Financial Reporting Manual
for
Maryland Public Schools
Revised 2014
The Maryland State Department of Education does not discriminate on the basis of age, ancestry,
color, creed, gender identity and expression, genetic information, marital status, disability, national
origin, race, religion, sex, or sexual orientation in matters affecting employment or in providing
access to programs. For inquiries related to Departmental policy, please contact:
Equity Assurance and Compliance Branch
Maryland State Department of Education
200 W. Baltimore Street—6th Floor
Baltimore, Maryland 21201–2595
410.767.0433 (voice)
410.767.0431 (fax)
410.333.6442 (TTY/TDD)
Maryland State Board of Education
S. James Gates, Jr.
Madhu Sidhu
Guffrie M. Smith, Jr.
Donna Hill Staton
James H. DeGraffenreidt, Jr.
Sayed M. Naved
Luisa Montero-Diaz
Linda Eberhart
Larry Giammo
Christian T. Hodges,
Student Member
Charlene M. Dukes, President
Mary Kay Finan, Vice President
Lillian M. Lowery
Secretary-Treasurer of the Board
State Superintendent of Schools
Penelope Thornton Talley, Esq.
Chief Performance Ofcer
Dr. Jack Smith
Chief Academic Ofcer
Kristy Michel
Chief Operating Ofcer
Maryland State Department of Education
Martin O’Malley
Governor
State of Maryland
Maryland State Department of Education
Nancy S. Grasmick State Education Building
200 West Baltimore Street
Baltimore, Maryland 21201
410.767.0100
www.marylandpublicschools.org
Financial Reporting Manual
for
Maryland Public Schools
~ Note ~
The following acronyms and terminology are used throughout this Manual:
GAAP: Generally Accepted Accounting Principles
LEA or LEAs: Local Education Agency(s), Maryland’s 23 Counties and Baltimore City
MSDE: Maryland State Department of Education
County (e.g., as in County government) refers to Maryland’s 23 Counties and Baltimore City.
Editor: Kathy Marzola
Maryland State Department of Education
Ofce of Finance & Administration
410.767.0011
SUBJECT PAGE
Introduction i
Financial Accounting 1
Accounting and Reporting Requirements 5
Coding and Reporting Structure 9
Coding by Field 11
Matrices:
Assets, Liabilities, and Fund Balances by Fund 12
Revenue by Fund 13
Expenditure by Fund 17
Object-Subobject by Fund 20
Revenue Source Codes 37
Denitions
Financial Statement Account 39
Revenue and Other Fund Source Account 41
Expenditure Account 47
Object/Subobject Dimension 65
Charter Schools 71
Bi-Annual Report 73
Maintenance of Effort 77
Non-Recurring Cost Waiver Request 81
On-Behalf Payments 89
Table of Contents
Table of Contents - Appendices
SUBJECT APPENDICES
Instructions for Completing the Annual Financial
Report Forms
A
Instructions for Completing the Annual Budget Forms B
The Annual Financial Reporting System C
Supplies and Equipment D
Fund Source Codes and Catalog Numbers E
Cost Principles and State-Funded Grants F
The Financial Reporting Manual for
Maryland Public Schools (Manual) was
developed and adopted by the Maryland State
Board of Education in 1963 in response to the need for
a uniform system of budgeting and reporting Maryland public
school nancial data. To assure uniform reporting at both the state
and federal levels, the Manual was based upon the federal Handbook II,
Financial Accounting for Local and State School Systems, written and produced
in 1957 by the U.S. Ofce of Education.
In 1968, the education laws were reviewed and changes were proposed to limit county government
control of local school budgets. Subsequent passage of Article 77, Section 117 of the Annotated
Code of Maryland (now known as Section 5-101 of the Education Article of the Annotated Code
of Maryland and referred to as the Budget Categories Law) and changes in federal reporting
requirements necessitated revisions to the Manual that were made in 1970.
In the early 1970s, the federal government began working on a new nancial handbook and
distributed discussion drafts to states. The handbook introduced a multi-dimensional expenditure
framework to address the demands for increasingly sophisticated program cost information, and
it reduced the number of major reporting categories from twelve to four. The revised federal
Handbook II was adopted in 1973 and introduced as Handbook II, Revised - Financial Accounting,
Classications and Standard Terminology for Local and State School Systems (HBIIR). Maryland
was then unable to report expenditures to the federal government in accordance with the new
denitions.
A 1973 report to the State Board of Education recommended the adoption of HBIIR for Maryland
public schools, but the recommendations were too controversial and were not adopted. Over
the next several years, public sentiment shifted in favor of changing the state budget categories
because of the focus on Special Education and the desire by local governments to change the
denitions of some of the categories listed in the Manual. In 1977, Maryland’s Budget Categories
Law was revised to add a new expenditure category for Special Education, to revise the denitions
of the categories of Administration and Instruction, and to make some other less signicant
changes, effective for 1979 scal year. The Manual was revised to incorporate the changes and
was distributed to users in 1980.
In 1983, the Manual was again revised to include a standard chart of accounts to accommodate the
automated reporting of nancial information; to provide a structure to support the 1980 revision of
the federal handbook, Handbook IIR2 - Financial Accounting for Local and State School Systems;
and to provide guidance in areas not previously addressed in the Manual.
The 1996 version of the Manual was precipitated by the growing awareness that the 1983 Manual
was seriously out-of-date. Changes in educational policy, changes in operating practices, changes
in public interest, and the desire for comparable nancial information and greater accountability
created an interest in revising the denitions and account codes. A committee of local nance
ofcers and state education staff reviewed the Manual and recommended changes.
Concurrently with this activity, the State Board of Education granted a three-year waiver beginning
with scal year 1995 to include expenditures for instructional staff development in the category
of Instruction rather than in the category of Administration, as dened in the Manual. It was also
i
Introduction
concluded that school-based curriculum development should be charged to Instruction as these
activities are performed by teachers, usually during summer work sessions.
During the 1996 legislative session, several bills were introduced to modify the state budget
categories. At the conclusion, three budget categories were added to segregate certain instructional
expenditures. This revision conforms to the new budget categories, codies the Board’s waiver,
renes the denitions of expenditure areas, and introduces new concepts.
Since the last revision of the Manual in 1996, there have been major statutory changes affecting
public nancing of public education. These include the establishment of Bridge to Excellence in
2002 that dramatically increased State aid to education and replaced 25 restrictive grant programs
with four new unrestricted funding formulas, increased scal accountability under the Education
Fiscal Accountability and Oversight Act of 2004, and the authorization and establishment of charter
schools as a new type of public school in Maryland.
In addition to legislation, signicant changes have been made in nancial reporting with the
implementation of the web-based Annual Financial Reporting system and in reporting categories.
This Manual is revised to include guidance in interpreting nancial reporting policy and
directives.
Legal Authority
The structure of nancial accountability in Maryland is determined by several references in the
Education Article of the Annotated Code of Maryland. Section 5-101 establishes the budget
categories and references the Financial Reporting Manual for Maryland Public Schools, revised
2009 as the source for identifying additional budgetary details that the county scal authorities
may request of the county board. Section 2-205 requires the State Board to adopt bylaws, rules,
and regulations that govern the administration of the public school systems in Maryland and
empowers the State Board to collect the nancial information. Section 2-303 authorizes the
State Superintendent to withhold State funding if a school system violates the legal requirements
identied in the laws, bylaws, and State Board rules and regulations. Section 5-101 prescribes a
uniform method of reporting receipts, expenditures, and balances of the operations and activities
of the public schools.
The Code of Maryland Regulations (COMAR) 13A.02.01.02, cites as legal authority Section
5-101, Education Article, Annotated Code of Maryland and reads as follows:
C. Annual School Budget. The Annual School Budget shall be submitted by the local board
of education to the board of county commissioners or county council or the city council
according to the form and procedures adopted by the State Board of Education and set
forth in the Financial Reporting Manual Maryland Public Schools, revised 2009, that is
incorporated by reference. The forms and procedures in the Manual shall apply to the
annual school budgets beginning with scal year 2010.
D. Annual School Financial Report. The Annual School Financial Report shall be submitted
by the local board of education to the State Board of Education according to the form and
procedures adopted by the State Board of Education.
ii
Introduction
Distribution
The Manual will be available in .pdf format on the Maryland State Department of Education’s
main webpage. The URL will be provided when the revisions to Manual are nalized and the
Manual is posted. The anticipated path will be:
marylandpublicschools.org
click on Newsroom
click on Publications
scroll to The Financial Reporting Manual for Maryland Public Schools
Compliance
Maryland LEAs are required to adhere to the denitions of accounts contained in this Manual when
submitting expenditure information to the Maryland State Department of Education. Although
LEAs may use a different chart of accounts or unique structures to record expenditures for purposes
of internal control, they are required to report in accordance with the provisions outlined in this
Manual to assure reasonable comparability. “Differences between nancial reports should be due
to substantive differences in the underlying transactions. . . rather than to the selection of different
alternatives in accounting procedures and practices.”
*
Failure to comply with the denitions and other requirements is a violation of State Board
regulations and may be the basis for withholding State Aid (refer to Sections 2-303(b), 5-114, and
5-205(a) of the Education Article of the Annotated Code of Maryland).
* Quoted in National Council on Governmental Accounting, Governmental Accounting, Auditing
and Financial Reporting, published by Government Finance Ofcers Association, Chicago,
1988, p.3.
iii
Introduction
In 1979, the National Council on
Governmental Accounting (NCGA) set forth
twelve basic principles of accounting and nancial
reporting in Statement 1, Governmental Accounting
and Financial Reporting Principles. These principles are the
generally accepted accounting principles (GAAP) for governmental
units as recognized by the American Institute of Certied Public
Accountants and the Association of School Business Ofcials of the United
States and Canada. Maryland local education agencies are required to maintain their
accounts in accordance with GAAP.
