Safety Division of Homeland Security and Emergency Management (HSEM).
2. County obtains a preliminary damage assessment. HSEM officials meet with local officials to identify facilities impacted, damage, impacts to the communities and their demographics. Damages must meet the following criteria:
Damage and costs are the direct result of the disaster;
Federal assistance is not available; and
Applicant incurred eligible damages that meet the damage threshold.
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3. Applicants apply to HSEM for reimbursement of eligible costs. Eligible costs are the same as under a federal declaration.
Applicants assume responsibility for 25% of total eligible costs. This can be in-kind match of volunteer hours, donation of equipment, etc.
Funds became available July 1, 2014.
If the $3 million fund is depleted, applicants must wait until the legislature appropriates additional funds.
Check HSEM’s website for updates on this funding.
Accounting Entry: record receipt of State Disaster Assistance Contingency funds
Debit Account: (asset) Cash
Credit Account: (revenue) State Disaster Assistance Revenue
NON STATE AID BONDS
General Obligation Bonds issued by the county are usually accounted for in the debt service fund. In some
instances the bonds are accounted for in the county highway fund. This section illustrates both instances.
Bonds Accounted for in Debt Service Fund
Funds from a general obligation bond are transferred to the highway fund:
Accounting Entry: to post Bond Proceeds
Date: MM/DD/YYYY
Explanation: Proceeds from Debt Service – General Obligation Bonds
Debit Account: (asset) Cash
Credit Account: (revenue) Proceeds from Sale of Bonds
Amount: Amount of transfer
Bonds Accounted for in Highway Fund
Funds from the sale of general obligation bonds are receipted to the highway fund, as reported on the
bond settlement statement:
Accounting Entry: to post sale of general obligation bonds
Date: MM/DD/YYYY
Explanation: Sale of General Obligation Bonds
Debit Account: (asset) Cash
Credit Account: (revenue) Proceeds from Bonds Issued
Amount: Amount of bond proceeds
Funds from interest earned receipted to the highway fund, as reported on the bond settlement statement:
Accounting Entry: to post interest earned on bond funds
Date: MM/DD/YYYY
Explanation: Interest earned on general obligation bonds
Debit Account: (asset) Cash
Credit Account: (revenue) Interest earned
Amount: Amount of bond interest
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Funds for premium on general obligation bond receipted to the highway fund, as reported on the bond
settlement statement:
Accounting Entry: to post premium on general obligation bonds
Date: MM/DD/YYYY
Explanation: Premium on general obligation bonds
Debit Account: (asset) Cash
Credit Account: (revenue) Premium on General Obligation Bonds
Amount: Amount of bond premium
Funds for discounts or issuance costs deducted from general obligation bonds, as reported on the bond
settlement statement:
Accounting Entry: to post discounts on general obligation bonds
Date: MM/DD/YYYY
Explanation: Discounts / charges to general obligation bonds
Debit Account: (county exp) Disc/charges to general obligation bonds
Credit Account: (asset) Cash
Amount: Amount of discount or issuance charges
If bond covenants restrict levy used to pay back bonds, a reserve for debt service must be setup.
Accounting Entry: Reserve for debt service
Date: 01/01/YYYY
Explanation: Reserve for debt service
Debit Account: (fund bal) Unreserved/Undesignated Fund Balance
Credit Account: (fund bal) Reserve for debt service
Amount: Amount of (bond principal + interest + charges)
The County Highway Accountant should recognize (assuming an accrual basis of accounting) the liability
due the bonding company.
Book bond principal liability to bonding company
Accounting Entry: for amount of Bond Principal Due
Debit Account: (county exp) Bond Principal
Credit Account: (liability) Accounts Payable
Book bond interest expense and liability to bonding company
Accounting Entry: for amount of Bond Interest Due
Debit Account: (county exp) Bond Interest Expense
Credit Account: (liability) Accounts Payable
Book bond company service charge
Accounting Entry: for amount of Bond Company Service Charge
Debit Account: (county exp) Bond Service Charge
Credit Account: (liability) Accounts Payable
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County pays the bonding company the amounts due for bond principal, interest and service charge.
Accounting Entry: for amount of disbursement to the Bond Company
Debit Account: (liability) Accounts Payable
Credit Account: (asset) Cash
Relieve the Reserve for Debt Service:
Accounting Entry: Relieve reserve for debt service
Date: MM/DD/YYYY
Explanation: Relieve reserve for dbt service
Debit Account: (fund bal) Reserve for Debt Service
Credit Account: (fund bal) Unreserved/Undesignated Fund Balance
Amount: Amount of (bond principal + interest + charges)
SHARED FEDERAL REVENUE
When more than one local government has a project as part of a DCP it is the administering government
that recognizes all federal revenue from the DCP. The administering government does not capitalize the
projects from the other governments.
State Aid funds that are forwarded to the administering government from the other participating
governments are to be recognized as reimbursements, these funds may be posted to revenues; they are
not required to be netted to expenditure accounts.
ADVANCE OF STATE AID FUNDS FOR FEDERAL PROJECTS
If the county has funds available in their State Aid Construction Accounts they may use these funds in lieu
of Federal funds on a DCP. The state aid payments are recognized in the following examples:
For State Aid Construction funds that are received in lieu of federal funds:
Accounting Entry: for amount of payment
Debit Account: (asset) Cash
Credit Account: (liability) Due to State Aid Federal Funds
Debit Account: (liability) State Aid unearned revenue (Reg. or Muni. Const.)
Credit Account: (asset) State Aid allotment (Reg. or Muni. Const.)
If Federal funds become available, SAF will transfer the amount of the Federal reimbursement back to the
county’s State Aid construction account and the following entries will be required. This transfer may occur
within the same year or in future years.
For transfer of Federal funds to State Aid construction account to reimburse State Aid funds and recognize
federal revenue.
Accounting Entry: for amount of Federal transfer notice
Debit Account: (liability) Due to State Aid Federal Funds
Credit Account: (revenue) Federal Construction Revenue
Debit Account: (asset) State Aid allotment (Reg. or Muni. Const.)
Credit Account: (liability) State Aid unearned revenue (Reg. or Muni. Const.)
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If the county does not have funds available in their State Aid Construction Account they may advance
State Aid funds. The entries for recognizing State Aid revenues for Federal funds would be the same as
those discussed above. The discussion below describes the entries required to recognize the State Aid
Advance of funds.
ADVANCE RESOLUTION
If the county needs to borrow State Aid Funds in excess of their account balance it is mandatory for the
county board to pass a resolution. A copy of the resolution must be sent to the SAF. The county engineer
will be notified upon receipt of the resolution.
A resolution is not required when using State Aid funds in lieu of federal funds if there are sufficient funds
available in the State Aid Account.
TRANSFER FOR HARDSHIP CONDITION OR OTHER LOCAL USE Hardship
When the county board desires to use a part of its State Aid allocation off an approved State Aid system,
it shall certify by resolution that it is experiencing a hardship condition in regard to financing its local roads
while holding its current road and bridge levy or budget equal to or greater than the levy or budget for
previous years. Approval may be granted only if the county board demonstrates that the request is made
for good cause (flooding, disaster, etc.). If the hardship condition is approved, without requiring progress
reports and within 30 days, an immediate payment of at least 50 percent of the total amount authorized
will be made, with the balance to be paid within 90 days, or an immediate payment of the entire amount
authorized will be made upon determining that sufficient funds are available.
State Aid funds received for hardship condition:
Accounting Entry: for amount of State Aid payment
Debit Account: (asset) Cash
Credit Account: (asset) State Aid Construction Allotment
Accounting Entry: recognize revenue for amount State Aid payment
Debit Account: (liability) State Aid Unearned Revenue
Credit Account: (revenue) State Aid Construction Revenue
(Click for increasing or decreasing maintenance allotments)
Other Local Use
When the county board desires to use a part of its State Aid allocation on local roads not on an approved
State Aid system, it shall certify by resolution that its State Aid routes are improved to State Aid standards
or are in adequate condition that does not have needs other than additional surfacing or shouldering
needs identified in its State Aid Needs report. The portion of the county apportionment attributable to
needs may not be used on the local system.
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A construction project for a local road not on an approved State Aid system and not designed to State Aid
standards will not be given approval by the State Aid for Local Transportation Division unless the plan is
accompanied by a resolution from the respective county board that indemnifies, saves, and holds
harmless the state of Minnesota and its agents and employees from claims, demands, actions, or causes
of actions arising out of or by reason of a matter related to constructing the local road and agree to defend
at the sole cost of the county any claim arising as a result of constructing the local road.
Payments for Other Local Use must be requested on the State Aid Payment Request Form, the accounting
entries are the same as those made for Regular and Municipal State Aid Construction. See REGULAR AND
MUNICIPAL CONSTRUCTION ACCOUNTS for further discussion.
REVISION OF COUNTY MAINTENANCE APPORTIONMENTS The commissioner may, upon recommendation of the screening board or upon receipt of a resolution
from a county board and for good cause shown, increase or decrease the proportion to be used for
maintenance for a requested year.
Maintenance proportion is increased:
Accounting Entry: recognize increase to Maintenance
Debit Account: (asset) Maintenance Allotment
Credit Account: (liability) Maintenance Unearned Revenue
Accounting Entry: recognize reduction to Construction
Debit Account: (liability) Construction Unearned Revenue
Credit Account: (asset) Construction Allotment
Maintenance proportion is decreased:
Accounting Entry: recognize decrease to Maintenance
Debit Account: (liability) Maintenance Unearned Revenue
Credit Account: (asset) Maintenance Allotment
Accounting Entry: recognize increase to Construction
Debit Account: (asset) Construction Allotment
Credit Account: (liability) Construction Unearned Revenue
FEDERAL FUND EXCHANGE PRGRAM (FUND SWAPS) The Federal Fund Exchange Program is a voluntary program which allows counties who have been selected
to receive federal funds to trade them with other counties for state aid funds. This process de-federalizes
the project donating the federal funds and brings the other project (the recipient) up closer to allowable
federal participation levels. The result is not only a decrease in the total number of federal projects that
need to be processed each year but also a decrease in review queues for the remaining federal project.
The fund swap program is not intended to circumvent the Area Transportation Partnership (ATP) process
but simply to consolidate federal funds and streamline plan processing for all projects.
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Eligible Participants
Any county that has been selected to receive federal funds for a project eligible for state aid funding may
opt to exchange the federal funds from one or more county’s state aid construction funds; exchanges may
occur over multiple years as well.
Eligible Funds
Federal Funds eligible to be donated are Surface Transportation Program (STP) and Highway Bridge
Program (BR). Enhancement funds (TE) may be swapped if the donor’s project is eligible for state aid
funds.
Exchange Rate
The exchange rate for the program is currently 1:1. The fund exchange must occur between like funding
accounts (regular construction to regular construction or county municipal construction to county
municipal construction).
Exchange Approval Process
Counties who wish to be considered for a fund exchange need to fill out a fund exchange application.
DSAE and SALT review and approve fund exchange.
DSAE prepares STIP modification.
STIP modification is approved.
Agreement is prepared by SALT to designate fund exchange amounts and timing. Download the Federal Fund Exchange Application from the State Aid Finance Website: Forms and Resolutions
Agreement is executed by local agencies and SALT.
State Aid Finance transfers State Aid funds from Recipient County to the Donor County’s State Aid Account.
Recipient County completes federal process to receive funds for the project (plan approval, permits etc.).
Recipient County receives federal funds when the project is authorized and payment requests are submitted.
Rules
Both projects must be eligible for state aid funds.
Both projects must be in STIP but do not need to be in the same fiscal year.
Projects involved in the swap should be constructed in the year they were programmed in the STIP.
Federal funds donated cannot exceed federal participation rules for the project.
Cautions
Projects constructed with state funds may still be federalized if an Army Corps of Engineers (COE) permit is required.
Accurate cost estimates are extremely important. Once an agreement is executed and funds are transferred, there will be no further adjustments.
CSAH Regular funds cannot be spent on MSAS or TH routes.
