N.J. Admin. Code § 6A:23A-18.5

Current through Register Vol. 56, No. 21, November 4, 2024

Section 6A:23A-18.5 - Bookkeeping and accounting

(a) An APSSD shall maintain accounting and bookkeeping systems as prescribed in the Department's Financial Accounting for New Jersey Private Schools for Students with Disabilities in accordance with the following standards:

1. An APSSD shall maintain accounts in accordance with generally accepted accounting principles (GAAP) as established by the Financial Accounting Standards Board (FASB) and recognized as authoritative by the American Institute of Certified Public Accountants, except as already modified in this subchapter.

2. At a minimum, an APSSD shall use accrual accounting on a quarterly basis.

3. An APSSD shall capitalize fixed asset expenditures of $ 2,000 or more and depreciate such expenditures using the straight-line depreciation method and using a useful life consistent with current Federal tax law as defined in Internal Revenue Code Section 168 and class lives as defined in that section (also see IRS Publication 946), except for real property that may be depreciated using a useful life of 15 years or the term of the original mortgage, whichever is greater.

4. An APSSD shall:

i. Capitalize leasehold improvements made to an existing structure leased by the APSSD and depreciate the improvements using the straight-line method and a useful life equal to the lease's remaining term and any extension(s), but not less than five years;

ii. Depreciate any leasehold improvement(s) to which a related party(ies) is the lessor using the straight-line method and a useful life equal to the lease's remaining term and any extension(s), but not less than 10 years;

iii. Not depreciate a leasehold improvement(s) made to a structure for any month(s) the structure is not in service as an APSSD, or in excess of amounts determined under (a)4i or ii above for any fiscal year; and

iv. Not depreciate a leasehold improvement(s) made to a structure that does not directly benefit public school placement students being educated or that is in excess of amounts determined pursuant to (a)4i, ii, or iii above.

5. An APSSD shall maintain asset, liability, and net asset accounts, as well as expenditure and revenue accounts.

6. Nonprofit organizations shall maintain financial records on a fund basis, which requires restricted or unrestricted donations to be maintained in funds separate from the public school restricted fund. Costs incurred as a result of restricted or unrestricted donations shall be charged to the appropriate fund and not through the public school restricted fund. Profit-making organizations shall maintain financial records on a modified fund basis.

7. A chart of accounts issued by the Commissioner, or his or her designee, shall be maintained by each APSSD. A Uniform Minimum Chart of Accounts consistent with Financial Accounting for Local and State School Systems 2014, developed by the National Center for Education Statistics, incorporated herein by reference, as amended and supplemented as prepared, published, and distributed by the Commissioner, or his or her designee, for use in the accounting systems of all APSSDs shall be used for financial reporting to the Department. Effective July 1, 2017, the Department will not consider requests for approval to use an alternative chart of accounts. APSSDs that received approval prior to July 1, 2017, to use an alternative chart of accounts may continue to do so.

i. Effective July 1, 2018, the first $ 15,000 of attorney's fees or other costs per litigation and per fiscal year of costs incurred by an APSSD shall be included within the administrative cost category limits identified in N.J.A.C. 6A:23A-18.3(a)3. Costs for litigation above the first $ 15,000 per litigation and per fiscal year shall be outside the total cost category assignment as indicated in the Department's chart of accounts pursuant to (a)7 above.

ii. For purposes of (a)7i above, litigation means a suit brought by or against an APSSD for which a court of law or agency of the State or Federal government assigns a docket or other form of tracking number.

8. If multiple facilities for an APSSD have been approved, financial information in the bookkeeping records shall be segregated by facility. If the APSSD chooses to charge tuition rates by class type, financial information in the bookkeeping records shall be segregated by class type. Bookkeeping records shall include, but not be limited to:

i. Cash receipts journal;

ii. Cash disbursement journal;

iii. General ledger;

iv. Tuition ledger;

v. Payroll journal; and

vi. Fixed asset inventory.

9. An APSSD shall maintain documentation to verify all amounts recorded in the general ledger. Purchase orders shall be prepared in detail to document all payments for goods and services. Invoices or cash register receipts shall be attached to their related purchase orders to support all purchases of goods and services. Detailed vouchers signed by the payee shall be attached to their related purchase orders to support all payments for personal services, employee mileage reimbursements, or any payment for which invoices or cash register receipts are not used. All documentation shall be subject to audit by the Department and shall support expenses charged by the APSSD in its audited financial statements.