GAAP for state and local governments is monitored by the NCGA, a group sponsored by the
Government Finance Ofcers Association. The latter organization has produced a comprehensive
publication entitled Governmental Accounting, Auditing and Financial Reporting (GAAFR),
commonly known as the Blue Book. GAAFR is the premier source of guidance on state and
local government accounting, auditing, and nancial reporting. It does not set GAAP, nor is it the
authoritative source of GAAP, but it does provide practical guidance for implementation of GAAP
standards.
In June 1999, the Governmental Accounting Standards Board (GASB) issued Statement Number
34 entitled Basic Financial Statements and Management’s Discussion and Analysis for State and
Local Governments. This statement signicantly changed the presentation format of nancial
statement information by requiring the inclusion of government-wide nancial statements
presented on the accrual basis of accounting. All Maryland LEAs were required to implement this
statement by the scal year ending June 30, 2003.
Fund Accounting
For accounting purposes, a government entity is a collection of smaller entities, each designed for
a specic purpose. To account for these individual purposes, fund accounting evolved to serve as
the framework for accounting and reporting in the public sector.
A fund is dened as a “scal and accounting entity with a self-balancing set of accounts recording
cash and other nancial resources, together with all related liabilities and residual equities or
balances, and changes therein, which are segregated for the purpose of carrying on specic
activities or attaining certain objectives in accordance with special regulations, restrictions, or
limitations.”
*
Governments and government subunits, such as LEAs, are required to use fund accounting.
GAAFR describes three broad fund categories, subdivided into a maximum of ten fund types, for
accounting and nancial reporting. The funds are described below. The basic nancial statements
should conform to the requirements of Governmental Accounting Standards Board Statement
Number 34 and consist of government-wide nancial statements and fund nancial statements,
and include the following:
• The Government-Wide Financial Statements, consisting of a Statement of Net Assets
* Governmental Accounting Standards Board (GASB), Codication of Governmental Accounting
and Financial Reporting Standards, Section 1100.110.
1
Financial
Accounting
and a Statement of Activities, are prepared using the economic resources measurement
focus and the accrual basis of accounting. These statements should report all of the assets,
liabilities, revenues, expenses, and gains and losses of the government. Each statement
should distinguish between the Governmental Activities and Business-Type Activities of
the primary government and its discretely presented component units by reporting each in
separate sections.
• The Fund Financial Statements consist of a series of statements that focus on information
about the government’s major governmental and proprietary funds, including its blended
component units. Fund Financial Statements also should report information about a
government’s duciary funds and component units that are duciary in nature.
• The Governmental Fund Financial Statements should be prepared using the current
nancial resources measurement focus and the modied accrual basis of accounting, and
they include the following:
(1) General Fund – The chief operating fund used to account for all nancial resources
except those required to be accounted for in another fund.
(2) Special Revenue Fund – A fund used to set apart particular operating revenues that may
be restricted for expenditures of a specic purpose. Examples are federal restricted
programs, state restricted programs, and local restricted programs.
(3) Debt Service Fund – A fund used to account for monies set aside for current and future
debt service requirements. These funds are required if legally mandated and if nancial
resources are accumulated for principal and interest payments maturing in future years.
It is not applicable to all school systems.
(4) Capital Projects (School Construction) Fund – A fund used to account for nancial
resources to be used for the acquisition or construction of major capital facilities that
are not nanced by proprietary or trust funds.
• The Proprietary Fund Financial Statements should be prepared using the economic resources
measurement focus and the accrual basis of accounting and include the following:
(1) Enterprise Fund – A fund used to report any activity for which a fee is charged to
external users for goods and services.
(2) Internal Service Fund – A fund used to report any activity that provides goods or services
to other funds, departments, or agencies of the primary government and its component
units, or to other governments, on a cost-reimbursement basis.
• The Fiduciary Fund Financial Statements should be prepared using the economic resources
measurement focus and the accrual basis of accounting and include the following:
(1) Pension (and Other Employee Benet) Trust Fund – A fund used to report resources
that are required to be held in trust for the members and beneciaries of dened benet
pension plans, dened contribution plans, other post-employment benet plans, or
other employee benet plans.
2
Financial Accounting
(2) Investment Trust Fund – A fund used to report the external portion of investment pools
reported by the sponsoring government.
(3) Private-Purpose Trust Fund – A fund used to report all other trust arrangements
under which principal and income benet individuals, private organizations or other
governments.
(4) Agency Fund – A fund used to report resources held by the reporting government in a
purely custodial capacity (assets equal liabilities).
3
Financial Accounting
4
Maryland local education agency (LEA)
accounting systems shall provide the information
necessary to prepare nancial reports that present
fair and full disclosure of the LEA nancial operations
in accordance with GAAP. The system shall accommodate
adjustments to demonstrate nancial compliance with legal provisions
and reporting requirements of the Maryland State Department of Education
(MSDE).
This Manual presumes adherence to GAAP, but dictates a unique reporting structure for
Maryland LEAs based on federal and state reporting requirements. The design and structure of
the account code facilitates reporting in accordance with Section 5-101 of the Education Article of
the Annotated Code of Maryland and in accordance with the requirements of the National Center
for Education Statistics, as described in Financial Accounting for Local and State School Systems,
2003 edition.
Funds and Report Groups
While Maryland LEAs are encouraged to use any or all of the described funds for management
purposes, they are limited to only those funds identied below when reporting in accordance with
Section 5-101 of the Education Article, Annotated Code of Maryland. Each of these funds is
described in that context:
Funds:
(1) Current Expense - This fund is the composite of the General Fund and all Special
Revenue Funds except the Food Service Fund and Special Revenue funds set up
for capital projects. The Current Expense Fund accounts for the basic education
programs and includes all nancial resources used for the basic operations of the
school system. It may be thought of as the operating fund. The Current Expense
Fund is subdivided into Unrestricted Programs and Restricted Programs. Included
in the Current Expense Fund are the proprietary-type Internal Service Funds that
shall be reported in the appropriate category, program, and object in accordance
with the Public School Laws of Maryland.
(2) [Not Used]
(3) School Construction - This fund is used to account for the nancing of major
construction projects within the LEA, including remodeling and alterations to
existing facilities. This is generally funded with debt proceeds rather than through
operating revenues. Funds available for payment toward the completion of a
school construction project in a subsequent scal year(s) should be recognized as
assets and corresponding deferred revenues in the current scal year.
(4) Debt Service - This fund is used to report the payment of interest and principal on
long-term general obligation debt used to nance LEA capital projects. Although
most Maryland LEAs do not have the authority to issue bonds, they are required
to report the revenue and expenses related to the portion of the county or city debt
that is attributable to the LEA on the Annual Financial Report.
5
Accounting
and Reporting
Requirements
(5) Food Service - This fund is used to account for the operation of the food service
program, including all activities involved in providing food to schools, students,
staff, or the community. The fund may be a government-type special revenue fund
or a proprietary-type enterprise fund.
(6) Student Activities - This duciary type fund is used to account for the operations of
student activities which are owned, operated, and managed by the student body
under the guidance and/or direction of staff members or other adults. Student
payments and fundraisers are the principal revenue sources for the Student
Activities Fund.
(7) Trust/Agency - This fund is used to report nancial resources for which the LEA
is only a trustee, an agent, or a conduit. Expenditures from this fund are in the
form of refunds of previous contributions, pass-through monies to agencies for
whom economic benet will occur, or funds for accumulation of assets to be
liquidated at a future date. When an LEA receives a grant that will benet several
LEAs, it assumes the leading function of doling funds, and collecting revenue and
expenditure reports from all parties involved for the purpose of ling the main
grant Annual Financial Report with MSDE under the Trust/Agency Fund. Each
LEA directly beneting from the grant should report its portion under a locally
created grant number in the Current Expense Fund.
(8) For all Funds, the accounts required for complete reporting are :
• Assets;
• Liabilities;
• Expenditures;
• Revenue (or Income) and Nonrevenue; and
• Fund Balances (beginning and ending).
(9) Fixed Charges Supplemental Report Group - dened as charges of a generally recurrent
nature that are not readily allocable to other expenditure categories. They have
traditionally been included in a separate category under Maryland law. Until there
is a change in the law, it will be necessary to request that these expenditures be
distributed to the appropriate category as supplementary information to comply
with federal reporting requirements. The xed charges supplemental account group
was created to facilitate the reporting of xed charges in the proper expenditure
category.
Basis of Accounting
LEAs must use the accrual basis of accounting for proprietary funds and nonexpendable trust funds
and use the modied accrual basis of accounting for all other funds. The modied accrual basis of
accounting means that expenditures are recognized when the liability is incurred and revenues are
recognized when they are measurable (the amount of revenue can be determined) and available
(realized within 60 days after the end of the scal year).
For Restricted Programs, revenue can be recognized only to the extent of the expenditures.
Expenditures for restricted programs are dened as Cash + Payables + Outstanding
encumbrances.
6
Accounting & Reporting Requirements
Revenue, Expenditure, and Transfer Accounts
The structure of an accounting system is dependent upon the needs of the user. Revenue,
expenditures (or expenses), and transfer accounts provide the basis for tracking the ow of funds.
Revenue is an increase in fund nancial resources that does not increase any liability, does not
represent the recovery of an expenditure, does not represent the cancellation or decrease in assets,
and does not represent contributions of fund capital in proprietary funds. Revenue does not include
interfund transfers, debt issue proceeds, exchanges of property for cash, or expenditure refunds.
