Capital Projects Fund Accounting WASBO Annual Conference 2006 Presented by Christie Hazlett, OSPI,...

Capital Projects Fund Capital Projects Fund AccountingAccounting

WASBO Annual Conference 2006 WASBO Annual Conference 2006 Presented by Christie Hazlett, OSPI, Presented by Christie Hazlett, OSPI, Supervisor School District and ESD Supervisor School District and ESD

AccountingAccounting

Capital Projects FundCapital Projects Fund

A Governmental type fund.A Governmental type fund. It is used to account for the acquisition of It is used to account for the acquisition of

financial resources to be used for construction financial resources to be used for construction of major capital facilities (other than those of major capital facilities (other than those financed by proprietary funds and trust funds). financed by proprietary funds and trust funds). GASB Cod. Sec 1100.103a[3].GASB Cod. Sec 1100.103a[3].


School Districts in the state of Washington School Districts in the state of Washington have two funds considered Capital Project have two funds considered Capital Project funds. Can you name them?funds. Can you name them?


Transportation Vehicle FundTransportation Vehicle Fund

How is the CPF financed?How is the CPF financed?

Generally from proceeds of the sale of bonds.Generally from proceeds of the sale of bonds. Voter approved bond issues – proposition must Voter approved bond issues – proposition must

include a description of the projects for which the include a description of the projects for which the money is being raised.money is being raised.

RCW 28A.530.010 authorizes School Districts to RCW 28A.530.010 authorizes School Districts to issue bonds for certain capital projects.issue bonds for certain capital projects.

The acquisition of school buses is not a capital project; The acquisition of school buses is not a capital project; therefore, bonds issued pursuant to this RCW cannot be therefore, bonds issued pursuant to this RCW cannot be used to acquire school buses.used to acquire school buses.

State matching revenues.State matching revenues.

Special Levies.Special Levies.

What is the focus of CPF What is the focus of CPF Accounting?Accounting?

Modified Accrual Basis (except cash basis Modified Accrual Basis (except cash basis districts).districts). Earned, measurable, and Earned, measurable, and availableavailable (same for (same for

all governmental fund types).all governmental fund types). Accrual basis – Earned and measurable only.Accrual basis – Earned and measurable only.

Sources and uses available resources.Sources and uses available resources. Amounts are recorded as revenues or other Amounts are recorded as revenues or other

financing sources when they are both financing sources when they are both measurable and available.measurable and available.

What are the allowable What are the allowable expenditures in the CPF? expenditures in the CPF?

Revenue source: Sale of Bonds.Revenue source: Sale of Bonds. Restricted to Restricted to sitessites and and buildingsbuildings as authorized by law as authorized by law

or as necessary or proper to carry out the function of or as necessary or proper to carry out the function of a school district.a school district.

Improvement of energy efficiency and installation of Improvement of energy efficiency and installation of energy systems and components.energy systems and components.

Structural changes and additions to buildings and Structural changes and additions to buildings and sites. sites.

The purchase of initial equipment as defined in this The purchase of initial equipment as defined in this section is also allowable.section is also allowable.

What are the allowable What are the allowable expenditures in the CPF?expenditures in the CPF?

Revenue Source: Special Levies.Revenue Source: Special Levies. Same purposes as bond proceeds.Same purposes as bond proceeds. Major renovations of buildings.Major renovations of buildings. Renovation and rehabilitation of playfields.Renovation and rehabilitation of playfields. Costs associated with implementing technology Costs associated with implementing technology

systems, facilities and projects, including acquiring systems, facilities and projects, including acquiring hardware, licensing software, and on-line applications hardware, licensing software, and on-line applications and training related to the installation of the foregoing.and training related to the installation of the foregoing.

Additional major items of equipment and furniture Additional major items of equipment and furniture (RCW 28A.320.330).(RCW 28A.320.330).

The resolution approved by the voters authorizing the special The resolution approved by the voters authorizing the special levy must include the purpose of raising the moneys.levy must include the purpose of raising the moneys.


Revenue Source: Investment earnings.Revenue Source: Investment earnings. Investment earnings from bond proceeds and Investment earnings from bond proceeds and

the proceeds from special levies are restricted the proceeds from special levies are restricted to the same purposes.to the same purposes.

The purchase of initial equipment is also The purchase of initial equipment is also allowable.allowable.


Revenue Source: Insurance Proceeds.Revenue Source: Insurance Proceeds. Insurance proceeds that represent Insurance proceeds that represent

reimbursement for loss of a building and reimbursement for loss of a building and contents shall be deposited to the CPF. contents shall be deposited to the CPF.

Insurance proceeds for business interruption Insurance proceeds for business interruption insurance shall be credited to the general insurance shall be credited to the general fund.fund.

Expenditures for the replacement of the Expenditures for the replacement of the building and contents shall be expended from building and contents shall be expended from the CPF. the CPF.