10. An APSSD shall prepare a payroll that is supported by an accurate employee time record in a format prescribed or approved by the Commissioner, or his or her designee, signed by the employee and supervisor, prepared in the time period in which the work was done and completed semi-monthly, at a minimum. An employee time record shall be prepared for all employees of the APSSD, including all administrative employees. Upon receipt of written approval from the Commissioner, or his or her designee, APSSDs may use an electronic time record system in lieu of the Commissioner-prescribed format. Approval shall continue unless and until an APSSD alters the system or engages the services of a new provider for the electronic time record system.

11. At least quarterly, an APSSD shall prepare a financial report in a format prescribed or approved by the Commissioner, or his or her designee, for the school-year program. The financial report shall be submitted to the school's governing body and its acceptance shall be documented in the governing body's meeting minutes.

12. An APSSD shall maintain effective internal control practices, including, but not limited to, the separation of duties such as the recording and authorizing of checks and purchase approvals.

13. An APSSD shall use the Commissioner-prescribed mandated tuition contract for each student received from a sending district board of education. The mandated tuition contract may be revised only by the APSSD or the sending district board of education with the Commissioner's prior written approval.

14. An APSSD that incurs contingent pay increases shall have an employee contract that contains the criteria by which the increase will be paid. Under no circumstances shall the APSSD employee's salary plus the contingent pay increase exceed the maximum allowable salary determined pursuant to N.J.A.C. 6A:23A-18.3(o), (p), or (q). The criteria shall be submitted to the Commissioner, or his or her designee, for approval prior to implementation. The APSSD shall make payment of the contingent pay increase upon achievement of the contractual contingencies as set forth in the approved plan. The payment shall be based upon measurable criteria and shall not be at the management's discretion. The employee contract shall contain the following:

i. The date and signature of both the staff member and authorized APSSD representative;

ii. The ADE contingency the APSSD must achieve to generate the increase; and

iii. The specific dollar amount or percentage of original contracted salary to be paid pursuant to (a)14ii above.

15. An APSSD that incurs merit pay increases shall have adopted a formal policy that outlines the criteria of the merit pay plan(s). The APSSD employee's salary plus the merit pay shall not exceed the maximum allowable salary determined pursuant to N.J.A.C. 6A:23A-18.3(o), (p), or (q). The plan(s) shall be submitted for approval to the Commissioner, or his or her designee, prior to implementation. The APSSD shall accrue the merit pay and any resultant employer payroll tax expense in the fiscal year in which the merit pay is awarded. Payment of such merit pay increase upon achievement of the criteria set forth in the approved plan shall occur no later than the following January 31. The payment shall not be at the management's discretion. The plan(s) shall include the following:

i. Eligibility for all employees;

ii. Basis by which the pay is earned;

iii. The amount of the awards by plan(s);

iv. The maximum number of awards to be given by plan(s) for each year; and

v. The date of board approval and date of initiation of the plan(s).

16. An imprest balance petty cash fund shall be maintained upon annual approval in the minutes by the APSSD's governing body. Replenishments and reimbursements shall be supported by documentation. Undocumented outflows from petty cash shall be classified as a non-allowable cost. The imprest fund balance shall not exceed $ 1,500 and individual disbursements made shall not exceed $ 150.00, except in the case of an emergent condition.

17. A student activity fund shall be approved by the APSSD's governing body and supported by documentation. Revenues derived from public school placement tuition shall be used to supplement, not supplant, student contributions.

18. Mileage records shall be maintained for each school-owned vehicle, leased vehicle, or vehicle contained in a related party transaction involving the purchase of transportation services in a format prescribed by the Commissioner, or his or her designee. The mileage records shall be maintained on a trip-by-trip basis and shall include any personal use including to/from work commutation. At the end of the fiscal year, the percentage determined by the total personal miles to total miles shall be applied to all costs associated with the vehicle(s) and the personal costs shall be excluded from the actual allowable costs. Vehicle costs may include, but not be limited to, the following: depreciation, lease costs, gas, oil, repairs and maintenance, and insurance.