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If the county is the Recipient (receives the federal funds):
Post the entry to transfer the State Aid funds to the Donor County (donates the federal funds):
Accounting Entry: Transfer of State Aid Funds to “Donor County”
Debit Account: (liability) SA Regular Construction - Unearned Revenue
Credit Account: (asset) SA Regular Construction - Allotment
If the county is the Donor (donates the federal funds):
Post the entry to transfer the State Aid funds from the Recipient County (receives the federal funds):
Accounting Entry: Transfer of State Aid Funds from “Recipient County”
Debit Account: (asset) SA Regular Construction - Allotment
Credit Account: (liability) SA Regular Construction - Unearned Revenue
No other special entries are required, the standard construction entries apply as defined in previous
chapters.
FLEXIBLE HIGHWAY ACCOUNT (FLEX) EXCESS SUM FUNDS ACCOUNTS
Flexible Highway Account (Flex) is created in the state treasury and derives funds from the 5% of Highway
User Tax Distribution Fund (HUTDF). Flex account funds are divided equally, to the extent feasible,
between the seven Metropolitan Area Counties (Metro) and the Greater Minnesota Counties (GM). Funds
in the flex account are defined in two parts. Base funds are those derived from the pre-2008 HUTDF
revenue formula. Excess sum funds are those derived from the difference of base and total revenue, the
delta of old formula and current formula.
For budgeting and appropriation purposes, GM excess sum funds are added to its 50% of the Flex Account
base. Metro’s excess sum is divided among the seven metropolitan counties by population excluding cities
of the first class in the calculation, and deposited in separate accounts for each county. The remainder of
flex account funds, GM base plus excess, Metro base, are appropriated by the state legislature biennially.
County Turnback Account (72GM, 72DM), Municipal Turnback Account (91GM, 91DM), and Trunk
Highway Fund are the three eligible recipients of Flex funds. Appropriations are to the three recipients in
whole, distribution to sub accounts is accomplished by the annual commissioner’s order.
First priority use of these funds are for turnbacks per §MS 161.081. For Metro counties without County
Turnback Account (CTB) project obligations, excess sum funds may be used for safety improvements to
local roads or routes of regional significance.
The procedure for metro county flex-excess sum projects for turnback, safety improvement and routes of
regional significance projects is as follows:
1. County requests use of funds by letter to District State Aid Engineer (DSAE) including category, estimated amount and schedule.
2. DSAE responds affirming eligible use and availability of funds, with copy to State Aid Finance.
3. Follow standard state aid project approval procedures.
4. District SA office issues project approval letter including payment request instructions (SEE 5).
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5. County submits a “State Aid Pay Request” indicating the amount and the category type on the Turnback / Flex line of the request form; 95% may be advanced with 5% retained until receipt of the final project acceptance and final cost determination by the county or city engineer, and upon concurrence of project acceptance by the district state aid engineer. On the specify line enter your FLEX-EXCESS SUM Account Number and indicate whether it is for Turnback, Safety Improvement, or Routes of Regional Significance.
6. A copy of the DSAE approval letter must accompany the State Aid Pay Request. (See No. 2 above)
7. SA Finance will process the payments using the specified category type. Payments cannot be processed without this information.
Refer to the "Regular and Municipal Construction" entries in chapter 3.
ACCOUNTS NEEDED
(const exp) CONSTRUCTION EXPENSE (there will be numerous of these)
(revenue) FLEX – EXCESS SUM CONSTRUCTION – REVENUE
(asset) CASH
(asset) FLEX – EXCESS SUM CONSTRUCTION – RECEIVABLE
(asset) FLEX – EXCESS SUM CONSTRUCTION – ALLOTMENT
(liability) CONTRACTS PAYABLE
(liability) DUE TO STATE AID FLEX – EXCESS SUM – OVERPAYMENT
(liability) FLEX – EXCESS SUM CONSTRUCTION – UNEARNED REVENUE
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NARRATIVE
Adjustment entries may be required at year-end to various balance sheet accounts, these accounts may include:
Inventory (this would also include inventory items) Comp Time Payable
Current and Delinquent Taxes Receivable Non-spendable for Inventory
Salaries and Wages Payable Restricted Funds for CSAH Contracts
Benefits Payable Committed Funds for County Contracts
Vacation Payable Assigned Funds Fund Balance
Vested Sick Leave Payable Unassigned Fund Balance
SEQUENCE OF EVENTS
INVENTORY ADJUSTMENTS
The inventory on your accounting system may differ from the physical inventory taken at year-end. Inventory
variance adjustments are required to bring the inventory quantities and dollar values in balance with the physical
inventory.
If variances exist, entries to the following unallocated areas will be required:
End-of-year Inventory Adjustments for Field Supplies
End-of-year Inventory Adjustments for Administrative Supplies
End-of-year Inventory Adjustments for Shop and Equipment Supplies
Take the following steps to determine your inventory variances:
1. Take a physical count of all inventory items. 2. Calculate the dollar value for each item; physical count multiplied by unit price. 3. Compare the calculated dollar values and quantities to the amounts on the accounting system. 4. Make adjustments to any items that differ. The offset for these differences will be in the unallocated
sections described above.
NOTE: In the case of specific inventory items such as road sand or salt, the variance for those items should be
charged to the respective cost center (snow and ice control).
CURRENT AND DELINQUENT TAXES RECEIVABLE
Current and Delinquent Taxes Receivable represent the Highway Department's portion of property taxes owed the
county for the current and past years. This balance is calculated by the County Auditor/Treasurers Office and needs
to be posted to your accounting system. The amount from the prior year may need to be reversed and the current
year posted. Any amounts not collected within the first 60 days subsequent to the year-end should be unearned.
Accounting Entry: reverse prior year Current and Delinquent Taxes Receivable
Debit Account: (revenue) County Tax Revenue
Credit Account: (asset) Current Taxes Receivable
Debit Account: (liability) Delinquent Tax Unearned Revenue
Credit Account: (asset) Delinquent Taxes Receivable
Accounting Entry: current year Current and Delinquent Taxes Receivable
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Debit Account: (asset) Current Taxes Receivable
Credit Account: (revenue) County Tax Revenue
Debit Account: (asset) Delinquent Taxes Receivable
Credit Account: (liability) Delinquent tax Unearned Revenue
SALARIES AND WAGES PAYABLE
Salaries and Wages Payable represent the amount owed to Highway Department employees for work performed in
the current year and paid in subsequent years. This liability may need to be adjusted to match the payable amount
provided by the County Auditor/Treasurers Office at year-end.
Accounting Entry: Salaries and Wages Payable is too high
Debit Account: (liability) Salaries and Wages Payable
Credit Account: (expense) Unallocated (EOY Salaries/Wages Adjustment Account)
Accounting Entry: Salaries and Wages Payable is too low
Debit Account: (expense) Unallocated (EOY Salaries/Wages Adjustment Account)
Credit Account: (liability) Salaries and Wages Payable
BENEFITS PAYABLE
Benefits Payable represent the Highway Department’s portion of the accrued County expense for FICA, Medicare
and PERA. These accruals are based on the Salaries and Wages Payable balance. This balance is calculated by the
County Auditor/Treasurers Office, and needs to be posted to your accounting system. The amount from the prior
year may need to be reversed and the current year posted.
Accounting Entry: reverse prior year Benefits Payable
Debit Account: (liability) Benefits Payable
Credit Account: (expense) Unallocated (FICA, Medicare, PERA)
Accounting Entry: current year Benefits Payable
Debit Account: (expense) Unallocated (FICA, Medicare, PERA)
Credit Account: (liability) Benefits Payable
LONG TERM COMPENSATED ABSENCES PAYABLE
Long Term Liabilities (Vacation, Vested Sick Leave, and Comp Time Payables) are not required to be reported at the
fund level. They are reported on the county wide financials. It is beneficial to report here since the information is
accumulated by each fund for the county wide report.
VACATION PAYABLE
Vacation Payable represents the amount owed to Highway Department employees for their vacation hours
accrued as of year-end. This balance may be determined by county policy or union contracts and is calculated
by the County Highway Department or County Auditor/Treasurers Office. The amount from the prior year may
need to be reversed and the current year posted.
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Accounting Entry: reverse prior year Vacation Payable
Debit Account: (liability) Vacation Payable
Credit Account: (expense) Unallocated (Vacation Expense)
Accounting Entry: current year Vacation Payable
Debit Account: (expense) Unallocated (Vacation Expense)
Credit Account: (liability) Vacation Payable
VESTED SICK LEAVE PAYABLE
Vested Sick Leave Payable represents the amount of sick leave compensation owed to each Highway
Department employee if job termination were to occur prior to year-end. This balance may be determined by
county policy or union contracts and is calculated by the County Highway Department or County
Auditor/Treasurers Office. The amount from the prior year may need to be reversed and the current year
posted.
Accounting Entry: reverse prior year Vested Sick Leave Payable
Debit Account: (liability) Vested Sick Leave Payable
Credit Account: (expense) Unallocated (Sick Leave Expense)
Accounting Entry: current year Vested Sick Leave Payable
Debit Account: (expense) Unallocated (Sick Leave Expense)
Credit Account: (liability) Vested Sick Leave Payable
COMP TIME PAYABLE
Comp Time Payable represents the amount owed to Highway Department employees for their remaining comp
time hours accrued as of year-end. This balance may be determined by county policy or union contracts and is
calculated by the County Highway Department or County Auditor/Treasurers Office. If your accounting system
has been posting transactions to this account during the year, one of the following adjustments may be required.
Accounting Entry: Comp Time Payable is too high
Debit Account: (liability) Comp Time Payable
Credit Account: (expense) Unallocated (EOY Comp Time Adjustment Account)
Accounting Entry: Comp Time Payable is too low
Debit Account: (expense) Unallocated (EOY Comp Time Adjustment Account)
Credit Account: (liability) Comp Time Payable
FUND BALANCE NON-SPENDABLE FOR INVENTORY
The Non-spendable for Inventory is based on the year-end inventory value. Some accounting systems make this
entry automatically.
The adjustment to the Non-spendable for Inventory is calculated with the following formula:
Current balance of the Non-spendable for Inventory
MINUS: Current year-end Inventory Value
EQUALS: Adjustment to Non-spendable for Inventory
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If the adjustment amount is POSITIVE:
Accounting Entry: Adjustment to Non-spendable for Inventory
Debit Account: (fund equity) Non-spendable for Inventory
Credit Account: (county expense) EOY Adjustment to Non-spendable for Inventory
If the adjustment amount is NEGATIVE:
Accounting Entry: Adjustment to Non-spendable for Inventory
Debit Account: (county expense) EOY Adjustment to Non-spendable for Inventory
Credit Account: (fund equity) Non-spendable for Inventory
The following entries are recommended but not required due to the differences in accounting practices between
the highway department and the county wide financial system. Year-end reporting of restricted, committed,
assigned, and residual fund balances is required for the county wide financials.
RESTRICTED FUNDS FOR STATE AID PROJECTS
Restricted Funds for State Aid Projects (CSAH Regular, CSAH Municipal, and Town Bridge Projects) may be combined
as one total or may be reported separately as illustrated below.
FUND BALANCE RESTRICTED FOR CSAH REGULAR PROJECTS
The Restricted Funds for CSAH Regular Projects is the remainder of the CSAH Regular funds paid to the county
for each CSAH Regular project minus the certified work for the CSAH Regular portion of the project.
Accounting Entry: reverse prior year Fund Balance Restricted for CSAH Regular Projects
Debit Account: (fund equity) Fund Balance Restricted for CSAH Regular Projects
Credit Account: (fund equity) Unassigned (Assigned) Fund Balance
Accounting Entry: current year Fund Balance Restricted for CSAH Regular Projects
Debit Account: (fund equity) Unassigned (Assigned) Fund Balance
Credit Account: (fund equity) Fund Balance Restricted for CSAH Regular Projects
FUND BALANCE RESTRICTED FOR CSAH MUNICIPAL PROJECTS
The Restricted Funds for CSAH Municipal Projects is the remainder of the CSAH Municipal funds paid to the
county for each CSAH Municipal project minus the certified work for the CSAH Municipal portion of the project.