Federal program funds applicable to expenditures for the same program in the current scal year,
but expected to be received in the next scal year, are to be accrued as current revenue at the end
of the scal year. Federal revenue is to be recognized when the expenditure has occurred. State
aid entitlements are to be recognized as revenue in the year of entitlement even though some funds
may be received in a subsequent scal year.
Revenue is categorized by source of funds (federal, state, or local) and by funding authority (state
aid category or federal program).
Expenditures or expenses for proprietary funds are decreases in net nancial resources resulting
from charges incurred, whether paid or not paid, that benet the current year. For purposes of
MSDE nancial reporting and the Budget to Actual Statement in the Component Unit Financial
Report (Audit), expenditures are dened as cash + accounts payable + encumbrances. In some
cases, expenditures should be recorded as transfers.
Expenditures are classied by fund and object in all funds. The Current Expense fund has additional
classications by category, program, and activity.
Transfers are distinguished from revenues and expenditures. Transfers are special types of
expenditure and revenue accounts that must be differentiated to avoid duplication or to identify
an expenditure that should not be included when calculating per pupil expenditures. Transfer
accounts allow money to ow between funds or governments without duplicate recording by the
various recipients. Transfers may occur between funds, between units of government, or between
LEAs.
For example, one school system may pay tuition to another school system to educate a child.
The receiving LEA enrolls the student and pays for the services rendered. Both LEAs will have
revenue and expenditures related to the same student. Recognizing and recording the transactions
related to the same student as transfers out or in prevents the overstatement of state and national
expenditures for education.
7
Accounting & Reporting Requirements
8
The structure of the Maryland State
Department of Education (MSDE) account code
is hierarchical and governs the nancial reporting
structure to be followed for the Annual Financial Report.
The design is multi-dimensional and allows the aggregation of
nancial data within any eld. School systems are encouraged to
adopt a compatible structure with modications based on locally-identied
needs for additional detail. Expansion of the hierarchy will allow more nite
accounting while facilitating extraction of details required by MSDE.
Structure of Accounts/Record Layout
The MSDE account codes are shown below. This structure of accounts allows nancial information
to be submitted via electronic media and/or le transfer. (See Appendix A for le specications
and reporting requirements.)
Column Length Data Element Data Type
1-2 2 LEA Number Numeric
3 1 Fund Numeric
4 1 Class Numeric
5-6 2 Category Numeric
7-8 2 Program Numeric
9-10 2 Activity Numeric
11 1 Object Numeric
12-13 2 Sub-Object Numeric
14-25 10 Dollar Amount Numeric
26-29 4 Fund (Revenue) Source Numeric
30-37 8 Grant Document Number Numeric
See below for numbering non-MSDE issued grants
38-47 10 Local Grant Number Alpha-numeric
48-59 12 Original Grant Amount Numeric
60-71 12 Cash Received Numeric
72-83 12 Cash Expenditures Numeric
84-91 8 Payables Numeric
92-99 8 Encumbrances Numeric
100-109 10 Administration-Federal Numeric
110-119 10 Administration-Nonfederal Numeric
120-129 10 Career & Tech. Maintenance of Program Numeric
130-133 4 Fiscal Year Numeric
134-143 10 Local Contributions Numeric
The rst ve italicized elds (columns 48-99) are inception-to-date data that is indispensable for
MSDE-issued grants requiring Restricted Program Reports. They are optional for non-MSDE
(locally restricted) grants. The Career and Technology elds (columns 120-129) apply exclusively
to MSDE-issued grants under the Carl D. Perkins Act. The Local Contributions elds (columns
134-143) are for local matching funds as the required addition to the grant award.
9
Coding and
Reporting
Structure
How to Assign Grant Numbers to Programs without MSDE Grant Numbers
Using the following numbering scheme for non-MSDE issued grants will assure a unique
number for each restricted report submitted:
First 2 digits - FY (2009 = 09)
Next 2 digits - LEA #
Next 4 digits - Unique number of LEA choice (e.g., sequential, beginning with 0001)
10
Coding & Reporting Structure
11
CODING BY FIELD
LEA Number
The LEA number identies the local education agency for which nancial information is being
submitted. The LEA code numbers are:
01 Allegany 12 Harford
02 Anne Arundel 13 Howard
03 Baltimore 14 Kent
30 Baltimore City 15 Montgomery
04 Calvert 16 Prince George’s
05 Caroline 17 Queen Anne’s
06 Carroll 18 St. Mary’s
07 Cecil 19 Somerset
08 Charles 20 Talbot
09 Dorchester 21 Washington
10 Frederick 22 Wicomico
11 Garrett 23 Worcester
Fund
The fund codes are used to identify the fund types for which revenue, expenditures, assets, liabilities,
and fund balances are reported. The fund codes are:
1 Current Expense
2 [Not Used]
3 School Construction
4 Debt Service
5 Food Service
6 Student Activities
7 Trust/Agency
8 General Fixed Assets
9 Fixed Charges Supplemental Report Group (This account is used to redistribute
expenditures reported in the Fixed Charges category to the category for which the
charge was incurred. It should not be confused with the true fund types and is used
for convenience only.)
Class
The class code describes the type of nominal and real accounts. These account totals are used to
describe the operations and status of each of the major funds identied in the Fund code.
1 Revenue 5 [Not Used]
2 Expenditures 6 [Not Used]
3 Assets 7 Fund Balance
4 Liabilities
Coding & Reporting Structure
Current
Expense
School
Construc-
tion
Debt
Service
Food
Service
Student
Activities
Trust/
Agency
General
Fixed
Assets
3
Assets
301
Cash (including CDs)
X
X
X
X
X
302
Temporary Investments
X
X
X
X
X
320
Accounts Receivable
X
X
X
X
X
370
Inventories
X
X
X
X
X
383
Land & Land Improvements
X
384
Buildings & Additions
X
385
Furniture & Equipment
X
389
Construction in Progress
X
399
Other Assets
X
X
X
X
X
4
Liabilities
450
Payroll Deductions/Withholding
X
X
X
473
Deferred Revenue-Transportation
X
474
Deferred Revenue-Other
X
X
X
499
Other Liabilities
X
X
X
X
X
7
Fund Balance
701
Opening Balance
X
X
X
X
X
710
Closing Balance-Unreserved
X
X
X
X
X
712
Closing Balance-Reserved
X
X
X
X
X
750
Investment in General Fixed
Assets
X
760
Prior Years’ Adjustments
X
X
X
X
Category/Program/Activity
The category/program/activity elds are dependent upon the class (and fund type) codes. The
number of digits required to completely describe the account varies according to the class code.
With the exception of the revenue and expenditure accounts, coding is required only to the category
level.
Below are three matrix representations showing the linkages of category/program/activity codes to
class codes and the fund types in which these accounts will be reported.
Assets, Liabilities, and Fund Balances by Fund Matrix
Coding for these account groups requires only the category code appended to the fund and class
codes. All LEA Asset accounts that are not shown below are to be reported by Fund in Code 399-
Other Assets. All LEA liability accounts not shown below are to be reported by Fund in Code
499-Other Liabilities.
12
Coding & Reporting Structure
Account
Revenue by Fund Matrix
Coding for the Revenue accounts requires category and program codes appended to the fund type
and class codes. For restricted programs, the revenue (fund) source code eld is also required
to identify the type of federal program or the specic initiative of each major state aid funding
source. Revenue details in the Trust/Agency Fund apply only if one LEA is acting as the agent
for other LEAs.
101
Local Appropriations
X X
X
X X
X
105
Other Revenue
10502
Tuition-Nonresident
X
10503
Tuition-Adult Education
X
10505
Tuition-Summer School
X
10509
Tuition-Other
X
10511
Student Payment/Fees
X
X
X
10512
Other Sales
X
X
X
10520
Transportation Payments
X
10530
Earnings on Investments
X
X
X
X
10535
Rent
X
X X
10591
Locally Donated Commodities
X
10598
Local Revenue For/On-Behalf
of the LEA
X X
X
10599
Other Miscellaneous Revenue
X X
X
X X
X
120
State Revenue
12001
State Share of Current Expenses
1200131 Formula
X
1200191 Supplemental Grant
X X
X
12002
Compensatory Education
1200237 Formula
X
12005
Formula Grants for Specic
Populations
X
1200532 Schools Near County Lines
X
1200534
Out-of-County Living
Arrangement
X
12007
Students with Disabilities
X
1200749
Formula
X
1200750
Nonpublic Placement
X
1200777
Maryland Infants & Toddlers
X
12009
Gifted and Talented
X
Current
Expense
School
Construc-
tion
Debt
Service
Food
Service
Student
Activities
Trust/
Agency
13
Coding & Reporting Structure
Revenue by Fund
14
1200954
Gifted and Talented Grants
X
12013
Innovative Programs
1201388
School-Based Health Centers
X
1201395
Smith Island Boat
X
12014
Adult Continuing Education
1201466
Formula
X
1201467
External Diploma
X
1201468
Multi-Service Centers
X
1201469
Literary Works
X
12024
Limited English Procient
X
1202435
Formula
X
12025
Guaranteed Tax Base
1202586
Formula
X
12027
Food Services
1202717
State Program
X
1202759
MD Meals for Achievement
Program
X
12039
Transportation
1203978
Formula
X
1203979
Students with Disabilities
X
12052
Science & Math
1205284
Grants
X
12098
State Revenue For/On-Behalf of
the LEA
X
12099
Other State Revenue
X
X
X
X
X
X
NOTE: Any other major aid program will be separately identied and included in the User Guide
Appendix at the Annual Financial Report and Grant Reporting System website.