19. Upon request from the Commissioner, or his or her designee:

i. A profit-making APSSD shall submit a copy of its Internal Revenue Service (IRS) tax return for any fiscal year requested; and

ii. A nonprofit APSSD shall submit a copy of IRS form 990 for any fiscal year requested.

20. An APSSD shall maintain all pertinent financial record(s) for a period of seven years after the November 1 due date of the annual audited financial statement, or until the Commissioner, or his or her designee, issues approval or adjustment to an independent-auditor-certified tuition rate.

21. A nonprofit entity that has chosen to cease operations as a nonprofit APSSD shall distribute its accumulated public school placement restricted working capital fund to each sending district board of education that had enrolled students during the APSSD's last five years of operation. Public school placement restricted working capital may be retained if an APSSD reconfigures its operations and continues to serve a majority of the same sending district boards of education from the last five years of operation.

i. The distribution shall be based on the ratio of each sending district board of education's total ADE in the APSSD for the last five years of operation to the APSSD's total ADE for the same period.

ii. Within 90 days of filing with the Department the required year-end audited financial statements in accordance with N.J.A.C. 6A:23A-18.10, the APSSD shall submit to the Commissioner, or his or her designee, a listing of the total distribution of the public school placement restricted working capital fund, by sending district board of education.

22. An APSSD shall ensure school staff; consultants; subcontractors, including members of a management company; and anyone working with students hold the proper school certification, license, or bachelor's degree required pursuant to N.J.A.C. 6A:23A-18.2 to provide the services being rendered.

(b) An APSSD that receives a refund(s) from a current or prior-year expenditure, or that cancels an accounts payable, shall apply the refund or accounts payable as a reduction to the original general expenditure account charged to reduce the current-year expenditure account even if the original expenditure was not made in the current fiscal year.

(c) An APSSD annually shall execute an employment contract with each school employee. The contract shall contain the following information:

1. The employee's name;

2. Dates of employment;

3. Work hours/durational term of employment;

4. Certification(s) and/or degree(s) held;

5. Certification(s) required for the job title;

6. A job description;

7. The job title;

8. All fringe benefits; and

9. The salary.

(d) An APSSD that operates its educational program outside of a public school district shall request Departmental approval to purchase or rent an administrative or business office at a location outside of the APSSD's educational facility. Once received, an approval shall not require renewal, unless and until the APSSD changes the location of its educational or administrative facility. At the Department's request:

1. The county office of education may conduct an on-site facility review to determine if there is sufficient space at the APSSD's educational facility for these operations; and/or

2. The APSSD shall submit to the Commissioner, or his or her designee, documents that substantiate the need for additional space.

(e) An APSSD shall ensure its employees provide:

1. To the students, an instructional program for which the employees are compensated during the hours the school is in session; and

2. All administrative and business functions on the APSSD's premises whether the premises are owned or leased by the APSSD, and during the APSSD's normal hours of operation, except for meetings and/or conferences held offsite related to the job function. If the APSSD's facilities are not deemed feasible for any administrative or business function, the APSSD shall provide written justification to the Commissioner, or his or her designee, and request approval of a reasonable alternative work location.

(f) An APSSD shall establish and maintain an employee handbook that shall be distributed to all staff each school year and made available to the Department upon request. The APSSD's employee handbook shall include an outline of all employee fringe benefits. All employee fringe benefits shall be adopted at a board of directors meeting and documented in board minutes prior to implementing the fringe benefit. Employee fringe benefits that are consistent with N.J.A.C. 6A:23A-18.6(a)23 for which costs are deemed allowable are as follows:

1. Health insurance coverage (including dental and vision) that complies with Federal and State laws, rules, and regulations, including payments to employees for a complete waiver of health insurance coverage that comply with the following:

i. The payment for waiver of health insurance coverage shall not exceed $ 5,000 per fiscal year; and

ii. The employee shall provide, and the APSSD shall keep on file, documented evidence the employee had other valid health insurance coverage during the fiscal year;

2. Life insurance;

3. Type(s) and qualification for retirement plan(s);

4. Severance pay;

5. Vacation;

6. Long-term disability;

7. Sick day and personal day benefits;

8. Premium-only plans;

9. Cafeteria plans;

10. Section 125 plans;

11. Tuition reimbursement;

12. Health savings accounts (HSAs), medical savings accounts (MSAs), health flexible spending arrangements (FSAs), and health reimbursement arrangements (HRAs) established and maintained within applicable laws and regulations; and

13. Other benefits for which an APSSD has applied and received written approval from the Commissioner, or his or her designee.