Accounting Entry: reverse prior year Fund Balance Restricted for CSAH Municipal Projects
Debit Account: (fund equity) Fund Balance Restricted for CSAH Municipal Projects
Credit Account: (fund equity) Unassigned (Assigned) Fund Balance
Accounting Entry: current year Fund Balance Restricted for CSAH Municipal Projects
Debit Account: (fund equity) Unassigned (Assigned) Fund Balance
Credit Account: (fund equity) Fund Balance Restricted Funds CSAH Municipal Projects
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FUND BALANCE RESTRICTED FUNDS TOWN BRIDGE PROJECTS
The Restricted Funds for Town Bridge Projects is the remainder of the Town Bridge funds paid to the county for
each Town Bridge project minus the certified work for the Town Bridge portion of the project.
Accounting Entry: reverse prior year Fund Balance Restricted for Town Bridge Projects
Debit Account: (fund equity) Fund Balance Restricted for Town Bridge Projects
Credit Account: (fund equity) Unassigned (Assigned) Fund Balance
Accounting Entry: current year Fund Balance Restricted for Town Bridge Projects
Debit Account: (fund equity) Unassigned (Assigned) Fund Balance
Credit Account: (fund equity) Fund Balance Restricted for Town Bridge Projects
FUND BALANCE RESTRICTED FUNDS FOR BOND PRINCIPAL AND INTEREST
If funds are received from State Aid for principal and interest for a State Aid Bond prior to year-end but are not paid
to the bond service company until the new-year the amount should be reported in the Restricted Funds for Bond
Principal and Interest.
Accounting Entry: reverse prior year Fund Balance Restricted for Bond Principal and Interest
Debit Account: (fund equity) Fund Balance Restricted for Bond Principal and Interest
Credit Account: (fund equity) Unassigned (Assigned) Fund Balance
Accounting Entry: current year Fund Balance Restricted for Bond Principal and Interest
Debit Account: (fund equity) Unassigned (Assigned) Fund Balance
Credit Account: (fund equity) Fund Balance Restricted for Bond Principal and Interest
FUND BALANCE COMMITTED FOR COUNTY PROJECTS/PURPOSES
The Fund Balance Committed for County Projects/Purposes is the county portion of projects or other specific
purpose that the County Board has identified. Any committed funds must be placed in reserve by the county board
by resolution prior to year-end, but the amount may be adjusted after year-end.
Accounting Entry: reverse prior year Fund Balance Committed for County Projects/Purposes
Debit Account: (fund equity) Fund Balance Committed for County Projects/Purposes
Credit Account: (fund equity) Unassigned (Assigned) Fund Balance
Accounting Entry: current year Fund Balance Committed for County Projects/Purposes
Debit Account: (fund equity) Unassigned (Assigned) Fund Balance
Credit Account: (fund equity) Fund Balance Committed for County Projects/Purposes
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ASSIGNED FUND BALANCE
All resources of the Road and Bridge Fund are considered assigned for road and bridge purposes. For this discussion,
this fund balance is labeled unassigned. The County can also assign fund balance for more specific purposes.
Assigned Fund Balances are balance accounts that may be assigned at or after year-end. The County Board may
grant authority to the County Administrator, County Auditor, County Engineer, or Financial Officer to assign these
balances. Examples of Assigned Fund Balances are:
Assigned for County Maintenance Projects
Assigned for County Highway Improvements
Assigned for County Roads and Bridges
These Fund Balances are assigned after Non-spendable, Restricted and Committed Funds have been deducted from
the Fund Balance. If the remaining Fund Balance is negative after these deductions, no funds may be assigned in
these fund balance accounts; they will remain in the residual account called Assigned for Road and Bridge Fund
Balance. The Assigned Fund Balance Accounts are transferred back to Unassigned (Assigned) Fund Balance as of the
beginning of the new-year.
Accounting Entry: current year Assigned for County Highway “Example”
Debit Account: (fund equity) Unassigned (Assigned) Fund Balance
Credit Account: (fund equity) Assigned for County Highway “Example”
Accounting Entry: for new-year Assigned for County Highway “Example”
For the amount of the Assigned for County Highway “Example”
balance at year-end.
Debit Account: (fund equity) Assigned for County Highway “Example”
Credit Account: (fund equity) Unassigned (Assigned) Fund Balance
RESIDUAL FUND BALANCE
If the Unassigned (Assigned) Fund Balance is negative after the deductions for Non-spendable, Restricted and
Committed Funds, the negative balance will remain in Unassigned Fund Balance and no additional entries are
required. Any positive residual balance after deductions for Non-spendable, Restricted, Committed, or other
Assigned amounts should be classified Assigned to Roads and Bridges.
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COVER PAGE
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LETTER OF TRANSMITTAL
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INDEX OF ANNUAL REPORT
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SUMMARY OF COUNTY HIGHWAY INFORMATION
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BRIEF OF ACTIVITIES, COMMENTS AND RECOMMENDATIONS
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FINANCIAL STATEMENT
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RECEIVABLES
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RECEIVABLES ADDENDUM
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TOWN ROAD ALLOTMENT
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INVENTORY OF MATERIALS AND SUPPLIES
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LIABILITIES AND FUND BALANCE RESERVES
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LIABILITIES AND FUND BALANCE RESERVES ADDENDUM (OPTIONAL PAGE)
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FIXED ASSETS
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FIXED ASSET BETTERMENTS
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LAND AND BUILDINGS
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STATEMENT OF REVENUES AND EXPENDITURES
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SUMMARY OF EXPENDITURES
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SUMMARY OF MAINTENANCE COSTS BY FUNDS
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DETAILED MAINTENANCE COSTS BY FUNDS
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SUMMARY OF MAINTENANCE COSTS BY ROADS – CSAH REGULAR
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DETAILED ROUTINE MAINTENANCE COSTS BY ROADS – CSAH REGULAR
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SUMMARY OF MAINTENANCE COSTS BY ROADS – CSAH MUNICIPAL
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DETAILED ROUTINE MAINTENANCE COSTS BY ROADS – CSAH MUNICIPAL
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SUMMARY OF MAINTENANCE COSTS BY ROADS – COUNTY ROADS
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DETAILED ROUTINE MAINTENANCE COSTS BY ROADS – COUNTY ROADS
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SUMMARY OF CONSTRUCTION COSTS – CSAH REGULAR
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STATEMENT OF CONSTRUCTION COSTS – CSAH REGULAR
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SUMMARY OF CONSTRUCTION COSTS – CSAH MUNICIPAL
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STATEMENT OF CONSTRUCTION COSTS – CSAH MUNICIPAL
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SUMMARY OF CONSTRUCTION COSTS – COUNTY ROADS
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STATEMENT OF CONSTRUCTION COSTS – COUNTY ROADS
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LOCAL AGENCY BONDS
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ESTIMATED BUDGET
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INSTRUCTIONS
The Annual Report is not required to be submitted to State Aid Finance, see Chapter 19 Annual Summary
of Highway Information for State Aid Finance reporting requirements.
The Annual Report is used to report county highway activities for the year to other commissions and
committees within the county. It may be used as a source of information to the State Auditor’s Office in
the preparation of the county wide financial report.
LETTER OF TRANSMITTAL
The letter of transmittal included with the annual report formally presents the report to the board of
county commissioners.
The letter of transmittal should meet the following criteria:
The letter should be typed on letterhead paper.
The letter should be dated as of the date of completion of the report.
The letter should be addressed to the board of county commissioners.
The letter should be signed by the county engineer.
The body of the letter should be similar to the sample letter of transmittal. Although the contents
of the letter is left to the discretion of the engineer, it should not include specific information
regarding the activities of the county for either the current or upcoming year. Information of this
nature should be included in the Brief of Activities, Comments and Recommendations.
SUMMARY OF COUNTY HIGHWAY INFORMATION
The Summary of County Highway Information page summarizes the current year's maintenance costs and
corresponding mileage amounts, and construction costs by funding sources.
Construction costs include all costs from federal projects (SPs) and non-federal (SAPs) projects, costs
should exclude Federal Funds, Bridge Bonding Funds and Special Account Funds (Town Bridge, State Park,
Turnback, etc.). Total costs should not be reduced by any reimbursements received from other sources if
the reimbursement is for work associated to the CSAH Regular or CSAH Municipal road. If work is
associated with other road systems, those costs or reimbursements should not be included at all.
The construction and maintenance costs should match the amounts shown on the Summary of
Construction Cost and the Summary of Maintenance Cost pages, respectively.
The mileage amounts should correspond to the mileage amounts in the State Aid Apportionment Data
report.
BRIEF OF ACTIVITIES, COMMENTS AND RECOMMENDATIONS
The Brief of Activities, Comments and Recommendations page summarizes the major accomplishments
and activities of the highway department during the year. This page may also include recommendations
and/or proposals for the upcoming year. The format of the page is left to the discretion of the county;
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however, the State Aid Office prefers that the majority of the data be summarized quantitatively rather
than narratively, as shown in the sample annual report.
FINANCIAL STATEMENT
The Financial Statement summarizes the financial position of the highway department on 12/31/X0 by
disclosing the assets, liabilities and fund balance on that date. Some of the asset, liability and fund balance
accounts are briefly described below.
ASSETS
Cash and Pooled Investments
Cash and Pooled Investments is the amount of cash the highway department has on hand, including
pooled investments. This amount should correspond to the ending cash balance shown on the
Statement of Revenues and Expenditures.
Petty Cash and Change Funds
A Petty Cash and Change Fund is a small amount of cash the highway department has on hand to pay
for such items as office supplies and postage. This amount should always equal the full petty cash
amount designated by the county board.
Taxes Receivable
Taxes Receivable is composed of two accounts – Non-apportioned Taxes and Delinquent Taxes.
Non-apportioned Taxes
Non-apportioned taxes is the amount of taxes collected at the close of the current year that will not be
receipted into the Road and Bridge fund until the upcoming year.
Delinquent Taxes
Delinquent Taxes is the amount of outstanding delinquent taxes from the current year and the past six
years (If the actual amount is not known, it should be estimated). Delinquent taxes that have been
outstanding for over six years should be written off the records by debiting Bad Debt Expense and
crediting Accounts Receivable.
Accounts Receivable
Accounts receivable is the amount due from non-governmental entities resulting from various
transactions such as the sale of goods and/or services. This account encompasses all receivables not
classified within one of the other receivable accounts (e.g., receivables from individuals and businesses).
Accrued Interest Receivable
Accrued Interest Receivable is the amount of interest that has been earned on investments which has
not yet been collected. This amount should match the amount on the Receivables page.
Due From Other Funds
Due from Other Funds is the total amount due from the county's other funds resulting from various
transactions such as the sale of goods and/or services. This amount should match the amount on the
Receivables page.
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Due From Other Governments
Due from Other Governments is the total amount due from other governmental entities. The accounts
may include Due from Townships, Due from Municipalities, Due from Counties and State Aid
Maintenance and Construction Receivables.
Due From Townships/Municipalities
Due from townships/municipalities is the amount due from townships/municipalities resulting from
various transactions such as the sale of goods and/or services.
Due From Counties
Due from counties is the amount due from other counties resulting from various transactions such as
the sale of goods and/or services.
State Aid Regular and Municipal Maintenance Receivable
The State Aid Maintenance Receivable amounts indicate the portion of the maintenance allotment that
has been spent, but not yet reimbursed from the State Aid Office. Generally, this amount is 10% of the
Regular Maintenance Allotment, unless the county has spent less than their allotment, and 100% of the
Municipal Maintenance Allotment, unless the county has spent less than their allotment or a portion of
their allotment has previously been advanced.
State Aid Regular, Municipal and Town Bridge Construction Receivables
The State Aid Regular, Municipal and Town Bridge Construction Receivable amounts indicate the funds
encumbered on open regular, municipal and town bridge construction projects (typically 5% of the
estimated costs of the projects). These amounts should match the allotment encumbrances shown on
the Status of State Aid Accounts (status report) as of 12/31/XX. If the amounts do not match, you will
need to reconcile the differences on the Receivables Addendum page.