130
Federal Revenue
X
X
X
13001
Unrestricted-Impact Aid
X
13002
Restricted Through MSDE
X
X
X
Current
Expense
School
Construc-
tion
Debt
Service
Food
Service
Student
Activities
Trust/
Agency
Coding & Reporting Structure
Revenue by Fund
15
Coding & Reporting Structure
Revenue by Fund
Current
Expense
School
Construc-
tion
Debt
Service
Food
Service
Student
Activities
Trust/
Agency
Revenue by Fund
13002
Restricted Through MSDE
X
X
X
13003
Restricted Direct
X
X
X
13004
Restricted-Pass Through Other
Agency
X
X
13050
USDA Commodities
X
13098
Federal Revenue For/On-Behalf of
the LEA
X
199
Other Resources
19901
Sale of Equipment (Assets)
X
X
X
19902
Net Insurance Recovery
X
X
19903
Sale of Bonds
X
19904
State Loans
X
19905
Prior Year Balance
X
X
X
X
X
19910
Transfers In-Maryland LEAs
X
19911
Transfers In-OOS LEAs
X
19920
Interfund Transfers
X
X
X
X
X
19999
Other Nonrevenue
X
X
X
X
X
X
16
Coding & Reporting Structure
This page is intentionally blank.
17
Coding & Reporting Structure
Expenditure by Fund Matrix
Expenditure coding by category and program area is required for Fund 1 – the Current Expense
Fund and Fund 3 – School Construction Fund. Category and Program details are also required for
restricted grants reported in Fund 7 – Trust/Agency Fund. Other Fund types have no category or
program levels of detail and require only object/subobject details.
Expenditure by Fund
Current
Expense
School
Construc-
tion
Debt
Service
Food
Service
Student
Activities
Trust/
Agency
200
Expenditures
X
X
X
X
201
Administration
X
20121
General Support
X
20122
Business Support
X
20123
Centralized Support
X
202
Mid-Level Administration
20215
Ofce of the Principal
2021501
Basic/Supplemental Programs
X
2021502
Career & Technology Programs
X
20216
Instructional Admin & Supervision
2021601
Basic/Supplemental Programs
X
2021602
Career & Technology Programs
X
2021604
Professional Media Support
X
203
Instructional Salaries and Wages
20301
Regular Programs
X
20302
Special Programs
X
20303
Career & Technology Programs
X
20304
Gifted and Talented Programs
X
20308
School Library Media Programs
X
20309
Instructional Staff/Curriculum
Development
X
20310
Guidance Services
X
20311
Psychological Services
X
20312
Adult Education
X
204
Textbooks and Instructional Supplies
20401
Regular Programs
X
20402
Special Programs
X
20403
Career & Technology Programs
X
20404
Gifted and Talented Programs
X
20408
School Library Media Programs
X
20409
Instructional Staff/Curriculum
Development
X
18
Coding & Reporting Structure
20615
Ofce of the Principal
X
X
207
Student Personnel Services
X
X
208
Student Health Services
X
X
209
Student Transportation
X
X
210
Operation of Plant
20130
Warehousing and Distribution
X
X
20131
Other Operation of Plant
X
X
211
Maintenance of Plant
X
X
212
Fixed Charges
X
X
213
Food Services
X
X
214
Community Services
X
X
215
Capital Outlay
21534
Land & Land Improvements
X
X
21535
Buildings & Additions
X
X
21536
Remodeling
X
X
20410
Guidance Services
X
20411
Psychological Services
X
20412
Adult Education
X
205
Other Instructional Costs
20501
Regular Programs
X
20502
Special Programs
X
20503
Career & Technology Programs
X
20504
Gifted and Talented Programs
X
20508
School Library Media Programs
X
20509
Instructional Staff/Curriculum
Development
X
20510
Guidance Services
X
20511
Psychological Services
X
20512
Adult Education
X
206
Special Education
20604
Public School Instruction
X
20606
Programs in State Institutions
X
20607
Nonpublic School Programs
X
20609
Instructional Staff/Curriculum
Development
X
20616
Instructional Admin & Supervision
X
X
20615
Ofce of the Principal
X
X
Current
Expense
School
Construc-
tion
Debt
Service
Food
Service
Student
Activities
Trust/
Agency
Expenditure by Fund
19
Coding & Reporting Structure
Current
Expense
School
Construc-
tion
Debt
Service
Food
Service
Student
Activities
Trust/
Agency
100
Salaries and Wages
X
X
X
X
X
101
Salaries for Temporary/Substi
-
tute Teachers
X
X
102
Other Salaries -- Teachers and
Other
X
X
103
Teachers -- Certied
X
X
104
Aides and Assistants
X
X
200
Contracted Services
205
Rent (including operating leases)
X
X
X
206
Outside Food Service
X
207
Independent Audit Cost
X
X
X
209
Other Contracted Services
(cleaning services, repair/
maintenance, construction,
student transportation, food
service management, and other)
X
X
X
X
X
300
Supplies and Materials
321
Textbooks
X
X
X
322
Library Media
X
X
X
325
Food
X
327
Other Donated Commodities
X
328
Food Supplies
X
329
Other Supplies
X
X
X
X
400
Other Charges
X
X
X
408
Other Purchased Services
(includes non-employee
insurance, communications,
travel, non-energy utilities water
and sewer services, other)
X
X
X
Object-Subobject by Fund
412
Employee Retirement
X X X
413
Security Security
X X
X
414
Other Employee Benets
(tuition reimbursement,
unemployment insurance,
workers compensation, group
insurance
X X X
424
Energy Services
X
X
X
499
Miscellaneous (judgments, dues,
fees, subscriptions, short-term
interest)
X
X
500 Land, Buildings, and Equipment
551
Land
X
X
552
Buildings
X
X
554
Equipment
X X X
X
X
20
Coding & Reporting Structure
Current
Expense
School
Construc-
tion
Debt
Service
Food
Service
Student
Activities
Trust/
Agency
Object-Subobject by Fund
555
Depreciation
X
556
Depreciation (memo only)
X
600 Principal
661
Long-Term Bonds X
662
State Loans
X
700 Interest
761
Long-Term Bonds
X
762
State Loans
X
800
Transfers
X
881
Maryland LEAs
X X
882
Other LEAs
X
X
885
Other
X X
886
Interfund
X X X
X
X
890
Indirect Cost Recovery
X
Coding & Reporting Structure
21
This page is intentionally blank.
Coding & Reporting Structure
22
Administration
General
Support
Business
Support
Central
Support
Current Expense Fund
100 Salaries
101 Temporary/Substitute Teachers X X X
102 Other Salaries X X X
103 Teachers -- Certied
104 Aides and Assistants
200 Contracted Services
205 Rent & Operating Leases X X X
206 Outside Food Service
207 Independent Audit X
209 Other Contracted
Cleaning Services
Repair/Maintenance
Construction
Student Transportation
Food Service Management
Other
X X X
300 Supplies and Materials
321 Textbooks
322 Library
325 Food
327 Other Donated Commodities
328 Food Supplies
329 Other Supplies X X X
400 Other Charges
408 Other Purchased Services:
Travel X X X
Liability/Fidelity Insurance X
Property/Casualty Insurance
Communication
Utilities (not energy)
Other X X X
412 Employee Retirement
413 Social Security
414 Other Employee Benets
424 Miscellaneous
Judgments X
Object-Subobject by Fund/Category
Coding & Reporting Structure
23
Mid-Level
Administration
Instructional Salaries
Ofce
of the
Principal
Inst.
Admin.
and Su-
pervisor
Regu-
lar Pro-
grams
Gifted
and
Tal-
ented ESOL
Career
and
Tech
Adult
Educ
School
Media
Staff
Devel
Gui-
dance
Psych
Ser-
vices
X X X X X X X X X X X
X X X X X X X X X X X
X X
X X
X X
X X
X X
X X
X
X X
Current Expense Fund
Coding & Reporting Structure
Current Expense Fund
Administration
General
Support
Business
Support
Central
Support
Short-Term Interest
Other X X X
500 Land, Buildings, Equipment
551 Land
552 Buildings
554 Equipment--new & replacement X X X
555 Depreciation
556 Depreciation (memo)
600 Principal
661 Long-Term Bonds
662 State Loans
700 Interest
761 Long-Term Bonds
762 State Loans
800 Transfers
881 Maryland LEAs
882 Other LEAs
885 Other
886 Interfund
890 Indirect Cost Recovery X X
Object-Subobject by Fund/Category
24
Coding & Reporting Structure
25
Current Expense Fund
Mid-Level
Administration
Instructional Salaries
Ofce
of the
Principal
Inst.
