Section 92-2-003 - General Procedures003.01Accounting System. An accounting system is that combination of people, equipment, methods, internal controls, and procedures organized to record financial activity and to display that activity in financial reports. A primary purpose of an accounting system is to produce financial information organized in meaningful ways for various reporting uses. The accounting system is the means by which financial data is acquired during the actual operation of the public school district, recorded in an appropriate permanent form, and then analyzed to produce the reports for various purposes. Internal control is a system affected by the district's board of education, management, and other personnel designed to provide reasonable assurance regarding the achievement of objectives in the following categories:
(a) reliability of financial reporting, (b) effectiveness and efficiency of operations, and (c) compliance with applicable laws and regulations. Internal control consists of the following five interrelated components: (1) control environment (sets the tone of an organization, influencing the control consciousness of its people and is the foundation for all other components of internal control, providing discipline and structure), (2) risk assessment (the entity's identification, analysis and management of risks relevant to achievement of its objectives and to the preparation of financial statements that are fairly presented in conformity with accounting principles generally accepted in the United States of America (or another comprehensive basis of accounting) (Appendix A, a copy of which is on file at the Nebraska Department of Education's (NDE's) central office in Lincoln), (3) control activities (the policies and procedures that help ensure that management directives are carried out), (4) information and communication (the identification, capture, and exchange of information in a form and time frame that enable people to carry out their responsibilities), (5) monitoring (a process that assesses the quality of internal control performance over time). 003.02Basis of Accounting. The basis of accounting refers to the point in time when revenues and expenses or expenditures are recognized in the accounting system. The basis of accounting, therefore, determines the time at which the accounting system recognizes accounting transactions. 003.02ACash Basis. Cash-basis accounting recognizes transactions when cash is actually received or disbursed. Public school districts in Nebraska may operate on another comprehensive basis of accounting which includes the use of the cash basis of accounting. 003.02BAccrual and Modified Accrual Basis. Accrual basis accounting recognizes revenues as soon as they are earned. Expenses are recognized as soon as the liability is incurred, regardless of the timing of the related inflows and outflows of cash. For funds that use the modified accrual basis of accounting, revenues are recognized when earned, but only to the extent that they are available (i.e., collectible within the period soon enough afterwards to be used to pay liabilities of the current period). Debt service payments and a number of specified liabilities are only recognized as expenditures when due. Public school districts in Nebraska may operate on a system of accounting in conformity with accounting principles generally accepted in the United States of America (Appendix A, a copy of which is on file at the NDE's central office in Lincoln), which may include the use of the accrual and/or modified accrual basis of accounting. School districts using the accrual or modified accrual basis of accounting must report to the NDE on a cash basis.003.03Fund Accounting. A fund is a fiscal and accounting entity, with a self-balancing set of accounts and is completely independent of any other fund. All school district accounting systems must be organized and operated on a fund basis. The reporting focus of the funds is upon determining financial position rather than net income. 003.03AGeneral Fund. The General Fund may finance all facets of services rendered by the school district, inclusive of operation and maintenance. General Fund revenues are classified according to source while its expenditures are classified according to specific functions. The General Fund must be maintained by all operating school districts in the State. General Fund expenditures are limited by the TEEOSA.003.03BDepreciation Fund. A Depreciation Fund may be established by a school district in order to facilitate the eventual purchase of a costly capital outlay by reserving such monies from the General Fund. To allocate monies from the General Fund, a school district will show the movement of monies as an expense from the General Fund and the Depreciation Fund will show the revenue as a transfer from the General Fund. The school district may divide this fund into more than one account to allocate a portion of this fund for different valid purposes. The purpose of a Depreciation Fund is to spread replacement costs of capital outlays over a period of years in order to avoid a disproportionate tax effort in a single year to meet such an expense. The budgeted total requirements of this fund is restricted as part of the Allowable Reserve by the TEEOSA. The Depreciation Fund is considered only a component of the General Fund. 003.03CEmployee Benefit Fund. An Employee Benefit Fund may be established in order to specifically reserve General Fund money for the benefit of school district employees (unemployment compensation, early retirement, health insurance deductibles, etc.). To allocate monies from the General Fund, a school district will show the movement of monies as an expense from the General Fund, and the Employee Benefit Fund will show the revenue as a transfer from the General Fund. The school district may divide this fund into more than one account to allocate a portion of this fund for different valid purposes. The cash reserve of this fund is restricted as part of the Allowable Reserve by the TEEOSA. The Employee Benefits Fund is considered a component of the General Fund. 003.03DContingency Fund. A Contingency Fund is authorized by Section 79-1072, R.R.S. and may be established by school districts to fund uninsured losses and legal fees incurred by the school district for defense against possible losses. Expenditures from this fund must not exceed five percent of the total budgeted General Fund expenditures of the school district. To allocate monies from the General Fund, a school district must show the movement of monies as an expense from the General Fund, and the Contingency Fund must show the revenue as a transfer from the General Fund. This fund is restricted as part of the Allowable Reserve by the TEEOSA. 003.03EActivities Fund. The Activities Fund is required to account for the financial operations of quasi-independent student organizations, interschool athletics, and other self-supporting or partially self-supporting school activities, not part of another fund. The inclusion of such accounts in the General Fund (see 003.03A) would distort the financial position of the basic school operation and would complicate the computation of the net expense incurred in conducting school services. The Activity Fund may not be used to record general operation revenues or expenditures, nor may the Activity Fund be used as a clearing account for the General Fund. The school district may divide this fund into more than one account to allocate a portion of this fund for different purposes. The financial operations of all school-connected activities are a legal responsibility of the school district board of education. If deficits in such activities are incurred, they shall may be paid from the General Fund (see 003.03A). Such revenue shah finances only those projects which qualify for approval under policies established by the school district board of education for such activities.