Bridge Bonding Construction Receivable
The Bridge Bonding Construction Receivable amount indicates the funds encumbered on open bridge
bonding construction projects. Typically, 100% of the grant amount is encumbered until the project has
been finalized.
State Aid Allotments
State Aid Allotments is the total balance available in the State Aid Allotment accounts. The accounts
may include Regular Maintenance, Regular Construction, Municipal Maintenance, Municipal
Construction, and Town Bridge Construction. The amounts for each of the accounts should match the
balances available shown on the Status of State Aid Accounts (status report) as of 12/31/XX.
Inventories
Inventories is the total value of materials and supplies the highway department has on hand. (For
information regarding inventory costing methods, see the Inventory Management section in the State
Aid Accounting Manual).
LIABILITIES
Accounts Payable
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Accounts payable is the total amount owed to non-governmental entities resulting from various
transactions such as the purchase of goods and/or services. This account encompasses all payables not
classified within one of the other payable accounts (e.g., payables to vendors, individuals, etc.).
Salaries Payable
Salaries Payable is the amount owed to employees for services rendered.
Contracts Payable
Contracts Payable is the amount owed to contractors resulting from various transactions, such as the
purchase of goods and/or services.
Due To Other Funds
Due to Other Funds is the total amount owed to the county's other funds resulting from various
transactions such as the purchase of goods and/or services.
Due To Other Governments
Due to Other Governments is the total amount owed to other governmental entities resulting from
various transactions, such as the purchase of goods and/or services. The accounts may include Due to
Townships, Due to Municipalities, Due to Counties and Due to State Aid - Overpayments.
Due To Townships/Municipalities
Due to townships/municipalities is the amount due to townships/municipalities resulting from various
transactions such as the purchase of goods and/or services.
Due To Counties
Due to counties is the amount due from other counties resulting from various transactions such as the
purchase of goods and/or services.
Due To State Aid - Overpayments
Due to State Aid - Overpayments is the amount of State Aid funds that were overpaid to the highway
department. This usually occurs if a construction project underran its original estimate, or annual
maintenance expenditures were less than the portion of the maintenance allotment advanced for that
year.
Unearned Revenue
Unearned Revenue represents future income contracted for and/or collected in advance which has not
yet been earned. Unearned revenue accounts may include State Aid Allotments, Delinquent Taxes and
Prepaid Taxes.
State Aid Allotments
State Aid Allotments is the amount of State Aid Allotment funds which have not yet been earned (i.e.,
the balance available in the account plus the uncertified portions of contracts).
Delinquent Taxes
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Delinquent taxes is the amount of outstanding delinquent taxes from the current year and the past six
years that is estimated will not be collected within the first 60 days of the upcoming year.
Prepaid Taxes
Prepaid taxes is the amount of taxes that have been receipted into the Road and Bridge Fund which
have not yet been earned.
Compensated Absences
Compensated absences is the amount of vested vacation and sick leave that will become payable within
60 days of the close of the year. Compensated absences are only recorded as a liability in cases where
it is known that employees who have vested vacation or sick leave will be resigning within the first 60
days of the upcoming year. Vested benefits are benefits earned by employees that are not contingent
on remaining in the service of the employer (i.e., the employees will receive benefits based on service
to date, even if they terminate employment).
FUND BALANCE
Reserved
Reserved fund balance is the portion of the fund balance that has been earmarked for specific purposes
for which the highway department has a legal obligation. A legal obligation occurs when a purchase
order has been approved, a contract has been awarded or an expenditure has been approved per board
motion.
Unreserved
Designated
Designated fund balance is the portion of the unreserved fund balance that has been earmarked for
specific purposes for which the county has no legal obligation (i.e., the funds are not legally obligated
to be used for the proposed purposes).
NOTE: Designated funds are not recognized by the State Auditor's Office as reducing the fund balance.
Undesignated
Undesignated fund balance is the portion of the unreserved fund balance that has not been designated
for any purpose (i.e. available funds).
RECEIVABLES
The Receivables page summarizes the activity of the receivable accounts for the year. The format of the
page typically includes four columns. The first column is the balance at the beginning of the year. The
second column adds charges billed during the year. The third column subtracts payments received during
the year. The fourth column shows the resulting year-end balance. The final column - the ending balance
- is the only column that is required to be shown; however, if this is done, records should be kept to verify
these amounts.
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The "charges billed" amounts should correspond to the "modified accrual balance" amounts on the
Statement of Revenues and Expenditures page. The "payments received" amounts should correspond to
the "cash receipts" amount on the Statement of Revenues and Expenditures page. The "ending balance"
amounts should match the amounts shown on the Financial Statement.
The receivable accounts are briefly described below. The amounts referred to in the descriptions are the
ending balances (balances as of 12/31/X0).
Taxes Receivable
Taxes Receivable is composed of two accounts – non-apportioned Taxes and Delinquent Taxes.
Non-apportioned Taxes
Non-apportioned taxes is the amount of taxes collected at the close of the current year that will not be
receipted into the Road and Bridge fund until the upcoming year.
Delinquent Taxes
Delinquent taxes is the amount of outstanding delinquent taxes from the current year and the past six
years. Delinquent taxes that have been outstanding for over six years should be written off the records
by debiting Bad Debt Expense and crediting Accounts Receivable.
Accounts Receivable
Accounts receivable is the amount due from non-governmental entities resulting from various
transactions such as the sale of goods and/or services. This account encompasses all receivables not
classified within one of the other receivable accounts (e.g., receivables from individuals and businesses).
Accrued interest Receivable
Accrued Interest Receivable is the amount of interest that has been earned on investments which has
not yet been collected.
Due From Other Funds
Due from Other Funds is the total amount due from the county's other funds resulting from various
transactions such as the sale of goods and/or services.
Due From Other Governments
Due from Other Governments is the total amount due from other governmental units. The accounts
may include Due from Townships, Due from Municipalities, Due from Counties and State Aid
Maintenance and Construction Receivables.
Due From Townships/Municipalities
Due from townships/municipalities is the amount due from townships/municipalities resulting from
various transactions such as the sale of goods and/or services.
Due From Counties
Due from counties is the amount due from other counties resulting from various transactions such as
the sale of goods and/or services.
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State Aid Regular and Municipal Maintenance Receivables
These amounts indicate the portion of the maintenance allotment that has been spent, but not yet
reimbursed from the State Aid Office. Generally, this amount is 10% of the Regular Maintenance
Allotment, unless the county has spent less than their allotment, and 100% of the Municipal
Maintenance Allotment, unless the county has spent less than their allotment or a portion of their
allotment has previously been advanced.
State Aid Regular, Municipal and Town Bridge Construction Receivables
These amounts indicate the funds encumbered on open construction projects (typically 5% of the
estimated costs of the projects). These amounts should match the allotment encumbrances shown on
the Status of State Aid Accounts (status report) as of 12/31/XX. If the amounts do not match, you will
need to reconcile the differences on the Receivables Addendum page.
Bridge Bonding Construction Receivable
The Bridge Bonding Construction Receivable amount indicates the funds encumbered on open
construction projects. Typically, 100% of the grant amount is encumbered until the project has been
finalized.
RECEIVABLES ADDENDUM
The Receivables Addendum page is only required if the ending balance of a state aid account on the
receivables page does not coincide with the allotment encumbrances on the Status of State Aid Accounts
(status report) as of 12/31/XX. This usually occurs if State Aid funds were overpaid to the county for some
reason (e.g., a project underrun). If this is the case, the differing amounts should be reconciled on this
page.
Individual accounts should be reconciled separately. The overpayment(s) should be subtracted from the
allotment encumbrances (funds encumbered for open construction projects) to arrive at an adjusted
receivable amount. This adjusted amount should then match the amount on the Receivables page.
TOWN ROAD ALLOTMENT
The Town Road Allotment page shows the distribution of the current year's town road allotment. All
townships within the county and their respective distribution amounts should be listed.
The total should match the town road allotment shown on the Notice of Annual Apportionment, which is
sent out in January.
It should be noted who administered the funds (e.g., Highway Department, Auditor, etc.).
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INVENTORY OF MATERIALS AND SUPPLIES
The Inventory of Materials and Supplies page itemizes the values of the materials and supplies on hand
as of 12/31/XX. (For information regarding inventory costing methods, see the Inventory Management
section in the State Aid Accounting Manual).
The inventory items should be divided into three main categories:
1. Parts and Replacements - This includes such items as batteries, belts, cutting edges, filters, etc.
2. Motor Fuels, Lubricants and Fluids - This includes such items as gasoline, grease, transmission
fluid, anti-freeze, etc.
3. Field Materials and Supplies - This includes such items as calcium chloride and salt, crack filler,
signs and posts, etc.
The total should correspond to the amount shown on the Financial Statement.
A change in the inventory costing method from the previous year should be footnoted.
LIABILITIES AND FUND BALANCE RESERVES
The Liabilities and Fund Balance Reserves page shows the breakdown of the liability and fund balance
reserve accounts. The amounts on the Liabilities and Fund Balance Reserves page should correspond to
the amounts shown on the Financial Statement.
The Accounts Payable, Salaries Payable, Due to Other Funds and Due to Other Governments liability
accounts are divided into five categories - maintenance, construction, equipment maintenance and shops,
administration and other. The breakdown of these accounts are shown on a separate page - the Liabilities
and Fund Balance Reserves Addendum page. The totals for each of these accounts should be combined
and shown on the Liabilities and Fund Balance Reserves page as Accounts Payable/Other Liabilities.
Some of the liability and fund balance accounts are briefly described below.
LIABILITIES
Accounts Payable/Other Liabilities
Accounts Payable
Accounts payable is the amount owed to non-governmental entities resulting from various transactions
such as the purchase of goods and/or services. This account encompasses all payables not classified
within one of the other payable accounts (e.g., payables to vendors, individuals, etc.).
Salaries Payable
Salaries Payable is the amount owed to employees for services rendered.
Due to Other Funds
Due to Other Funds is the total amount owed to the county's other funds resulting from various
transactions such as the purchase of goods and/or services.
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Due to Other Governments (Goods and Services)
Due to Other Governments is the total amount owed to other governmental units resulting from various
transactions, such as the purchase of goods and/or services. Other governmental units may include
townships, municipalities and counties.
Contracts Payable
Contracts Payable is the amount owed to contractors resulting from various transactions, such as the
purchase of goods and/or services. This amount does not include amounts owed to contractors for
federal aid projects, since the State Aid Finance Office pays them directly.
Due to Other Governments – (Other)
Due to State Aid - Overpayments
Due to State Aid - Overpayments is the amount of State Aid funds that were overpaid to the highway
department. This usually occurs if a construction project underran its original estimate, or annual
maintenance expenditures were less than the portion of the maintenance allotment advanced for that
year.
Unearned Revenue
Some of the accounts Unearned Revenue may consist of include State Aid Allotments, Delinquent Taxes
and Prepaid Taxes.
State Aid Allotments
State Aid Allotments is the amount of State Aid Allotment funds which have not yet been earned. (i.e.,
the balance available in the account plus the uncertified portions of contracts).
Delinquent Taxes
Delinquent taxes is the amount of outstanding delinquent taxes from the current year and the past six
years that is estimated will not be collected within the first 60 days of the upcoming year.
Prepaid Taxes
Prepaid taxes is the amount of taxes that have been receipted into the Road and Bridge Fund which
have not yet been earned.
Compensated Absences
Compensated absences is the amount of vested vacation and sick leave that will become payable within
60 days of the close of the year. Compensated absences are only recorded as a liability in cases where
it is known that employees who have vested vacation or sick leave will be resigning within the first 60
days of the upcoming year. Vested benefits are benefits earned by employees that are not contingent
on remaining in the service of the employer (i.e., the employees will receive benefits based on service
to date, even if they terminate employment).
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FUND BALANCE
Reserved
Reserved fund balance is the portion of the fund balance that has been earmarked for specific purposes
for which the highway department has a legal obligation. A legal obligation occurs when a purchase
order has been approved, a contract has been awarded or an expenditure has been approved per board
motion.