Admin.
and Su-
pervisor
Regu-
lar Pro-
grams
Gifted
and
Tal-
ented ESOL
Career
and
Tech
Adult
Educ
School
Media
Staff
Devel
Gui-
dance
Psych
Ser-
vices
X X
X X
X X
Coding & Reporting Structure
Regular
Programs
Special
Programs
Career &
Tech
School
Media
Staff
Devel
Gui-
dance
Psych
Services
Adult
Ed
Current Expense Fund
Instructional Textbooks and Supplies
26
300
Supplies and Materials
321
Textbooks
X
X
X
322
Library Media
X
325
Food
X
X
X X
X
X
X
X
327
Other Donated Commidities
328
Food Supplies
329
Other Supplies
Object-Subobject by
Fund/Category
Coding & Reporting Structure
27
200
Contracted Services
205
Rent
X
X
X X X
X
X
X
206
Outside Food Service
207
Independent Audit
209
Other Contracted, Clean
-
ing Services, Repair/Main-
tenance, Construction,
Student Transportation,
Food Service Management,
Other
400
Other Charges
408
Other Purchased Services:
Travel
X
X
X X X
X
X
X
Liability/Fidelity Insurance
Property/Casualty Insurance
Communication
X
X
X X
X
X
X
X
Utilities (not energy)
Other
X
X
X
X
X
X
X
X
500
Land, Buildings, Equipment
551
Land
552
Buildings
554
Equipment--new & replace
-
ment
X
X
X X X
X
X
X
555
Depreciation
556
Depreciation (memo)
800
Transfers
881
Maryland LEAs
X
882
Other LEAs
X
Regular
Programs
Special
Programs
Career &
Tech
School
Media
Staff
Devel
Gui-
dance
Psych
Services
Adult
Ed
Current Expense Fund
Other Instructional Costs
Object-Subobject by
Fund/Category
Student
Personnel
Services
Student
Health
Services
Student
Trans-
portation
Object-Subobject by Fund/Category
Coding & Reporting Structure
Current Expense Fund
100 Salaries X X X
101 Temporary/Substitute Teachers X X X
102 Other Salaries X X X
103 Teachers Certied X X X
104 Aid and Assistance X X X
200 Contracted Services
205 Rent X X X
206 Outside Food Service
207 Independent Audit
209 Other Contracted
Cleaning Services
Repair/Maintenance X
Construction
Student Transportation X
Food Service
Management
Other X X X
300 Supplies and Materials
321 Textbooks
322 Library Media
325 Food
327 Other Donated Commodities
328 Food Supplies
329 Other Supplies X X X
400 Other Charges
408 Other Purchased Services:
Travel X X X
Liability/Fidelity Insurance
Property/Casualty Insurance X
Communications
Utilities (not energy)
Other X X X
412 Employee Retirement
413 Social Security
414 Other Employee Benets
424 Energy Services X
450 State Payment for On-Behalf X X X
451 Other Than State Payments for On-Behalf X X X
28
Current Expense Fund
Special Education
Operation of Plant
Class
Inst
State
Inst
Nonpub
Prog
Staff
Devel
Ofce
of the
Principal
Admin
Superv
Warehs
&
Distrib
Other
tenance
of
Plant
X X X X X X X
X X X X
X X X X
X X X X X X X
X
X X
X X X X X X X
X
X
X X X X X X X
X X X X X X X
X
X X
X
X X X X X X X
X
Coding & Reporting Structure
29
Main-
Student
Personnel
Services
Student
Health
Services
Student
Trans-
portation
Object-Subobject by Fund/Category
Current Expense Fund
499 Miscellaneous
Judgments
Short-Term Interest
Other X X X
500 Land, Buildings, Equipment
551 Land
552 Buildings
554 Equipment--new & replacement X X X
555 Depreciation
556 Depreciation (memo)
600 Principal
661 Long-Term Bonds
662 State Loans
700 Interest
761 Long-Term Bonds
762 State Loans
800 Transfers
881 Maryland LEAs
882 Other LEAs
885 Other
886 Interfund
890 Indirect Cost Recovery
Coding & Reporting Structure
30
Current Expense Fund
Special Education
Class
Inst
State
Inst
Nonpub
Prog
Staff
Devel
Ofce
of the
Principal
Admin
Superv
Warehs
&
Distrib
Other
tenance
of
Plant
X X X X X X X
X X X X X X X
X
X
X X
Coding & Reporting Structure
31
Operation of Plant
Main-
Object-Subobject by Fund/Category
Current Expense Fund
Fixed
Charges
Food
Service
Com-
munity
Service
100 Salaries X
101 Temporary/Substitute Teachers
102 Other Salaries
200 Contracted Services
205 Rent X
206 Outside Food Service
207 Independent Audit
209 Other Contracted
Cleaning Services
Repair/Maintenance
Construction
Student Transportation X
Food Service
Other X
300 Supplies and Materials
321 Textbooks
322 Library Media
325 Food
327 Other Donated Commodities
328 Food Supplies
329 Other Supplies X
400 Other Charges
408 Other Purchased Services:
Travel X
Liability/Fidelity Insurance X
Property/Casualty Insurance
Communications
Utilities (not energy)
Other X
412 Employee Retirement X
413 Social Security X
414 Other Employee Benets X
424 Energy Services
499 Miscellaneous
Judgments
Short-Term Interest X
Other X
32
Coding & Reporting Structure
Coding & Reporting Structure
Capital Outlay
Current Expense Fund
Bldgs &
Additions
Remod-
eling
School
Const
Fund
Debt
Service
Fund
Food
Service
Fund
Student
Activity
Fund
Trust &
Agency
Fund
X X X X X X
X X
X X X X
X
X
X X X
X
X X X X X X
X X
X
X
X
X X X X X X
X X
X X X X X X
X X X X X X
X
X
X
X
X X X X X X
33
Fixed
Charges
Food
Service
Com-
munity
Service
Object-Subobject by Fund/Category
Current Expense Fund
500 Land, Buildings, Equipment
551 Land
552 Buildings
554 Equipment--new & replacement X
555 Depreciation
556 Depreciation (memo)
600 Principal
661 Long-Term Bonds
662 State Loans
700 Interest
761 Long-Term Bonds
762 State Loans
800 Transfers
881 Maryland LEAs
882 Other LEAs X
885 Other X
886 Interfund X X
890 Indirect Cost Recovery X
Coding & Reporting Structure
34
Bldgs &
Additions
Remod-
eling
School
Const
Fund
Debt
Service
Fund
Food
Service
Fund
Student
Activity
Fund
Trust &
Agency
Fund
Current Expense Fund
Capital Outlay
X X
X
X
X
X
X
X
X
Coding & Reporting Structure
35
36
37
Fund source codes are used to identify
the funding source of restricted program
expenditures. Every federally-funded grant issued
by MSDE or other non-federal agency, most direct federal
revenue, and many state-funded programs are restricted. For
these programs, expenditures must be reported independently
on Restricted Expenditure Reports (see Appendix A, Instructions for
Completing the Annual Financial Report Forms, and Appendix C, Annual
Financial Reporting System).
On grants received from MSDE, the fund source code will be shown on the Notice of Grant
Award document. Fund source codes for federal programs funded directly from the federal
government or through another agency must be identied before reporting to MSDE. Fund source
codes will be updated annually in the Appendix to the User Guide at the Annual Financial Report
and Grant Reporting System website including codes for new revenue sources.
Revenue
Source Codes
38
39
The Assets, Liabilities, and Fund Balance
accounts are balance sheet accounts. Those that
are required to be reported on the Annual Financial
Report to the Maryland State Department of Education
are dened below.
300 Assets. Assets and other debits include what is owned and what is
not owned (as of the date of the balance sheet) but is expected to become
fully owned at some future date. Assets may be current or xed (long-term).
Current Assets are cash or anything that can be readily converted into cash and include the
following:
301 Cash and Cash Equivalents. Include all funds on deposit with a bank or savings
and loan institution, currency, coin, checks, postal and express money orders,
bankers drafts on hand or on deposit, petty cash, and cash on deposit with scal
agents. Also included are liquid investments that are both readily convertible to
a known amount of cash and so near maturity that insignicant risk of change in
value is present.
302 Temporary Investments. Include securities held for the production of interest
income, such as treasury notes and certicates of deposit, with maturity dates of
less than one year.
320 Accounts Receivable. Amounts owed on open accounts from private persons,
rms, or corporations for goods and services furnished by an LEA.
370 Inventories. Include cost of supplies and equipment on hand not yet distributed,
and value of goods held by an LEA for resale rather than for use in its own
operations.
399 Other Assets. Include all current assets other than those mentioned above.
Examples are long-term investments, prepaid expenses, and deposits.
Fixed Assets (long-term) are assets that are held or used over a long period of time. After the
implementation of GASB Statement Number 34, xed assets are no longer reported on the Balance
Sheet, only on the Statement of Net Assets.
383 Land and Land Improvements. Include the acquisition value of land and
permanent improvements to land, such as sidewalks, retaining walls, gutters,
pavement, etc. Include the purchase price and additional purchase costs. If land
or improvements are acquired by gift, the value shall reect the appraised value
at the time of ownership transfer.
384 Buildings and Additions. Include the acquisition value of permanent structures
used to house persons or property. If buildings are purchased or constructed,
this account includes the purchase or contract price of all permanent buildings
and the xtures attached to and forming a permanent part of such buildings. If
Financial
Statement
Account Denitions
buildings are acquired by gift, the value shall reect the appraised value at the
time of ownership transfer.
385 Furniture and Equipment. Include tangible property of more or less permanent
nature, other than land, buildings, and improvements. Examples are machinery,
tools, trucks, cars, buses, furniture, furnishings, and all other items meeting the
criteria for equipment.
389 Construction in Progress. Includes the cost of construction work undertaken
but not yet completed.
400 Liabilities. LEA debts or legal obligations that arise out of past transactions and are
payable but not necessarily due. Liabilities may be current or long-term and include the
following:
450 Payroll Deductions/Withholding. Include amounts deducted from employee
salaries for withholding taxes and other purposes. District-paid benets payable
also are included here.
473 Deferred Revenue - Transportation. Includes State aid for transportation
received but not yet expended.
474 Deferred Revenue - Other. Includes all revenue that are collected before earned
except state aid transportation.
499 Other Liabilities. Include all other LEA debts not listed above. Examples
are accounts payable, deposits payable, loans payable, lease obligations, and
unamortized premiums.
700 Fund Balance. Fund balance is the excess of assets over liabilities and reserves.
701 Opening Fund Balance. A restatement of the fund balance as reported at the end
of the preceding scal year.