(g) An APSSD that loans funds to any party shall charge interest at a rate equal to the prime rate. An independent auditor shall compute imputed interest on funds that are loaned at less than the prime interest rate or interest free. Imputed interest revenue shall be netted first against short-term interest costs and then against long-term interest costs incurred by an APSSD. If the APSSD has not incurred interest costs, the imputed interest revenue shall be netted against costs incurred in account numbers classified as undistributed expenditures--central services.

(h) A nonprofit APSSD that has a positive public school placement restricted working capital fund balance but reports a net deficit unrestricted fund balance for more than three consecutive fiscal year-ends shall submit to the Commissioner, or his or her designee, within 60 days after the third fiscal year's end, a corrective action plan to reduce the net overall deficit fund balance. The nonprofit APSSD shall be subject to Department monitoring to ensure implementation of and adherence to the corrective action plan. If the APSSD fails to eliminate the deficit by the end of year three, the APSSD shall be placed on conditional approval status until the deficit unrestricted fund balance is eliminated.

(i) An APSSD that allows employees to accumulate and carry over from year to year unused sick and/or vacation leave shall do so in accordance with Financial Accounting Standards Board Statement No. 43 Accounting for Compensated Absences (FASB; 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116), incorporated herein by reference, as amended and supplemented, and shall include the costs in program expenses in the appropriate cost category only in the year of payment.

(j) An APSSD shall use job titles in use in public schools districts in accordance with N.J.A.C. 6A:9B, and the list published each year by the Commissioner, or job titles approved in accordance with N.J.A.C. 6A:9B-5.5.

(k) An APSSD shall limit compensation increases after the start of the fiscal year to specific instances in accordance with N.J.A.C. 6A:23A-18.3(q), and when the increase:

1. Is due to a staff member's promotion that results in additional job responsibilities;

2. Is due to a staff member's attaining a higher degree or certification;

3. Is due to a staff member's additional job responsibilities such as a coach, advisor, or mentor;

4. Is in accordance with (a)14 or 15 above; or

5. Has been approved by the Department after review of a formal written request to the Commissioner, or his or her designee, documenting the facts supporting the increase.

(l) An APSSD shall ensure individuals who are newly employed by the APSSD or new to the positions listed below on or after July 1, 2017, possess the appropriate master's degree or other required degree or certification as defined in N.J.A.C. 6A:23A-18.2. The APSSD also shall ensure individuals employed or serving in the following positions on or before June 30, 2017, currently possess the appropriate bachelor's degree or other required degree or certification as defined in N.J.A.C. 6A:23A-18.2, or will be removed from the position:

1. Director;

2. Assistant director;

3. Executive director; and

4. Business manager.

(m) An APSSD that incurs costs for a retirement plan(s) in accordance with N.J.A.C. 6A:23A-18.6(a)31 and/or medical benefits for retired employees in accordance with N.J.A.C. 6A:23A-18.6(a)54 shall include the costs in the certified actual cost per student only on the cash basis of accounting.

(n) An APSSD shall have its paraprofessional staff approved in accordance with N.J.A.C. 6A:32-4.2 and any change(s) to an approved job description shall be resubmitted for approval.

(o) An APSSD shall comply with the maximum salaries determined pursuant to N.J.A.C. 6A:23A-18.3(o) and (p) and restricted pursuant to N.J.A.C. 6A:23A-18.6(a)6, 8, and 9 regardless of the job titles used and whether they comply with the list of job titles published by the Commissioner, or his or her designee.

(p) Under no circumstances other than in accordance with (k) above shall an APSSD provide compensation increases after the start of the fiscal year.

N.J. Admin. Code § 6A:23A-18.5

Amended by 49 N.J.R. 1855(a), effective 7/3/2017