Unreserved
Designated
Designated fund balance is the unreserved portion of the fund balance that has been earmarked for
specific purposes for which the county has no legal obligation (i.e., the funds are not legally obligated
to be used for the proposed purposes).
NOTE: Designated funds are not recognized by the State Auditor's Office as reducing the fund balance.
Undesignated
Undesignated fund balance is the unreserved portion of the fund balance that has not been designated
for any purpose (i.e. available funds).
LIABILITIES AND FUND BALANCE RESERVES ADDENDUM (OPTIONAL PAGE)
The Liabilities and Fund Balance Reserves Addendum page shows the detailed breakdown of the Accounts
Payable, Salaries Payable, Due to Other Funds and Due to Other Governments liability accounts. The
liabilities are divided into five types - maintenance, construction, equipment maintenance and shops,
administration and other.
The totals for each of the accounts should be combined and specified as Accounts Payable/Other
Liabilities on the Liabilities and Fund Balance Reserves page.
FIXED ASSETS
The Fixed Assets page itemizes the fixed assets as of 12/31/XX. Fixed assets are not reported on the
Financial Statement under the governmental modified accrual basis of accounting.
The Fixed Assets page should include twelve columns, as shown in the sample annual report. Fixed assets
are divided into two categories - major equipment and minor equipment. Minor equipment is further
divided into four subcategories - maintenance, construction, equipment maintenance and shops and
administration. (For information regarding the classification of fixed assets as major or minor equipment,
see the Fixed Assets section in the State Aid Accounting Manual).
The twelve column headings are briefly described below.
Equipment Number
This is the identification number that has been assigned to the piece of equipment by the highway
department.
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Equipment Description
This is a brief description of the piece of equipment.
Date Acquired
This is the date the piece of equipment was originally purchased (i.e., the date of delivery of the
equipment).
Original Cost
This is the cash outlay or its equivalent that is necessary to acquire the piece of equipment and put it in
operating condition. The amount is determined when the equipment is originally purchased, and
remains constant from year to year.
Original cost typically equals:
Invoice price
Less cash discounts and other discounts available, if any
Plus freight-in
Plus assembly
Plus installation charges
Plus testing costs
Plus sales and federal excise taxes
However, the interpretation of the meaning of the term "original cost" is left to the discretion of the
county; therefore, it should be noted as to what this number actually represents.
Estimated Life
This is a measure of the number of years of service expected from the asset before its disposal. (Refer
to the Fixed Assets section in the State Aid Accounting Manual for a listing of the estimated years of life
of most types of equipment). The estimated life may increase if a betterment is made to the piece of
equipment.
Status Code
This indicates any change in condition of the piece of equipment during the year (e.g., new, improved,
traded, and scrapped).
Beginning Net Book Value
This amount is the equipment's remaining depreciable value at the beginning of the year. For existing
equipment, this amount is the same as the previous year's ending net book value. For new equipment,
the amount is the same as the original cost.
Current Year Costs
This amount includes any costs incurred during the year to maintain the piece of equipment (e.g.,
routine repairs, major overhauls, gas, oil, etc.). Current year costs do not include betterments made to
the unit.
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Current Year Rental Earned
This amount is the current year's rental earned for the piece of equipment. Rental earned is the total
amount that was charged to various roads for the use of a specific unit during the year. (For information
regarding rental rates, see the Fixed Assets section in the State Aid Accounting Manual).
Adjustment To Equalize Depreciation
This is the amount needed to adjust the current year's rental earned so that it reflects the actual costs
of maintaining the piece of equipment, and not the estimated amount obtained using the equipment's
rental rate.
To calculate this amount, first determine the equipment's actual total costs for the year (current year's
costs plus depreciation expenses). Next, subtract the amount of rental earned for the year from the
actual total costs for the year. The difference is the adjustment to equalize depreciation. This will be a
negative number if the rental earned was greater than the actual costs and a positive number if the
rental earned was less than the actual costs. This number should be as close to zero as possible. If it is
not, the need to modify the equipment's rental rate should be considered. (For more information
regarding the modification of rental rates, see the Fixed Assets section in the State Aid Accounting
Manual).
Current Year Depreciation
This amount is the current year's depreciation expense for the piece of equipment. The annual
depreciation expense for the piece of equipment should be determined at the time the equipment is
acquired using the straight line method. Since the straight-line method provides for equal periodic
charges to expense over the estimated life of the asset, the annual depreciation expense will remain
constant, unless a betterment is made to the unit.
Ending Net Book Value
This amount is the equipment's remaining depreciable value at the end of the year. This amount is
calculated by taking the equipment's beginning net book value plus betterments during the year (if any)
less the current year's depreciation expense.
FIXED ASSETS BETTERMENTS
The Fixed Asset Betterments page discloses the betterments made to fixed assets during the year. The
information required for each betterment includes the equipment number and description of the fixed
asset; date, cost and type of betterment; and the number of years the betterment extended the life of
the fixed asset. All betterments should be recorded, regardless of the source of funding.
Betterments are defined as modifications that altar the original function/design which improve the
quantity or quality of the unit, or major repairs which extend the life of the unit. (For more information
regarding betterments, see the Fixed Assets section in the State Aid Accounting Manual).
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LAND AND BUILDINGS
The Land and Buildings page itemizes the highway department's land and buildings as of 12/31/XX. Land
and buildings, like fixed assets, are not reported on the Financial Statement under the governmental
modified accrual basis of accounting.
The Land and Buildings page should include seven columns, as shown in the sample annual report. The
column headings are briefly described below.
Land and Building Description
This is a brief description of the land/building.
Date Acquired
This is the date the land/building was originally purchased (i.e., the date the transaction was closed).
Original Cost
This is the cash outlay or its equivalent that is necessary to acquire the land/building and put it in
operating condition. The amount is determined when the land/building is originally purchased, and
remains constant from year to year. If land and a building are acquired for a single lump-sum purchase
price, the purchase price should be allocated to the individual assets based on their relative fair market
values.
The cost of land generally includes:
Purchase price
Costs of closing the transaction and obtaining title, including commissions, options, legal fees, title
search, insurance, and past due mortgage payments and taxes.
The cost of a building generally includes:
Contract price
Costs of excavation for the specific building
Architectural costs and the costs of building permits
Capitalized interest costs in certain instances
Unanticipated costs resulting from the condition of the land (e.g. blasting rock or channeling an
underground stream)
Beginning Accumulated Value
This is the accumulated value of the land/building at the beginning of the year. Accumulated value is
the land/building's original cost plus the cost of all betterments made to the property. For existing
property, the beginning accumulated value is the same as the previous year's ending accumulated value.
For new property, the beginning accumulated value is the same as the original cost.
Current Year Betterment
This is the cost of a betterment made to the land/building during the year, if any.
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The costs of betterments to land generally include:
The costs of surveys
The costs of preparing the land for its particular use such as clearing, grading and razing old
buildings (net of any proceeds from salvage) when such improvements have an indefinite life
The costs of betterments to buildings generally include:
The costs of remodeling and reconditioning
Architect's fees
Type Of Betterment
This is a brief description of the betterment made to the land/building during the year, if any.
Ending Accumulated Value
This is the accumulated value of the land/building at the end of the year. This amount is calculated by
taking the land/building's beginning accumulated value plus betterments during the year (if any).
STATEMENT OF REVENUES AND EXPENDITURES
The Statement of Revenues and Expenditures page summarizes the results of the highway department's
operations for the year. The format of the page typically includes five columns. The first column lists the
Cash Receipts/Disbursements during the year. The second column reverses (subtracts) previous years'
receivables/payables that were received/paid in the current year. The third column records (adds) current
year receivables/payables that were not received/paid in the current year. The fourth column
adds/subtracts any transfers or adjustments that were made in the current year. The fifth column shows
the resulting modified accrual balance figures. The final column - the modified accrual balance - is the only
column that is required to be shown; however, if this is done, records should be kept to verify these
amounts.
The "cash receipts" and "modified accrual balance" amounts should correspond to the "payments
received" and "charges billed" amounts, respectively, on the Receivables page, if applicable.
Depreciation expense is not reported on the Statement of Revenues and Expenditures page because
depreciation is not an allowable expenditure under the governmental modified accrual basis of
accounting.
Following the revenues and expenditures, the beginning and ending year cash and fund balance amounts
should be reconciled to verify that the figures on the Statement of Revenues and Expenditures are correct.
The main categories for revenue and expenditures are briefly described below.
REVENUES
Taxes
Current and delinquent taxes may be lumped into one figure on the Statement of Revenues and
Expenditures page.
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Previous Year Accruals
The amount of previous year accruals should include the previous year's non-apportioned taxes (taxes
collected at the close of the previous year that were receipted into the Road and Bridge Fund in the
current year), and the portion of previous years' delinquent taxes that were collected within the first 60
days of the current year.
Current Year Accruals
The amount of current year accruals should include the current year's non-apportioned taxes (taxes
collected at the close of the current year that will not be receipted into the Road and Bridge Fund until
the upcoming year), and the portion of the current year's delinquent taxes that is estimated will be
collected within the first 60 days of the upcoming year.
Intergovernmental Revenue
Intergovernmental revenues are revenues from other governments in the form of operating grants,
entitlements, shared revenues or payments in lieu of taxes. This includes the Real Estate Haca Credit,
Mobile Home Haca Credit, and Disparity Reduction Aid.
State Aid Regular Maintenance
The cash receipts amount for Regular Maintenance should include 90% of the current year's allotment
and 10% or less of the previous year's allotment, unless the county has a bond. The amount received in
the current year from previous years' allotments should be recorded in the second column as a reversal.
The receivable amount for the current year should be recorded as an accrual in the third column. The
receivable amount should match the amounts shown on the Financial Statement page and the
Receivables page.
State Aid Municipal Maintenance
The cash receipts amount for municipal maintenance generally includes the previous year's municipal
maintenance expenses up to the previous year's allotment amount, unless a portion of the allotment
was previously advanced.
The previous year accruals generally includes the amount received in the current year for previous years'
receivables. The current year accruals should include amounts not yet received for current year
expenses, up to the current year's allotment amount.
State Aid Regular Construction
The cash receipts amount includes cash received for regular construction projects, including
engineering, right of way, utility costs, and bond principal.
The amount of the current year's revenue earned for regular construction projects is equal to the
amount of work certified during the year. Previous year accruals should include amounts received in
the current year for work not yet certified or for work certified in previous years. Current year accruals
should include amounts not yet received or received in previous years for work certified in the current
year.
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State Aid Transfers (State Aid portion of funding for a federal construction project)
The county never receives State Aid funds for federal projects because the State Aid Office acts as an
agent for the county and disburses the funds directly to the contractor. Therefore, there is never any
cash receipts or previous year accruals. The current year's accrual is the amount transferred from the
State Aid Account(s) to the Agency Fund. This amount is obtained from the State Transfer Notice sent
by the State Aid Finance Office shortly after the transfer has been made, and can be verified from copies
of the ledger sheets sent by the State Aid Finance Office in January of the following year.
State Aid Municipal Construction
The same guidelines are followed for Municipal Construction as Regular Construction.
Town Bridge Construction
The same guidelines are followed for Town Bridge Construction as Regular Construction.
Bridge Bonding Construction
The same guidelines are followed for Bridge Bonding Construction as for Regular and Municipal
Construction, except that revenue earned cannot exceed the bridge bonding grant amount (i.e. the
ending modified accrual balance should be less than or equal to the grant amount).
Federal Aid Construction
The county never receives Federal Aid funds for federal aid construction projects because the State Aid
Office disburses the funds directly to the contractor. Therefore, there is never any cash receipts or
previous year accruals. The current year's accrual is obtained from copies of the ledger sheets sent by
the State Aid Finance Office in January of the upcoming year.
Town Road Allotment
If the highway department administers the town road allotment funds, the cash receipts amount is the
same as the town road allotment amount. Since there are no previous year or current year accruals, the
cash received is also the modified accrual balance amount. If the highway department does not
administer the town road allotment funds, the town road allotment is not shown on the Statement of
Revenues and Expenditures.