710 Closing Fund Balance - Unreserved. The excess of assets over liabilities and
reserves at the end of the scal year.
712 Closing Fund Balance - Reserved. The portion of the excess of assets over
liabilities that is reserved for a specic purpose.
760 Prior Years’ Adjustments. An account to record money received as the result
of an abatement of prior year expenditures. The refund of expenditures made in
the same scal year may be recorded in the appropriate expenditure account as a
reduction of the expenditure.
Denitions: Financial Statement Account
40
LEAs receive funding from many sources.
Revenue may be restricted or unrestricted.
Unrestricted revenues are those received without
restriction other than the general restrictions imposed by
the parent government. Most local revenue and State revenue
sources are unrestricted.
Restricted revenues are those for which expenditure authority is maintained
by the grantor. Expenditure authority requires an approved budget, expenditures
are restricted to specic expenditure areas, and additional reporting requirements may be
imposed by the funding organization.
Revenue sources are to be reported as follows:
100 Revenues. Revenues are additions to assets that do not increase any liability, do not
represent the recovery of an expenditure, and do not represent the cancellation of certain
liabilities without a corresponding increase in liabilities or a decrease in assets. Revenues
are classied by category, program, and activity for state revenue only. The two-digit
code in the activity eld corresponds to the middle two digits of the Fund Number code
provided on all Notice of Grant Award documents issued by MSDE.
101 Local Appropriations. Money received from funds set aside periodically by the
appropriating body (city council, county commissioners, or county council) for school
purposes.
105 Other Revenue. Funds received from non-government sources that meet the denition
of revenue. Other revenue is reportable to the following areas:
10502 Tuition - Nonresident Students. Payments by nonresident students, welfare
agencies, or private sources for elementary and secondary education provided by
the LEA.
10503 Tuition - Adult Education. Payments received as tuition for adult continuing
and adult basic education provided by the LEA.
10505 Tuition - Summer School. Payments received as tuition for summer school
programs serving elementary and secondary students.
10509 Other Tuition. Payments received from students as tuition for instruction
programs not classied elsewhere.
10511 Student Payments/Fees. Payments by students for meals, admission to school-
sponsored activities, usage of school equipment, purchase of supplies and
materials, membership in school clubs or organizations, etc.
10512 Other Sales. Payments by persons other than students for meals or other items.
10520 Transportation Payments. Revenue from individuals, welfare agencies, or
private sources for transporting students to and from school or school activities.
41
Revenue
& Other
Fund Source
Account Denitions
10530 Earnings on Investments. Revenue from holdings invested for earnings
purposes, such as certicates of deposit, treasury investments, money markets,
etc.
10535 Rent. Revenue from the rental of either real or personal LEA property.
10598 Local Revenue For/On-Behalf of the LEA. Commitments or payments made
by the local governmental unit or a third party for the benet of the LEA, or
contributions of equipment or supplies.
10599 Other Miscellaneous Revenue. Other revenue from local sources not included
elsewhere; e.g., gifts, bequests, or gains on the sale of investments or assets.
120 State Revenue. Revenue from any agency of the State that originated within the state,
whether restricted or unrestricted. Restricted State revenues require individual
revenue/expenditure reporting annually. Restricted state revenues will be identied
as such on the notice of grant award. Unrestricted state revenue must be identied in
the revenue accounts by source, but the expenditures of these funds are reportable
along with other unrestricted funds.
State revenue accounts change as new programs are identied and funded.
Beginning in FY 2004, the Bridge to Excellence in Public Schools Act signicantly
changed the structure of state funding for public education. Numerous programs
have been consolidated into ve major funding programs. A few restricted state
programs still remain.
Shown below are the State revenue sources identied to the Major State Aid program.
12001 State Share of Foundation. Funded under the Bridge to Excellence in Public
Schools Act through Section 5-202 of the Education Article of the Annotated
Code of Maryland.
1200131 Formula
1200191 Supplemental Grant
12002 Compensatory Education. Funded under the Bridge to Excellence in Public
Schools Act through Section 5-207 of the Education Article of the Annotated
Code of Maryland.
1200237 Formula
12005 Formula Grants for Specic Populations. Sections 4-121 and 4-122 of the
Education Article of the Annotated Code of Maryland.
1200532 Schools Near County Lines (Tuition Bylaw)
1200534 Out-of-County Living Arrangements (Foster Care)
12007 Students with Disabilities. Sections 5-209, 8-414 and 8-415 of the Education
Article of the Annotated Code of Maryland provide a minimum guarantee for
Denitions: Revenue & Other Source Acct
42
Denitions: Revenue & Other Source Acct
special education funding levels; and for the State and local educational agencies
to fund nonpublic special education programs for students with disabilities for
whom neither the State nor local educational agencies can provide an appropriate
program. Additionally, funding is available for the Maryland Infants and Toddlers
program.
1200749 Formula (including Medicaid [State] IGT payments)
1200750 Nonpublic Placement
1200777 Maryland Infants and Toddlers
12009 Gifted and Talented. Funding for summer programs offering economics,
humanities, social sciences, leadership, science, visual and performing arts,
creative writing, mathematics, foreign languages, environmental studies, and
international studies at summer centers for gifted and talented students from each
of Maryland’s public school systems.
1200954 Gifted and Talented Grants
12013 Innovative Programs. Funding for projects to explore new ways of addressing
education issues and problems.
1201395 Smith Island Boat
12014 Adult Continuing Education. Funding to enable adults to acquire skills and
knowledge leading to a high school credential.
1201466 Formula
1201467 External Diploma
1201469 Literacy Works
12024 LimitedEnglishProcient. Funding in accordance with the Bridge to Excellence
in Public Schools Act, funded through Education Article 5-208 of the Education
Article of the Annotated Code of Maryland.
1202435 Formula
12025 Guaranteed Tax Base. Funding in accordance with the Bridge to Excellence
in Public Schools Act, funded through Education Article 5-210 of the Education
Article of the Annotated Code of Maryland.
1202586 Formula
12027 Food Service. State funds to supplement currently available federal and local
funds that expand and extend food and nutrition programs to needy children
throughout the State.
1202717 State Program
1202759 Maryland Meals for Achievement Program
43
12039 Student Transportation. Sections 5-205 and 8-410 of the Education Article
of the Annotated Code of Maryland provides transportation funding for public
school children and disabled children in nonpublic schools or state institutions.
1203978 Formula
1203979 Students with Disabilities
12052 Science/Math Education. Funding to strengthen science and mathematics
programs through activities such as summer sessions for teachers and equipment
incentive funds.
1205284 Grants
12054 School Quality, Accountability, and Recognition of Excellence. State Grants
for school improvement initiatives and the Challenge Grant program.
1205407 Schools in Improvement – Baltimore City
1205443 Schools in Improvement – Prince George’s County
1205493 Schools in Improvement – Other
12055 Teacher Development. State funding for teacher stipends and bonuses as set forth
in Section 6-306 of the Education Article of the Annotated Code of Maryland
1205555 StipendsforNBPTSCertication
1205558 Stipends for High Poverty Schools
1205560 Signing Bonuses
12057 Transitional Education Program. This program provides funding under the
Judith P. Hoyer Early Child Care and Education Enhancement Program.
1205780 Judith P. Hoyer Grants
12058 Head Start. The focus area is the expansion and improvement of Head Start
services in Maryland. Current grantees received funding under a formula since
FY 2000. Grantees are eligible to receive continuation funds by meeting the
programmatic criteria.
1205881 Head Start State Grants
12098 State Revenue For/On-Behalf of the LEA. Commitments or payments made
by the state for the benet of the LEA or contributions of equipment or supplies.
This represents the State Teachers Retirement and Pension System payments
made on behalf of the LEA to the State Retirement Agency.
12099 Other State Revenue. Other funding from MSDE headquarters budget or other
state agencies.
130 Federal Revenue. Revenue from any agency that originated as a federal program and
was either received direct from the federal government or was passed through another
agency to the LEA. Federal revenue shall be differentiated as follows:
Denitions: Revenue & Other Source Acct
44
13001 Unrestricted Grants-In-Aid (for example, Impact Aid). Revenue received
directly from the federal government as a grant to an LEA that can be used for
any legal purpose desired by the LEA without restriction.
13002 Restricted Through MSDE. Revenue from the federal government passed
through MSDE as a grant to the LEA which must be used for a categorical
purpose. All restricted federal grants passed to LEAs through MSDE require
Restricted Expenditure Reports.
13003 Restricted - Direct. Revenue direct from the federal government as a grant to
the LEA that must be used for a categorical or specic purpose. All restricted
federal grants received direct from the federal government require Restricted
Expenditure Reports.
13004 Restricted Through Other Agency. Revenue from the federal government
passed through an agency other than MSDE to the LEA that must be used for
a categorical purpose. All restricted federal grants passed to LEAs through any
agency require Restricted Expenditure Reports.
13050 USDA Commodities. The value of commodities received from the federal
government and used during the year.
13098 Federal Revenue For/On-Behalf of the LEA. Commitments or payments
made by the federal governmental for the benet of the LEA, or contributions of
equipment or supplies.
199 Other Resources (Nonrevenue). Other sources of funds to the LEA that represent
exchanges of property for cash, transfers between funds, compensation for loss
of property and equipment, or funds that must be repaid. Included are:
19901 Sale of Property/Equipment. Funds from the sale of xed assets.
19902 Net Insurance Recovery. Proceeds from insurance reimbursement for losses to
LEA property.