Revenue Source: State Apportionment.Revenue Source: State Apportionment. State apportionment may be used for the State apportionment may be used for the

same purposes as special levies and bond same purposes as special levies and bond proceeds.proceeds.

Revenue Source: Sale of Real Property.Revenue Source: Sale of Real Property. The sale of real property may be used for any The sale of real property may be used for any

legal purpose of the CPF.legal purpose of the CPF.


Revenue Source: Lease, Sale, or Rental Revenue Source: Lease, Sale, or Rental of Surplus Property.of Surplus Property. Expenditures necessary to transact the sale Expenditures necessary to transact the sale

of real estate or the lease, sale, and/or rental of real estate or the lease, sale, and/or rental of surplus property are charged to the CPF.of surplus property are charged to the CPF.

Include attorney fees, sales commissions, and Include attorney fees, sales commissions, and appraisal fees.appraisal fees.

What are Capital Outlay What are Capital Outlay Expenditures?Expenditures?

Those expenditures which result in the Those expenditures which result in the acquisition of capital assets or additions to acquisition of capital assets or additions to capital assets:capital assets: LandLand Existing buildingsExisting buildings Improvement to groundsImprovement to grounds Construction of buildingsConstruction of buildings Additions to buildingsAdditions to buildings RemodelingRemodeling Initial equipmentInitial equipment

What Other Items are considered What Other Items are considered Capital Outlay in the CPF?Capital Outlay in the CPF?

Facilities to house students during the Facilities to house students during the construction or remodeling of a school construction or remodeling of a school building.building.

Legal fees for capital projects.Legal fees for capital projects.

Election costs upon passage of the levy.Election costs upon passage of the levy. Failed levy election costs are charged to the Failed levy election costs are charged to the

GF, however, the CPF may reimburse the GF GF, however, the CPF may reimburse the GF for these expenditures if the levy passes at a for these expenditures if the levy passes at a later time within the same fiscal period.later time within the same fiscal period.

Are repair charges charged to the Are repair charges charged to the CPF?CPF?

Typically no.Typically no. Repairs for building structures that do not add Repairs for building structures that do not add

to existing facilities are recorded in the GF.to existing facilities are recorded in the GF. Rule of thumb, if changes involve roof, Rule of thumb, if changes involve roof,

structure, or walls the expenditure would be structure, or walls the expenditure would be recorded to the CPF as remodeling.recorded to the CPF as remodeling.

Capital Projects Fund ExpendituresCapital Projects Fund Expenditures

Type CodesType Codes See HandoutSee Handout


What type code would you use for What type code would you use for expenditures to pave the parking lot?expenditures to pave the parking lot?

12 - Improvements12 - Improvements


The school district has incurred election The school district has incurred election costs for the bond/levy election. The costs for the bond/levy election. The election was successful. election was successful. Can the CPF pay for the election costs?Can the CPF pay for the election costs?

YesYes What expenditure type code would be What expenditure type code would be

appropriate?appropriate?63 ~~~63 ~~~


The school district is going to hire a The school district is going to hire a construction manager to oversee the construction manager to oversee the construction of a new building. construction of a new building. Can the costs associated with hiring the Can the costs associated with hiring the

construction manager or management company construction manager or management company be charged to the CPF?be charged to the CPF?

YesYes What expenditure type code should be used?What expenditure type code should be used?

2121


Is it ok to pay the rent for another facility Is it ok to pay the rent for another facility from the CPF if you have to relocate from the CPF if you have to relocate students for a remodeling project?students for a remodeling project? YesYes

What expenditure type code do you use?What expenditure type code do you use? 2222

CPF Expenditure Object CodesCPF Expenditure Object Codes

The only difference in the classification of The only difference in the classification of objects of expenditures between the CPF objects of expenditures between the CPF and the General Fund are the following and the General Fund are the following definitions:definitions: Object 5 Supplies, Instructional Resources, Object 5 Supplies, Instructional Resources,

and Noncapitalized Items.and Noncapitalized Items. Object 9 All Other Capital Outlay.Object 9 All Other Capital Outlay.


Object 5 Supplies, Instructional Resources, Object 5 Supplies, Instructional Resources, and Noncapitalized Items.and Noncapitalized Items.

Only Only initialinitial expenditures for expenditures for newnew buildings for the buildings for the purchase of nonconsumable library, text, and purchase of nonconsumable library, text, and reference books are allowable in the CPF.reference books are allowable in the CPF.

Items of a Items of a consumableconsumable nature are nature are not not allowed in allowed in the CPF (i.e. workbooks).the CPF (i.e. workbooks).


Object 9 All Other Capital Outlay.Object 9 All Other Capital Outlay.

Since all expenditures of the Capital Projects Fund Since all expenditures of the Capital Projects Fund are of a capital outlay nature, Object 9 is labeled are of a capital outlay nature, Object 9 is labeled All Other Capital Outlay in the CPF.All Other Capital Outlay in the CPF.