Charges For Materials And Services
Charges for materials and services is revenue earned from the sale of goods and/or services to other
departments, other governmental units, individuals and businesses.
Miscellaneous Revenue
Miscellaneous Revenues are revenues not classified within one of the other categories. Examples of
various accounts which may classify as miscellaneous revenue include interest on investments, sales of
supplies and materials and sale of used equipment.
Other Financing Sources
Other financing sources include governmental fund general long-term debt proceeds, amounts equal to
the present value of minimum lease payments arising from capital leases, proceeds from the sale of
general fixed assets and operating transfers in.
CHAPTER 18 – ANNUAL REPORT - SAMPLE
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EXPENDITURES
Expenditures is divided into four main categories - administration, maintenance, construction and
equipment maintenance and shop. Other categories may include material and services for resale,
unallocated expenditures, intergovernmental expenditures and debt service and other financing uses. The
categories are further divided into three subcategories - personal services, services and supplies and
capital outlay. The maintenance category may have an additional subcategory - contracts. The
construction category may have two additional subcategories - contracts and federal aid.
Unallocated Expenditures
Unallocated Expenditures include all costs that cannot be classified within one of the other categories.
Intergovernmental Expenditures
Intergovernmental expenditures are expenditures made by one level or unit of government to another
government in support of government activities administered by the recipient unit.
Debt Service
Debt Service includes interest and principal payments on general long-term debt.
Other Financing Uses
Other Financing Uses includes governmental fund operating transfers out (e.g. town road allotment)
and the amount of refunding bond proceeds deposited with the escrow agent.
Personal Services
Personal service expenditures pertain to employee salaries and/or wages and fringe benefits.
Services and Supplies
Services and Supplies expenditures pertain to the purchase of services and supplies.
Capital Outlay
Counties may classify equipment purchases as capital outlay or services and supplies. This may be
dependent on the dollar value of the equipment or if the equipment will be depreciated. Betterments
to fixed assets may be considered a capital outlay expense.
YEAR-END CASH RECONCILIATION
The beginning cash balance is the previous year's ending cash balance. The cash receipts amount is the
total from the "cash receipts" column under the revenues section. The cash disbursements amount is the
total from the "cash disbursements" column under the revenues section. The resulting ending cash
balance should equal the cash and pooled investments amount shown on the Financial Statement.
YEAR-END FUND BALANCE RECONCILIATION
The beginning fund balance is the previous year's ending fund balance. The revenues amount is the total
from the "modified accrual" column under the revenues section. The expenditures amount is the total
from the "modified accrual" column under the expenditures section. The resulting ending fund balance
should equal the total fund balance amount shown on the Financial Statement.
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SUMMARY OF EXPENDITURES
The Summary of Expenditures page summarizes some of the highway department's expenditures for the
year. The following types of expenditures should be included in this summary:
SNOW AND ICE CONTROL
Snow and ice control includes expenditures for snow removal, sanding and salting, and erection and
removal of snow fences.
Snow and ice control expenditures should equal the total of the snow and ice control costs for each
funding source on the Detailed Maintenance Costs by Funds page.
RIGHT OF WAY
Right of way includes expenditures for land purchases, improvements, easements, and moving and
relocating buildings and persons. (Utility relocation is not included).
Right of way expenditures should equal the total of the right-of-way costs from the Summary of
Construction Costs pages.
ENGINEERING
Engineering includes expenditures for field engineering, surveys, material testing, borings, preparation of
plans and related traffic studies.
Engineering expenditures should equal the total of the engineering costs from the Summary of
Construction Costs pages.
CONSTRUCTION
Construction includes expenditures for construction, reconstruction, additions and betterments.
Construction expenditures should equal the total of the construction costs from the Summary of
Construction Costs pages.
BUILDING AND EQUIPMENT (CAPITAL OUTLAY)
Building and equipment expenditures should equal the total of the capital outlay costs from the modified
accrual balance column on the Statement of Revenues and Expenditures pages.
NOTE: The expenditure amounts include all costs, including federal funds, unallocated expenses and
equipment rental charges, where applicable.
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SUMMARY OF MAINTENANCE COSTS BY FUNDS
The Summary of Maintenance Costs by Funds page summarizes the current year's maintenance costs by
funding sources. The funding sources include CSAH Regular - Regular, CSAH - Municipal and County Roads.
The costs are split into the four primary maintenance types - routine, repairs and replacements,
betterments and special work. (For more information regarding the classification of maintenance costs,
see the Maintenance Costing section in the State Aid Accounting Manual). The cost per mile is calculated
by dividing the specific maintenance cost by the total number of miles. Unallocated expenses and
adjustments to equalize depreciation are added to the maintenance costs to arrive at a sub-total. Bond
expenses and bond interest expenses, if any, are then added to the sub-total to obtain a grand total. The
total mileage and mileage proration percent are also reported for each funding source.
To calculate the proration percent for each funding source:
1. First, determine the total mileage for all funding sources by adding the total mileage amounts of
the separate funding sources.
2. Next, divide the total mileage of the specific funding source by the total mileage for all funding
sources (as calculated above). The result is the proration percent for that specific funding source.
The total proration percent for all funding sources should equal 100%.
The sub-total for all funding sources should correspond to the grand total for CSAH Regular - Regular funds
on the Detailed Maintenance Costs by Funds page. The grand total for all funding sources should
correspond to the sub-total for CSAH Regular - Regular funds on the Summary of Maintenance Costs by
Funds page.
The Regular Maintenance and Municipal Maintenance costs should be identical to the amounts shown on
the Annual Maintenance Expenditure Report. (An Annual Maintenance Expenditure Report form is shown
in the State Aid Operations Manual).
DETAILED MAINTENANCE COSTS BY FUNDS
The Detailed Maintenance Costs by Fund page details the current year's maintenance costs by funding
sources. The funding sources include CSAH - Regular, CSAH - Municipal and County Roads. The costs are
split into subdivisions of the four primary maintenance types: routine, repairs and replacements,
betterments and special work. (For more information regarding the classification of maintenance costs,
see the Maintenance Costing section in the State Aid Accounting Manual).
SUMMARY OF MAINTENANCE COSTS BY ROADS - CSAH REGULAR
The Summary of Maintenance Costs by Roads page summarizes the current year's regular maintenance
costs by roads. The maintenance costs are split into the four primary maintenance types - routine, repairs
and replacements, betterments and special work. The maintenance costs are added together to arrive at
a sub-total. The prorated costs are then added to the sub-total to obtain a grand total.
The sub-total for all maintenance types should correspond to the grand total for CSAH - Regular funds on
the Detailed Maintenance Costs by Funds page. The grand total for all maintenance types should
correspond to the sub-total for CSAH - Regular funds on the Summary of Maintenance Costs by Funds
page.
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DETAILED ROUTINE MAINTENANCE COSTS BY ROADS - CSAH REGULAR (OPTIONAL PAGE)
The Detailed Routine Maintenance Costs by Roads page details the current year's routine regular
maintenance costs by roads. The costs are divided into the specific types of routine maintenance -
smoothing surface, minor surface maintenance, roadside and drainage, brush and weed control, snow
and ice control and traffic services.
The total costs for all maintenance types should correspond to the total routine maintenance costs on the
Summary of Maintenance Costs by Roads page for CSAH - Regular funds.
SUMMARY OF MAINTENANCE COSTS BY ROADS - CSAH MUNICIPAL
The Summary of Maintenance Costs by Roads page summarizes the current year's municipal maintenance
costs by roads. The maintenance costs are split into the four primary maintenance types - routine, repairs
and replacements, betterments and special work. The maintenance costs are added together to arrive at
a sub-total. The prorated costs are then added to the sub-total to obtain a grand total.
The sub-total for all maintenance types should correspond to the grand total for CSAH Regular - Municipal
funds on the Detailed Maintenance Costs by Funds page. The grand total for all maintenance types should
correspond to the sub-total for CSAH Regular - Municipal funds on the Summary of Maintenance Costs by
Funds page.
DETAILED ROUTINE MAINTENANCE COSTS BY ROADS - CSAH MUNICIPAL (OPTIONAL PAGE)
The Detailed Routine Maintenance Costs by Roads page details the current year's routine municipal
maintenance costs by roads. The costs are divided into the specific types of routine maintenance -
smoothing surface, minor surface maintenance, roadside and drainage, brush and weed control, snow
and ice control and traffic services.
The total costs for all maintenance types should correspond to the total routine maintenance costs on the
Summary of Maintenance Costs by Roads page for CSAH Regular - Municipal funds.
SUMMARY OF MAINTENANCE COSTS BY ROADS - COUNTY ROADS
The Summary of Maintenance Costs by Roads page summarizes the current year's county road costs by
roads. The maintenance costs are split into the four primary maintenance types - routine, repairs and
replacements, betterments and special work. The maintenance costs are added together to arrive at a
sub-total. The prorated costs are then added to the sub-total to obtain a grand total.
The sub-total for all maintenance types should correspond to the grand total for County Road funds on
the Detailed Maintenance Costs by Funds page. The grand total for all maintenance types should
correspond to the sub-total for County Road funds on the Summary of Maintenance Costs by Funds page.
CHAPTER 18 – ANNUAL REPORT - SAMPLE
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DETAILED ROUTINE MAINTENANCE COSTS BY ROADS - COUNTY ROADS (OPTIONAL PAGE)
The Detailed Routine Maintenance Costs by Roads page details the current year's routine county
maintenance costs by roads. The costs are divided into the specific types of routine maintenance -
smoothing surface, minor surface maintenance, roadside and drainage, brush and weed control, snow
and ice control and traffic services.
The total costs for all maintenance types should correspond to the total routine maintenance costs on the
Summary of Maintenance Costs by Roads page for County Road funds.
SUMMARY OF CONSTRUCTION COSTS - CSAH REGULAR
The Summary of Construction Costs page summarizes the current year's regular construction costs by
projects.
The costs are divided into three types - construction, right-of-way and engineering. (Construction costs
may be further split into contract costs and county force costs, if preferred). Each project's costs should
match the current year's costs shown on the corresponding Statement of Construction Costs page.
The construction costs include federal funds, bridge bonding funds, and other funding sources (e.g.,
reimbursements from other governmental agencies, businesses, etc.). Federal and bridge bonding
amounts included in a project's costs should be subtracted from the total to arrive at a revised total. This
revised total should then match the amount on the Summary of County Highway Information page.
Both federal projects and non-federal projects should be included on this page.
STATEMENT OF CONSTRUCTION COSTS - CSAH REGULAR
The Statement of Construction Costs page summarizes the total costs and projected funding of a regular
construction project as of 12/31/XX. A separate page should be included for each project that was open
as of 12/31/XX or that was finalized during the year.
A brief description of the project should be specified at the top of the page, including the project number,
CSAH Regular number, location, length of construction, type of construction and percentage of
completion.
The project's costs are divided into three types of costs - construction, right-of-way, and engineering.
(Further breakdown is optional). The costs are also categorized as previous years' costs and current year's
costs. All costs are reported, including unallocated expenses and equipment rental charges, if applicable.
The current year's total costs should correspond to the amount shown on the Summary of Construction
Costs page.
The project's costs are also divided into the projected funding sources. The costs are again categorized as
previous years' costs and current year's costs. All funding sources are reported, including federal funds,
bridge bonding funds, and reimbursements from other governmental agencies, businesses, etc.
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SUMMARY OF CONSTRUCTION COSTS - CSAH MUNICIPAL
The Summary of Construction Costs page summarizes the current year's municipal construction costs by
projects.
The costs are divided into three types - construction, right-of-way and engineering. (Construction costs
may be further split into contract costs and county force costs, if preferred). Each project's costs should
match the current year's costs shown on the corresponding Statement of Construction Costs page.
Construction costs include federal funds, bridge bonding funds, and other funding sources (e.g.,
reimbursements from other governmental agencies, businesses, etc.). Federal and bridge bonding
amounts included in a project's costs should be subtracted from the total to arrive at a revised total. This
revised total should then match the amount on the Summary of County Highway Information page.
Both federal projects and non-federal projects should be included on this page.