19903 Sale of Bonds. The proceeds from the sale of bonds.
19904 State Loans. Money received or due from the state as a loan to the LEA.
19910 Transfers In - Maryland LEAs. Money received from another LEA for services
rendered. Include tuition payments made by Maryland LEAs.
19911 Transfers In - Out-of-State LEAs. Money received from a school district in
another state for education services provided to students.
19920 Interfund Transfers. Amounts available from another fund that will not be
repaid. Excess self insurance receipts may be treated as interfund operating
transfers.
19999 Other Nonrevenue. Any other nancing source that does not meet one of the
denitions given above.
Denitions: Revenue & Other Source Acct
45
46
Expenditure details provide information
about the use of LEA resources. All funds
require expenditures to be reported by expenditure
object. The Current Expense Fund must also be reported
by expenditure Category/Program/Service Area. The level of
detail required (program activity level and subobject) is dependent
upon federal and state reporting requirements.
Category/Program/Activity Dimension
Section 5-101(b) of the Education Article requires a local school board to prepare a budget
that includes revenue and expenditure categories. LEAs must track expenditures according to
the purpose of the expenditure and in sufcient detail to meet all reporting requirements. The
accounts shown below include levels of detail that would not be required on MSDE Annual
Financial Reports. Account codes indicate which accounts will be reportable to MSDE. All areas
without a code are given to further explain the categories/programs/activities and may be needed
by LEAs for other reporting purposes. LEAs should review the types of nancial information
that they have been asked to provide and design accounting systems that facilitate all reporting
requirements.
The Category/Program/Activity accounts are required for reporting restricted and unrestricted
expenditures in the Current Expense Fund and restricted expenditures in the Trust/Agency Fund.
Expenditures are also reportable to the program areas identied in Category 15 - Capital Outlay
for the School Construction Fund.
Category 201 - Administration
201 Administration. Administration includes the activities associated with the general
regulations, direction, and control of the LEA. Such activities as establishing and
administering LEA operating policy, providing scal and internal services necessary for
operating the LEA, supporting each of the other instructional and supporting services
programs, and assisting the instructional staff with the content and process of providing
learning experiences for students are included in Administration. Administrative
expenditures affect the LEA as a whole and are not conned to a single school building.
20121 General Support Services. The activities concerned with establishing and
administering policy for LEA operations. Included are:
Board of Education Services. Activities of the elected or appointed body that is
created according to state law and vested with the responsibility of directing, planning,
and making policy for the LEA, including but not limited to directing and managing
the general operation of the LEA and attending school district meetings. Included
are:
• services of the Secretary or Clerk of the Board of Education;
• legal services (legal services directly related to Special Education may be
charged to Special Education), including general liability situations;
• external audit services;
• treasurer services;
• election services; and
• other services directly performed by the elected or appointed Board.
47
Expenditure
Account
Denitions
Executive Administration. Activities associated with the overall general
administration of or executive responsibility for the entire LEA. Examples are:
• the ofce of the superintendent including activities of deputy, associate, and
assistant superintendents unless the activities can be placed in another category,
program, or activity;
• community relations operated systemwide for bettering school/community
relations, including system promotion and support of school/business
partnerships;
• state and federal relations associated with the development and maintenance of
good federal/state relationships;
• grant procurement; and
• other associated activities.
20122 Business Support Services. Activities concerned with paying, transporting, exchanging,
and maintaining goods and services for the LEA. Included are the scal and internal
services necessary for LEA operations. Business services provided by central ofce
staff for an individual school or for any of the other categories dened in this Manual are
to be reported here. These expenditures are not distributable to any other expenditure
category. Do not include school bookkeepers or school business managers here; they
should be charged to 20206 or 20606 - Ofce of the Principal. Included are the following
services:
Fiscal Services. Activities concerned with the scal operations of the LEA. Examples
are:
• directing, managing, and supervising scal services;
• budgeting;
• receiving and disbursing funds;
• payroll;
• nancial accounting;
• internal auditing;
• property accounting; and
• other scal services.
Purchasing Services. Activities concerned with purchasing supplies, furniture, equipment,
and materials used in school or school system operations.
Printing, Publishing, and Duplicating Services. The activities of printing and publishing
administrative publications such as annual reports, school directories, and manuals.
Activities here also include centralized services for duplicating school materials such as
school bulletins, newsletters, and notices. Record the total cost of staff and equipment;
materials may be charged to the category for which the service was provided.
20123 Centralized Support Services. Activities that, whether contracted out or performed
within an internal service fund, support each of the other instructional and supporting
services programs. Planning, research, development, and evaluation services are
included. Activities of a systemwide nature associated with selecting or identifying the
overall, long-range goals and priorities of the organization or a program; researching,
developing, and improving education programs; and evaluating or appraising the success
Denitions: Expenditure Acct
48
of a particular previously-established goal or program. Include costs associated with
administering the standardized and criterion reference tests.
Information Services. Activities concerned with dissemination of educational and
administrative information to the public through various news media, personal contacts,
reports, brochures, or other means. Examples are:
• directing, managing, and supervising information services;
• collecting, editing, and publishing information needed about the operation of the
LEA; and
• writing, editing, and providing administrative information to students and staff.
Human Resource Services. Activities concerned with providing staff services.
Sabbaticals for non-instructional staff should be charged here. Tuition reimbursement
for non-instructional staff should be charged to category 212 - Fixed Charges and
distributed to this account in the Fixed Charges supplemental report group (Fund 9):
• directing managing, and supervising staff services;
• recruiting and placing LEA personnel;
• providing in-processing programs for personnel;
• providing systemwide staff relations and negotiations services for all personnel;
• administering the employee benets programs, such as employee wellness
programs;
• operating staff health programs, such as physical examinations, emergency care,
and referral services;
• recording and summarizing staff-related information; and
• providing in-service training for non-instructional personnel.
Data Processing Services. All activities concerned with directing, managing,
and supervising centralized data processing services, including systems analysis,
programming, data entry, and data processing operations. Include all costs associated
with the data processing staff, equipment, and supplies as well as any data processing
services that are contracted out. Data processing related to the Student Transportation
program may be charged to 209 - Student Transportation. Software, in general should
be charged to the program that the expenditures supports.
Category 202 - Mid-level Administration. Administration and supervision of district-wide
and school-level instructional programs and activities identied in categories 203 -
Instructional Salaries, 204 - Textbooks and Instructional Supplies, and 205 - Other
Instructional Costs. Included are the following programs:
20215 OfceofthePrincipal(SchoolAdministration) - Activities concerned with managing
the operation of a particular school or schools, including duties performed by the principal,
assistant principals, non-teaching school-based department chairpersons assigned full-
time to individual schools, school business managers, school clerical staff, and others
in the general supervision of individual school administrative services. Evaluation of
the school staff, assignment of duties to staff, supervision and maintenance of school
records, and coordination of school instructional activities with LEA instructional
activities are examples of school administration. Include the cost of school building
Denitions: Expenditure Acct
49
communications and graduation expenses here. Includes school telephones, fascimile
machines, and cell phones.
2021501 Basic/Supplemental Programs. Activities in the ofce of the principal concerned
with managing the operation of schools other than special education and Career and
Technology education schools or centers.
2021502 Career and Technology Programs (Career and Technology School or Center).
Activities in the ofce of the principal concerned with managing Career and Technology
education schools or centers.
20216 Instructional Administration and Supervision. Activities that enhance instruction
and assist instructional staff in planning, developing, and evaluating the process of
providing learning experiences for students. Included are:
2021601 Instructional Program Direction and Improvement. Activities associated with
directing, managing, supervising, and evaluating the non-career and technology
instructional program to improve instructional services. Examples are:
• curriculum development activities performed by central ofce personnel
including management and supervision of curriculum development;
• supervision of guidance and psychological services; and
• development of instructional techniques.
2021602 Career & Technology Program Direction and Improvement. Activities associated
with directing, managing, supervising, and evaluating the career and technology
instructional program to improve instructional services. Examples are:
• curriculum development activities performed by central ofce personnel, including
management and supervision of curriculum development; and
• development of instructional techniques.
2021604 Professional Media Support Services. Activities associated with directing, managing,
and supervising educational media services. Services provided can include professional
libraries, the review and evaluation of instructional materials, and services for the
schools. In addition, professional media support services can include the following:
Audiovisual Services. Activities such as selecting, preparing, caring for, servicing, and
making available to members of the instructional staff the equipment, lms, lmstrips,
transparencies, tapes, TV programs, and similar materials.
Educational Television Services. Activities involving planning, programming,
writing, and presenting educational programs or segments of programs by closed-
circuit or broadcast.
Instructional Categories:
The following three categories are subsets of Instruction as dened below. These categories are
also reportable to the instructional program/activity levels dened later in this section. These
Denitions: Expenditure Acct
50
categories have limited expenditure object details and are separated to give greater budgetary
control to county governments in approving school system budgets:
Category 203 - Instructional Salaries and Wages (Object 1 only)
Category 204 - Instructional Textbooks/Supplies (Object 3 only)
Category 205 - Other Instructional Costs (Objects 2, 4, 5, 8 only)
Instruction. Activities that directly or adjunctly deal with teaching students in non-
special education settings. Teaching may be provided in a school classroom via direct
delivery, instructional television, computer-assisted instruction, on-line services,
or through correspondence; in another location such as a home or hospital; or in
other settings where students are instructed, presented with learning experiences, or
participate in extra- or co-curricular activities. Instruction also includes most activities
that occur on a regular basis at the school level or for the benet of the instructional
program, such as school media services, guidance and psychological services for all
students, instructional staff development, and salaries of school department chairpersons
who also teach. Do not include the costs associated with hard-wiring a classroom for
electronic media capability or repairing and maintaining instructional equipment. These
expenditures should be charged to 210- Operation of Plant or 215- Capital Outlay, as
appropriate. Also excluded are expenditures related to maintenance of instructional
equipment; these are to be charged to 210- Operation of Plant. Costs associated with the
delivery of special education services, excluding guidance and psychological services,
are not to be reported here but are to be recorded in Category 206- Special Education.