003.03FSchool Nutrition Fund. The School Nutrition Fund is required to accommodate the financial activities of all Child Nutrition Programs. These include the School Lunch, School Breakfast, After School Snack, Special Milk, Child and Adult Care Food, Fresh Fruit and Vegetable Program, and the Summer Food Service Programs. The School Nutrition Fund must reflect a record of all revenues and expenditures incident to the operation of all Child Nutrition Programs. If a deficit is incurred in the operation, the deficiency may be covered by funds transferred from the General Fund.003.03GBond Fund. The Bond Fund must be used to record tax receipts and the payment of bond principal and interest, and other related costs (i.e. investment interest, trustee fees, etc.). If the fund balance is not sufficient to meet interest or bond retirement payments from the Bond Fund, the General Fund may be used for these payments. Revenue from a levy to retire bonds in any school district is retained in a separate fund by the county treasurer, the financial institution serving as a fiscal agent or the school district. Funds may be disbursed upon appropriate demand. All records of the transactions in this area must be maintained in this fund. Proceeds from a bond issue must be deposited into the Special Building Fund (see 003.03H) to be expended on the actual building project.003.03HSpecial Building Fund. A Special Building Fund must be established when a school district decides to acquire or improve sites and/or to erect, alter, or improve buildings. The sale of bonds, the sale of property, donations or tax receipts will be the primary sources of revenue for the Special Building Fund. Regardless of the source of money to be used for building construction and related costs, all income for this purpose must be accountable through this fund. General Fund expenditures for the purpose of this fund are not allowable. Special Building Fund accounting provides a more effective means of identifying those expenditures associated with construction activities and provides a complete and consolidated record of all costs of the building program at the conclusion of a project(s). If more than one Special Building Fund activity is active at the same time, separate accounts for each project may be established within the single Special Building Fund. The tax levy for this fund is restricted. The Board of Education of s school districts may approve a budget with a levy limitation of $ 0.14 per one hundred dollars of valuation (Section 79-10,120 R.R.S.); or a tax levy not to exceed $0,175 per one hundred dollars of valuation may be established for this fund in any class of school district by a vote of the people for a term of not to exceed ten years (Section 79-1098 R.R.S.).003.03IQualified Capital Purpose Undertaking Fund. A Qualified Capital Purpose Undertaking Fund (QCPUF) may be established for a specific abatement project to address an actual or potential environmental hazard, accessibility barrier, life safety code violation, life safety hazard, or mold which exists within one or more existing school buildings or the school grounds of existing school buildings controlled by the school district. Such determination must not include abatement projects related to the acquisition of new property, the construction of a new building, the expansion of an existing building, or the remodeling of an existing building for purposes other than the abatement of environmental hazards, accessibility barriers, life safety code violations, life safety hazards, or mold. The period of years for such levy may not exceed ten years and the levy for such project when combined with all other levies pursuant to Sections 79-10,110.02 and 79-10,110 R.R.S. may not exceed $ 0.03 per one hundred dollars of taxable valuation. General Fund expenditures for the purpose of these funds are not allowable. For projects in place prior to April 19, 2016, the Qualified Capital Purpose Undertaking Fund maximum levy remains at $0,052.
If taxable valuation is lower than the taxable valuation in the year when the district last issued QCPUF bonds and the $ 0.03 maximum levy is insufficient to meet the combined annual principal and interest, the district can exceed the $ 0.03 maximum levy for the difference to meet that year's principal and interest obligations.
003.03JCooperative Fund. The Cooperative Fund may be used by the school district acting as the fiscal agent for any cooperative activity between such district and one or more public agencies as defined in Section 13-803(2) R.R.S. All public agencies, including the school district acting as the fiscal agent, must show the payment for services to a cooperative in their General Fund or other appropriate fund (see 003.03A).003.03KStudent Fee Fund. The Student Fee Fund is a separate school district fund not funded by tax revenue into which money collected from students pursuant to subdivisions (1), (3), and (8) of Section 79-2,127 R.R.S., (fees collected for participation in extracurricular activities; fees collected for postsecondary education and fees collected for summer school or night school), must be deposited. Expenditures from this fund must be for the purposes for which the fees were collected.003.04General Information003.04ACreating Funds. When it is determined that one of the listed funds is necessary, the district's Board of Education approves the creation of the fund when the budget, as required by the Nebraska Budget Act, is approved. The school district's Board of Education must specifically designate the uses for the Depreciation and Employee Benefits Funds.003.04BDiscontinuing Funds. When it is determined that one of the listed funds is no longer needed, the school district's Board of Education may take action to discontinue the fund. All remaining money in the discontinued fund must be transferred to the General Fund (see 003.03A).003.04CLoans. Any class of school district may borrow money to the amount of seventy percent of the unexpended balance of total anticipated receipts for the General Fund, Special Building Fund, Bond Fund, or Qualified Capital Purpose Undertaking Fund for the current school fiscal year and the following school fiscal year (Section 79-1070 R.R.S.). These funds may also be used to make loans to each other. School districts must follow the provisions of Sections 79-1070 to 79-1071 R.R.S., when borrowing money.92 Neb. Admin. Code, ch. 2, § 003
Amended effective 11/1/2021