STATEMENT OF CONSTRUCTION COSTS - CSAH MUNICIPAL
The Statement of Construction Costs page summarizes the total costs of a municipal construction project
and projected funding as of 12/31/XX. A separate page should be included for each project that was open
as of 12/31/XX or that was finalized during the year.
A brief description of the project should be specified at the top of the page, including project number,
CSAH Regular number, location, length of construction, type of construction and percentage of
completion.
The project's costs are divided into three types of costs - construction, right-of-way, and engineering.
(Further breakdown is optional). The costs are also categorized as previous years' costs and current year's
costs. All costs are reported, including unallocated expenses and equipment rental charges, if applicable.
The current year's total costs should correspond to the amount shown on the Summary of Construction
Costs page.
The project's costs are also divided into the projected funding sources. The costs are again categorized as
previous years' costs and current year's costs. All funding sources are reported, including federal funds,
bridge bonding funds, and reimbursements from other governmental agencies, businesses, etc.
SUMMARY OF CONSTRUCTION COSTS - COUNTY ROADS
The Summary of Construction Costs page summarizes the current year's county roads construction costs
by projects.
The costs are divided into three types - construction, right-of-way and engineering. (Construction costs
may be further split into contract costs and county force costs, if preferred). Each project's costs should
match the current year's costs shown on the corresponding Statement of Construction Costs page.
Construction costs include federal funds, bridge bonding funds, and other funding sources (e.g.,
reimbursements from other governmental agencies, businesses, etc.). Federal and bridge bonding
amounts included in a project's costs should be subtracted from the total to arrive at a revised total. This
revised total should then match the amount on the Summary of County Highway Information page.
Both federal projects and non-federal projects should be included on this page.
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STATEMENT OF CONSTRUCTION COSTS - COUNTY ROADS
The Statement of Construction Costs page summarizes the total costs and projected funding of a county
construction project as of 12/31/XX. A separate page should be included for each project that was open
as of 12/31/XX or that was finalized during the year.
A brief description of the project should be specified at the top of the page, including project number,
CSAH number, location, length of construction, type of construction and percentage of completion.
The project's costs are divided into three types of costs - construction, right-of-way, and engineering
(further breakdown is optional). The costs are also categorized as previous years' costs and current year's
costs. All costs are reported, including unallocated expenses and equipment rental charges, if applicable.
The current year's total costs should correspond to the amount shown on the Summary of Construction
Costs page.
The project's costs are also divided into the projected funding sources. The costs are again categorized as
previous years' costs and current year's costs. All funding sources are reported, including federal funds,
bridge bonding funds, and reimbursements from other governmental agencies, businesses, etc.
STATE AID BONDS
The State Aid Bonds page summarizes the status of a State Aid bond as of 12/31/XX by disclosing the
projects that have been applied toward the bond as of that date. A separate page should be included for
each bond that has a balance greater than zero. If the highway department does not have any bonds, it
should be stated as such on the page.
The bond's issue amount and issue date should be specified at the top of the page. Following this, there
are typically five columns, which contain project information and a running bond fund balance. The
information required for each project includes the project number, whether the project has been
finalized, the date the costs were applied toward the bond, and the amount of the costs applied toward
the bond.
The information provided on this page should correspond to the bond information in the State Aid System.
ESTIMATED BUDGET
The Estimated Budget page shows the estimated revenues and expenditures passed by the county board
for the upcoming year. Although the format of this page is left to the discretion of the county, the format
shown in the sample annual report is the one most prevalently used by counties.
CHAPTER 19 – ANNUAL SUMMARY OF HIGHWAY INFORMATION
214
CHAPTER 19 ANNUAL SUMMARY OF HIGHWAY INFORMATION SAMPLE
CHAPTER 19 – ANNUAL SUMMARY OF HIGHWAY INFORMATION
215
INSTRUCTIONS
One copy of the Annual Summary of Highway Information is due in the State Aid Finance Office by August 1st of
the following year, the District State Aid Engineer (D.S.A.E), must approve this form so remember to allow time
for processing. When the report is received, State Aid Finance will final the county’s maintenance accounts and
distribute remaining funds due (if any) or transfer unused funds to the appropriate construction account.
The Annual Summary of Highway Information includes the construction and maintenance costs incurred during
the calendar year for the CSAH Regular, CSAH Municipal and County Highway Systems. The County Engineer and
the District State Aid Engineer must approve this report.
Amounts are totaled and reported by construction, maintenance, unallocated, and adjustment to equalize
depreciation.
The Needs Manager will contact the County Engineer if the Signal Optimization applies to your county. The County
Engineer and DSAE, both must sign Signal Optimization Certification section.
Enter the total mileage for each road system, CSAH Regular, CSAH Municipal and County.
TOTAL MILEAGE
Enter the total mileage for each road system, CSAH Regular, CSAH Municipal, and County.
CONSTRUCTION
Allocation Enter the State Allocation for the reporting year for CSAH Regular and CSAH Municipal Construction.
State Bond Interest Enter the amount paid to the county for Bond Interest paid from Regular Maintenance.
Total Cost Enter the total costs for federal (SP) projects, non-federal (SAP) projects and county (CP) projects for each road
system. Costs should include construction, engineering, ROW, FA and other misc. costs associated with each
project. Federal Funds, State Bonding Funds and Special Account Funds (Town Bridge, LRIP, State Park,
Turnback, Disaster, etc.) should be subtracted from the total cost reported. Total cost should not be reduced
by any reimbursements received from other sources.
MAINTENANCE
Allocation Enter the State Allocation for the reporting year for CSAH Regular and CSAH Municipal Maintenance.
Total Cost Enter the maintenance costs for CSAH Regular, CSAH Municipal and County Road Systems. These amounts
should include all costs, unallocated and adjustment to equalize depreciation.
UNALLOCATED COSTS
Costs are distributed to their appropriate cost centers during the year-end process, (see Chapter 10). The
remaining Unallocated Costs are distributed to the county road systems by mileage. The amounts spread to the
CSAH Regular, CSAH Municipal and County Systems are included in the Annual Summary of Highway Information.
CHAPTER 19 – ANNUAL SUMMARY OF HIGHWAY INFORMATION
216
ADJUSTMENT TO EQUALIZE DEPRECIATION
This is obtained from the Fixed Asset Report.
Total Rental Earned
minus (Total Equipment Depreciation + Total Equipment Costs)
equal Adjustment to Equalize Depreciation
A negative amount in the Adjustment to Equalize indicates Total Rental Earned was less than the actual costs for
the equipment during the year. Rental rates may need to be increased to better reflect the cost during the year.
Maintenance costs will be increased by this amount to equalize the cost for a rate that was too low.
A positive amount in the Adjustment to Equalize indicates the Total Rental Earned was greater than the actual
costs for the equipment during the year. Rental rates may need to be decreased to better reflect the cost during
the year. Maintenance costs will be decreased by this amount to equalize the cost for a rate that was too high.
The Adjustment to Equalize Depreciation is distributed to the county road systems by mileage. The amount for
the CSAH Regular, CSAH Municipal and County Systems are included in the Annual Summary of Highway
Information.
APPENDIX
A
APPENDIX
NOTICE OF ANNUAL APPORTIONMENT
APPENDIX
B
AGENCY FUND LEDGER – FEDERAL AID PROJECTS
APPENDIX
C
AGENCY FUND LEDGER (CONTINUED)
INDEX
1
Accounts Needed 13, 30, 39, 40, 48, 59, 69, 82, 88, 110
Accounts Payable 193
Accounts Payable/Other Liabilities 198
Accounts Receivable 192, 196
Accrued Interest Receivable 192, 196
Advance Payment for State Aid Funds Received for the
Project 60
Agency Fund - Federal Aid Projects B
ANNUAL REPORT - INSTRUCTIONS 191
Brief of Activities, Comments and Recommendations
191
Detailed Maintenance Costs by Funds 209
Detailed Routine Maintenance Costs by Roads - County
Roads 211
Detailed Routine Maintenance Costs by Roads - CSAH
Municipal 210
Detailed Routine Maintenance Costs by Roads - CSAH
Regular 210
Estimated Budget 213
Financial Statement 192
Fixed Assets 200
Fixed Assets Betterments 202
Inventory of Materials and Supplies 198
Land nad Buildings 203
Letter of Transmittal 191
Liabilities and Fund Balance Reserves 198
Liabilities and Fund Balance Reserves Addendum 200
Receivables 195
Receivables Addendum 197
State Aid Bonds 213
Statement of Construction Costs - CSAH Municipal 212
Statement of Construction Costs - CSAH Regular 211
Statement of Costruction Costs - County Roads 213
Summary of Construction Costs - CSAH Municipal 212
Summary of Construction Costs - CSAH Regular 211
Summary of Constrution Costs - County Roads 212
Summary of County Highway Information 191
Summary of Expenditures 208
Summary of Maintenance Costs by Funds 209
Summary of Maintenance Costs by Roads - County
Roads 210
Summary of Maintenance Costs by Roads - CSAH
Municipal 210
Summary of Maintenance Costs by Roads - CSAH
Regular 209
Town Road Allotment 197
Year-End Cash Reconciliation 207
Year-End Fund Balance Reconciliation 207
ANNUAL REPORT – INSTRUCTIONS
Statement of Revenues and Expenditures 204
ANNUAL REPORT - SAMPLE
Brief of Activities, Comments and Recommendations
155
Cover Page 151
Detailed Maintenance Costs by Funds 171
Detailed Routine Maintenance Costs by Roads - County
Roads 177
Detailed Routine Maintenance Costs by Roads - CSAH
Municipal 175
Detailed Routine Maintenance Costs by Roads - CSAH
Regular 173
Estimated Budget 190
Financial Statement 156
Fixed Asset Betterments 164
Fixed Assets 163
Index of Annual Report 153
Inventory of Materials and Supplies 160
Land and Buildings 165
Letter of Transmittal 152
Liabilities and Fund Balance Reserves 161
Liabilities and Fund Balance Reserves Addendum 162
Receivables 157
Receivables Addendum 158
State Aid Bonds - CSAH Regular 189
Statement of Construction Costs - County Roads 186
Statement of Construction Costs - CSAH Municipal 183
Statement of Construction Costs - CSAH Regular 179
Statement of Revenues and Expenditures 166
Summary of Construction Costs - County Roads 185
Summary of Construction Costs - CSAH Municipal 182
Summary of Construction Costs - CSAH Regular 178
Summary of County Highway Information 154