CPF Expenditure Source/Use CPF Expenditure Source/Use CodesCodes

As we discussed earlier, school districts As we discussed earlier, school districts receive and use resources that have receive and use resources that have restrictions or conditions attached.restrictions or conditions attached.When revenues are received, the school When revenues are received, the school district must account for amounts received district must account for amounts received and expended for that purpose. The and expended for that purpose. The source/use code provides a common source/use code provides a common coding classification for both restricted–coding classification for both restricted–use revenues and expenditures.use revenues and expenditures.


A one-digit source/use code should be assigned A one-digit source/use code should be assigned as follows:as follows: 0 – Unrestricted and undesignated.0 – Unrestricted and undesignated. 1 – Derived from the sale of bonds and investment 1 – Derived from the sale of bonds and investment

proceeds and used for the purposes expressed in the proceeds and used for the purposes expressed in the bond proposition.bond proposition.

2 – Received from capital project levies and used per 2 – Received from capital project levies and used per levy propositions.levy propositions.

3 – Received from state agencies and used for 3 – Received from state agencies and used for funded projects.funded projects.

4 – Received from federal agencies and used for 4 – Received from federal agencies and used for federal portions of individual grants.federal portions of individual grants.


5 – Other sources and uses not described 5 – Other sources and uses not described above.above.

9 – Amounts to be distributed. 9 – Amounts to be distributed. This is an intermediate code for use during the This is an intermediate code for use during the fiscal year and does not have a balance at budget fiscal year and does not have a balance at budget preparation time or when year-end reports are preparation time or when year-end reports are issued. issued.


Revenues and Other Financing Sources that are Revenues and Other Financing Sources that are not restricted in their use should be coded with not restricted in their use should be coded with source/use code “0”. source/use code “0”. For example, state apportionment revenues (Revenue For example, state apportionment revenues (Revenue

3100) that have been redirected from the General 3100) that have been redirected from the General Fund to the Capital Projects Fund are not restricted Fund to the Capital Projects Fund are not restricted and should be accounted for by using the “0” and should be accounted for by using the “0” source/use code. source/use code.

If the district puts restrictions on these resources, If the district puts restrictions on these resources, then source/use code “3” should be used.then source/use code “3” should be used.

Reservation of Fund Balance Using Reservation of Fund Balance Using Source/Use CodesSource/Use Codes

Establishing reservations of fund balance is Establishing reservations of fund balance is done by closing Account 960 Revenues and done by closing Account 960 Revenues and Account 965 Other Financing Sources to the Account 965 Other Financing Sources to the reserve accounts listed below through the use of reserve accounts listed below through the use of the source/use code. the source/use code.

To set up reservations of fund balance, the third To set up reservations of fund balance, the third digit in the revenue or other financing source digit in the revenue or other financing source account number must match the third digit in the account number must match the third digit in the reserve account section of the balance sheet.reserve account section of the balance sheet.


Closing expenditures that were expended Closing expenditures that were expended on the restricted use reduces the on the restricted use reduces the restriction on Capital Projects Fund restriction on Capital Projects Fund resources. resources.

So the account 530 Expenditures that So the account 530 Expenditures that were restricted are closed to the general were restricted are closed to the general ledger reserve accounts representing that ledger reserve accounts representing that restriction.restriction.


The applicable general ledger reserve The applicable general ledger reserve accounts are:accounts are: 861 – Reserve of Bond Proceeds861 – Reserve of Bond Proceeds 862 – Reserve of Levy Proceeds862 – Reserve of Levy Proceeds 863 – Reserve of State Proceeds863 – Reserve of State Proceeds 864 – Reserve of Federal Proceeds864 – Reserve of Federal Proceeds 865 – Reserve of Other Proceeds865 – Reserve of Other Proceeds 869 – Reserve for Undistributed Proceeds869 – Reserve for Undistributed Proceeds


The portion of G/L 960 Revenues and G/L The portion of G/L 960 Revenues and G/L 965 Other Financing Sources representing 965 Other Financing Sources representing unrestrictedunrestricted resources should use resources should use source/use code “0” and must be closed to source/use code “0” and must be closed to 890 Unreserved, Undesignated, Fund 890 Unreserved, Undesignated, Fund Balance. Balance. Examples include redirected state Examples include redirected state

apportionment and revenue from the lease of apportionment and revenue from the lease of real property.real property.


The following are general guidelines in The following are general guidelines in determining which reserve account to use:determining which reserve account to use: Investment earnings have the same Investment earnings have the same

expenditure restrictions as do the underlying expenditure restrictions as do the underlying resources generating the revenue.resources generating the revenue.

Assume that the most restrictive resources Assume that the most restrictive resources were expended first.were expended first.

Example Journal EntriesExample Journal Entries

See HandoutSee Handout

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Capital Projects Fund Accounting WASBO Annual Conference 2006 Presented by Christie Hazlett, OSPI,...

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