Summary of Expenditures 169
Summary of Maintenance Costs by Funds 170
Summary of Maintenance Costs by Roads - County
Roads 176
Summary of Maintenance Costs by Roads - CSAH
Municipal 174
Town Road Allotment 159
ASSET LISTING 110
ASSETS (Financial Statement) 192
Accounts Receivable 192
Accrued Interest Receivable 192
Bridge Bonding Construction Receivable 193
Cash and Pooled Investments 192
Delinquent Taxes 192
Due From Counties 193
Due From Other Funds 192
Due From Other Governments 193
Due From Townships/Municipalities 193
Inventories 193
Petty Cash and Change Funds 192
State Aid Allotments 193
State Aid Regular, Municipal and Town Bridge
Construction Receivables 193
Taxes Receivable 192
Unapportioned Taxes 192
Averaging 127
BETTERMENTS 112, 131
Mc 1 New Culverts, Guard Rails and New Tiling 131
Mc 2 Cuts and Fills 131
Mc 3 Sodding and Seeding 131
Mc 4 Bituminous Treatment 131
Mc 5 Overlays 131
BOND ACCOUNT
Narrative 87
bond interest 87, 100, 138
Bridge Bonding Construction 206
BRIDGE BONDING CONSTRUCTION ACCOUNT
Examples 52
Bridge Bonding Construction Receivable 197
Brief of Activities, Comments and Recommendations 155,
191
Brudge Bonding Construction Receivable 193
INDEX
2
Building and Equipment (Capital Outlay) 208
BUY BACKS 116
Capital Outlay 207
Cash and Pooled Investments 192
Chapter 8820.1200, Subp.2 1
Charges for Materials and Services 206
COFARS 71, 109
Compensated Absences 195, 199
Composite Methods 121
Construction 208
CONSTRUCTION COSTING
Bridges and Culverts 133
Engineering 133
Highways 133
Right of Way 133
Special Work 133
Contracts Payable 194, 199
Costs with Federal Aid Funds 70
Costs Without Federal Aid Funds 71
Cover Page 151
Current Year Accruals 205
Debt Service 207
Deferred Revenue 194, 199
DELEGATED CONTRACT PROCESS(COUNTY
ADMINISTERS CONTRACT 58
Delegated Contracts 57
Delinquent Taxes 192, 194, 196, 199
Department II
DEPRECIATION 112
Designated 195
Detailed Maintenance Costs by Funds 171, 209
Detailed Routine Maintenance Costs by Roads - County
Roads 177, 211
Detailed Routine Maintenance Costs by Roads - CSAH
Municipal 175, 210
Detailed Routine Maintenance Costs by Roads - CSAH
Regular 173, 210
Determining Major General Infrastructure Assets 120
Due From Counties 193, 196
Due From Other Funds 192, 196
Due From Other Governments 193, 196
Due From Townships/Municipalities 193, 196
Due to Counties 194
Due to Other Funds 194, 198
Due to Other Governments 194
Due to Other Governments (Goods and Services) 199
Due to Other Governments (Other) 199
Due to State Aid - Overpayments 194, 199
Due to Townships/Municipalities 194
Engineering 208
EQUIPMENT RENTAL, LEASE & LEASE BACK 113
Establishing Capitalization at Transition 120
Estimated Budget 190, 213
Estimated Historical Cost – Current Replacement Cost 120
Estimated Historical Cost – Existing Information 121
Example: Calculating Depreciation 121
Example: Estimated Historical Cost – Current Replacement
Cost 121
Example: Estimated Historical Cost – Existing Information
121
Examples 52, 65, 77, 95
EXPENDITURES (Statement of Revenues and
Expenditures) 207
Capital Outlay 207
Debt Service 207
Intergovernmental Expenditures 207
Other Financing Uses 207
Personal Services 207
Services and Supplies 207
Unallocated Expenditures 207
Federal Aid Construction 206
FEDERAL AID CONSTRUCTION - DELEGATED
Accounts Needed 59
Examples 65
FEDERAL AID CONSTRUCTION – NON-DELEGATED
Accounts Needed 69
Examples 77
Narrative 69
FIFO 127
Final Payment to Contractor 61
Financial Statement 156
FINANCIAL STATEMENT 192
Assets 192
Fund Balance 195
Liabilities 193
Fixed Assets 163, 200
FIXED ASSETS
Accounts Needed 110
Narrative 109
Presentation in Annual Report 117
Purchases 111
Useful Life 118
Fixed Assets Betterments 164, 202
Fund II
FUND BALANCE (Financial Statement) 195
Designated 195
Reserved 195
Undesignated 195
Unreserved 195
GASB 34 119
Highway Accounting II
Index of Annual Report 153
INFRASTRUCTURE CAPITALIZATION
Initial Capitalization of General Infrastructure Assets
120
Modified Approach for Reporting Infrastructure 122
Reporting Capital Assets 119
Reporting General Infrastructure Assets at Transition
119
INITIAL CAPITALIZATION OF GENERAL
INFRASTRUCTURE ASSETS 120
Composite Methods 121
Determining Major General Infrastructure Assets 120
Estimated Historical Cost - Current Replacement Cost
120
Estimated Historical Cost - Existing Information 121
Estimating Capitalization at Transition 120
Example
Calculating Depreciation 121
Estimated Historical Cost - Current Replacement
Cost 121
Estimated Historical Cost - Existing Information 121
Methods of Calculating Depreciation 121
Intergovernmental Expenditures 207
Intergovernmental Revenue 205
Inventories 193
Inventory 126
Inventory Expenses Versus Expenditures 127
INDEX
3
INVENTORY MANAGEMENT
Inventory Expenses Versus Expenditures 127
Inventory of Material and Supplies
Field Materials and Supplies 198
Motor Fuels, Lubricants, Fluids 198
Parts and Replacements 198
Inventory of Materials and Supplies 160, 198
INVENTORY VALUATION METHODS 126
Averaging 127
FIFO 127
LIFO 127
Land and Buildings 165, 203
Letter of Transmittal 152, 191
LIABILITIES (Financial Statement) 193
Accounts Payable 193
Compensated Absences 195
Constracts Payable 194
Deferred Revenue 194
Delinquent Taxes 194
Due to Counties 194
Due to Other Funds 194
Due to Other Governments 194
Due to State Aid - Overpayments 194
Due to Townships/Municipalities 194
Prepaid Taxes 195
Salaries Payable 194
State Aid Allotments 194
LIABILITIES (Liabilities and Fund Balance Reserves) 198
Accounts Payable 198
Accounts Payable/Other Liabilities 198
Compensated Absences 199
Contracts Payable 199
Deferred Revenue 199
Delinquent Taxes 199
Due to Other Funds 198
Due to Other Governments (Goods and Services) 199
Due to Other Governments (Other) 199
Due to State Aid - Overpayments 199
Prepaid Taxes 199
Salaries Payable 198
State Aid Allotments 199
Liabilities and Fund Balance Reserves 161, 198
Fund Balance 200
LIABILITIES AND FUND BALANCE RESERVES
Liabilities 198
Liabilities and Fund Balance Reserves Addendum 162, 200
LIFO 127
LOCAL AGENCY BOND 81
LOCAL AGENCY BONDS
Accounts Needed 82
Narrative 81
Sequence of Events 82
Local Obligation 69
MAINTENANCE COSTING
Betterments 131
Repairs and Replacements 130
Routine Maintenance 129
Special Work 132
Methods of Calculating Depreciation 121
Minnesota townships 3
MINOR EQUIPMENT 110
Miscellaneous Revenue 206
Modified Approach for Reporting Infrastructure 122
Municipal Construction 99
Municipal Maintenance 100, 101
MUNICIPAL MAINTENANCE ACCOUNT
Accounts Needed 13
Municipal Maintenance Allotment 2
Narrative 30, 39, 48, 55, 69, 81, 87, 90, 98, 101, 109
Notice of Annual Apportionment 1, 2
Notice of State Aid Annual Apportionment 3
Object II
Other Financing Sources 206
Other Financing Uses 207
overpayment 30, 63
Personal Services 207
Petty Cash and Change Funds 192
Prepaid Taxes 195, 199
Presentation in Annual Report 117
Previous Year Accruals 205
Project Development, Right of Way Reimbursement, Etc.
60, 70
Project is Approved 60
Project is Finaled 61, 73
Purchases 111
Receivables 157
RECEIVABLES 195
Accounts Receivable 196
Accrued Interest Receivable 196
Bridge Bonding Construction Receivable 197
Delinquent Taxes 196
Due From Counties 196
Due From Other Funds 196
Due From Other Governments 196
Due From Other Townships/Municipalities 196
State Aid Regular and Municipal Maintenance
Receivables 197
State Aid Regular, Municipal and Town Bridge
Construction Receivables 197
Taxes Receivable 196
Unapportioned Taxes 196
Receivables Addendum 158, 197
recognize revenue 6, 7, 8, 14, 15, 22, 32, 92, 93, 140
recognize unpaid balance 6, 7, 14
RECONCILING ACCOUNTS TO STATE AID STATUS
REPORTS 98
Municipal Construction 99
Municipal Maintenance 100
Narrative 98
Regular Maintenance 99, 100
Town Bridge Construction 99
RECONCILING THE DEFERRED REVENUE
ACCOUNTS 101
Municipal Maintenance 101
Narrative 101
Regular Maintenance 101
Regular, Municipal and Town Bridge Construction 101
Regular Construction 7, 8, 9, 15, 16, 89, 93, 99
Regular Construction Allotment 9, 16
Regular Maintenance 99, 100, 101
Regular Maintenance Allotment 1, 7, 9, 14, 15, 16, 100, 101
Regular, Municipal and Town Bridge Construction 101
RENTAL RATES 113
REPAIRS AND REPLACEMENTS 130
Reporting Capital Assets 119
Reporting General Infrastructure Assets at Transition 119
Reserved 195
INDEX
4
REVENUES (Statement of Revenues and Expenditures)
204
Bridge Bonding Construction 206
Charges for Materials and Services 206
Current Year Accruals 205
Federal Aid Construction 206
Intergovernmental Revenue 205
Miscellaneous Revenue 206
Other Financing Sources 206
Previous Year Accruals 205
State Aid Municipal Construction 206
State Aid Municipal Maintenance 205
State Aid Regular Construction 205
State Aid Regular Maintenance 205
State Aid Transfers 206
Taxes 204
Town Bridge Construction 206
Town Road Allotment 206
Right of Way 208
ROUTINE MAINTENANCE 129
Ma 1 Smothing Surface 129
Ma 3 Roadside and Drainage 129
Ma 5 Snow and Ice Control 129
Salaries Payable 194, 198
Sequence of Events 30, 82, 88, 91, 128
Services and Supplies 207
Snow and Ice Control 208
Special Considerations 30
SPECIAL TOWN BRIDGE AALLOTMENT
Narrative 39
SPECIAL TOWN BRIDGE ALLOTMENT 39
Accounts Needed 39
SPECIAL WORK 132
Md 1 Dust Treatments 132
Md 2 132
Md 3 132
Md 4 Construction of Bike Lanes 132
Md 5 Construction of Turn Lanes 132
Md 6 Special Agreements 132
STATE AID ADVANCE 90
Narrative 90
State Aid Allotments 193, 194, 199
State Aid Bonds 213
State Aid Bonds - CSAH Regular 189
State Aid Municipal Construction 206
State Aid Municipal Maintnenance 205
State Aid Payment 32, 98, 99, 100
State Aid Regular and Municipal Maintenance Receivables
197
State Aid Regular Construction 205
State Aid Regular Maintenance 205
State Aid Regular, Municipal and Town Bridge
Construction Receivables 197
State Aid Transfer Notice 69
State Aid Transfers 206
State transportation bonds
Accounts Needed 48
STATE TRANSPORTATION BONDS
Narrative 48, 55
Statement of Construction Costs - County Roads 186, 213
Statement of Construction Costs - CSAH Municipal 183,
212
Statement of Construction Costs - CSAH Regular 179, 211
Statement of Revenues and Expenditures 166
STATEMENT OF REVENUES AND EXPENDITURES
204
Expenditures 207
Revenues 204
Summary of Construction Costs - County Roads 185, 212
Summary of Construction Costs - CSAH Municipal 182,
212
Summary of Construction Costs - CSAH Regular 178, 211
Summary of County Highway Information 154, 191
Summary of Expenditures 169
SUMMARY OF EXPENDITURES 208
Building and Equipment (Capital Outlay) 208
Construction 208
Engineering 208
Right of Way 208
Snow and Ice Control 208
Summary of Maintenance Cost by Roads - CSAH Regular
209
Summary of Maintenance Costs by Funds 170, 209
Summary of Maintenance Costs by Roads - County Roads
176, 210
Summary of Maintenance Costs by Roads - CSAH
Municipal 174, 210
Taxes 204
Taxes Receivable 192, 196
Town Bridge Allotment 197
TOWN BRIDGE ALLOTMENT 30
Town Bridge Construction 32, 99, 206
TOWN BRIDGE CONSTRUCTION ACCOUNT
Accounts Needed 30
Narrative 30
Sequence of Events 30
Special Considerations 30
Town Road Allotment 3, 159, 206
townships 3, 57
TRADITIONAL PROJECTS (MN/DOT ADMINISTERS
CONTRACT 69 transfer 7, 8, 9, 15, 16, 98
TRANSPORTATION REVOLVING LOAN FUND 87
Accounts Needed 88
Sequence of Events 88
Unallocated Expenditures 207
Unapportioned Taxes 192, 196
Undesignated 195
Unreserved 195
Useful Life 118
Work Begins on the Project 60
Year End Adjustments 71
Year-End Cash Reconciliation 207
Year-End Fund Balance Reconciliation 207