Category 203 – Instructional Salaries and Wages (Object 1 only). Salaries and wages for
Instruction (as dened above), reportable to the program areas described on pages 52 -
54. Instructional salaries are those for staff whose responsibilities include interaction
with students in the delivery of instructional programs and related student instructional
support services as dened above. Included are salaries for the following position
types employed by the board of education, including those staff supported by federal
funding if they are receiving wages and are considered as employees according to the
Internal Revenue Service:
• teachers and instructors (e.g., classroom, resource, instructional television, home
and hospital, outdoor education);
• teaching assistants;
• teacher aides (classroom, lunchroom, etc.);
• teacher trainers (master teachers);
• teaching interns;
• tutors;
• reading specialists;
• school librarians/media specialists;
• school department chairpersons who also teach (non-teaching department
chairpersons should be charged to 20215 - ofce of the principal);
• guidance counselors and assistants;
• school psychologists;
• coaches;
• classroom technical support staff;
• substitutes; and
• library aides.
Denitions: Expenditure Acct
51
Category 204 – Instructional Textbooks/Supplies (Object 3 only). All supplies and materials
used in support of Instruction are reportable to the program areas described on pages
52-58.
Category 205 - Other Instructional Costs (Objects 2, 4, 5, 8 only). All other expenditures for
Instruction reportable to the program areas described on pages 52-58.
Instructional Programs. Instruction expenditures are reportable to the following instructional
program areas: Regular Programs – 01, Special Programs – 02, Career and Technology
Education Programs – 03, Gifted and Talented Programs – 04, Nonpublic School Transfer
Programs – 07, School Library Media Programs – 08, Instructional Staff Development –
09, Guidance Services – 10, Psychological Services – 11, and Adult Education Programs
– 12. Instructional programs in association to relevant expenditures categories are dened
below.
20301
20401
20501 Regular Programs. Activities that deal with teaching and coaching elementary and
secondary students during the regular school day or during the hours of school-sponsored
activities as part of the regular non-special, non-exemplary educational program. Include
teachers, teacher aides, and school-level department chairpersons who teach if it is not
possible to prorate the percentage of time between program 20215 - Ofce of the Principal
and this program. Examples are:
Art. One of the ne arts, art instruction provides activities involving primarily
visual, tactile, and kinesthetic expression. Included in art instruction are drawing,
painting, print making, sculpture, pottery, art history and theory, and spatial concepts
such as architecture and design for the performing arts.
Business. Non-Career and Technology activities designed to develop attitudes,
knowledge, skills, and understanding of business principles and practices to use in
the business world, in personal situations, or both.
Computer Science. Instructional programs that are designed to provide students
with basic knowledge and understanding of the electronic processing, storage,
retrieval, and transmission of data.
Dance. One of the ne arts, dance uses the human body as its expressive instrument
and movement as the mechanism for communication. Dance is represented by
structured, rhythmic movement in space and time resulting in communication of an
idea, mood, or situation.
Drama/Theater. A ne art involving a collaborative artistic expression by actors
before an audience to create and examine experiences that imitate and symbolize
human behavior and actions. Basic components of drama/theater are text, actors,
directors, designers, and technicians.
Driver Education and Safety. Learning experiences designed to help students
become good trafc-conscious citizens who operate motor vehicles safely and
respond appropriately when driving or walking in trafc.
Denitions: Expenditure Acct
52
English Language Arts. Activities concerned with developing an understanding
of the language system, prociency and control in the use of the English language,
appreciation of a variety of literary forms, including theater and drama, understanding
and appreciating aspects of past and present cultures as expressed in literature, and
interests that will motivate lifelong learning. Included are reading teachers, reading
specialists, speech and language teachers, English teachers, journalism teachers,
and aides.
Foreign Language. Learning experiences designed to provide skills in speaking,
writing, and understanding languages other than English. Included are various
classical and modern foreign languages when taught as a second language such as
French, German, Japanese, Latin, Russian, and Spanish.
Health. Learning experiences designed to provide students with knowledge and
skills that lead to an understanding about self and one’s relationship with others;
provide knowledge of tobacco, alcohol, and other drugs; provide information
about sound personal health practices; provide information about the value of
achieving a healthy lifestyle through responsible nutritional and tness behaviors;
provide knowledge of disease and methods for prevention and control; and provide
understanding of behavior and skills that promote safe living.
Physical Education/Recreation. Includes the body of related subject matter
and activities in physical education and recreation. These areas are organized
for carrying on learning experiences concerned with physical and mental growth
and tness through activities designed to improve the muscles, motor skills, and
attitudes.
Junior ROTC. Activities organized into programs of instruction to provide
opportunities for students to prepare for and achieve careers in selected branches of
the military.
Mathematics. Activities concerned with the science of relations existing between
quantities (magnitude) and operations, and with the science of methods used for
deducing from other quantities, known or supposed, the quantities sought. Examples
are arithmetic, algebra, geometry, calculus, differential equations, statistics, and
consumer math.
Music. Subject matter designed to impart the skills and knowledge necessary for
the understanding, appreciation, creation, performance, and enjoyment of music.
Included are both instrumental and vocal music.
Outdoor Education. Learning experiences included in the curriculum, in any
subject area and at any grade level, that can best be taught outside the classroom.
Science. Activities concerned with knowledge of the physical and biological
world and the processes of discovering and validating this knowledge. Examples
are astronomy, biology, chemistry, general science, geology, natural science, and
physics.
Social Science. Interrelated subject matter organized to impart knowledge, develop
skills, and identify goals concerning elements and institutions of human society.
Denitions: Expenditure Acct
53
Examples are anthropology, economics, geography, history, philosophy, political
science, psychology, and sociology.
Other Classroom Activities. Any other formal presentation of subject matter not
dened above.
Extra-curricular/Cocurricular Activities. School-sponsored activities under
the guidance of qualied adults designed to provide opportunities for students to
participate on an individual basis, in small groups, or in large groups at school
events, public events, or a combination of these for purposes such as motivation,
enjoyment, and improvement of skills. Cocurricular activities normally supplement
the regular instructional program and include such activities as band, chorus, choir,
speech, debate, and school sponsored athletics. Participation usually is not required,
and credit is not given.
Title I, Part A LEA 1% Parent Involvement Reservation of Funds. LEA
programs, activities, protocols, and procedures contained in Section 1118 of the
Federal Elementary and Secondary Educatoin Act (ESEA) as amended.
20302
20402
20502 - Special Programs. Activities designed for students with exceptional abilities or cultural
differences, including:
Programs for the Linguistically and Culturally Diverse. Special English-language
learning experiences for students who require additional educational opportunities
beyond those provided in the usual school program to achieve at their level of
ability. Included here are English Language Learners (ELL) and bilingual education
programs.
Other Special Programs. Programs such as migrant education, compensatory
education, and others that cannot be included in any of the above classications.
20303
20403
20503 - Career and Technology Education Programs. Organized educational programs that
are directly related to the preparation of individuals for paid or unpaid employment,
including:
Agriculture Science and Technology. Activities that enable students to acquire the
background, knowledge, and skills necessary to enter a wide range of agriculturally-
related occupations. The instruction emphasizes the functions of agriculture production,
supplies, mechanization, and products; ornamental horticulture; forestry; agricultural
resources; and the services related thereto.
Marketing Education. Activities concerned with directing the ow of goods and
services, including their appropriate utilization, from the producer to the consumer.
These activities include selling, buying, transporting, storing, promoting, nancing,
marketing research, and management.
Denitions: Expenditure Acct
54
Cooperative Education. Programs employing the school-employer cooperative
method in which a major portion of the skill development occurs with a participating
employer.
Allied Health Occupations. Activities designed to impart knowledge and develop
understanding and skills required by occupations that support the health professions.
Instruction is organized to prepare students for occupational objectives concerned
with assisting qualied personnel in providing diagnostic, therapeutic, preventive,
restorative, and rehabilitative services to people. Instruction also includes
understanding and skills essential to provide care and health services to patients.
Home Economics. Activities organized to enable students to acquire knowledge
and develop understanding, attitudes, and skills relevant to personal, home, and
family life and to home economics occupations.
Technology Education. Activities organized to develop understanding about
all aspects of industry and technology. Included are experimenting, designing,
constructing, and evaluating; using tools, machines, materials; and using processes
which may help individuals make informed and meaningful occupational choices.
Business and Ofce Occupations. Activities organized into programs of
instruction to provide opportunities for students to prepare for, upgrade skills, or
retrain for selected ofce occupations. Learning experiences are designed to lead
to individual employment or advancement in occupations in public and private
enterprises.
Career and Technology Support Services. Career and technology education
programs that provide extra help for students enrolled in occupational instruction.
This program is designed to provide support services for students who would not
succeed in regular programs without these services.
Technical Education. Classroom and laboratory experiences to prepare students
for a cluster of job opportunities in specialized elds of technology. A planned
sequence of study and extensive knowledge in a eld of specialization is required
in technical education, including competency in the basic communication skills and
related general education. Technical education prepares for the occupational area
between the skilled craftsman and the professional person.
Trades and Industrial Occupations. Subject matter organized to prepare students
for initial employment or to upgrade or retain workers in a wide range of skilled or
semi-skilled trade and industrial occupations.
20304
20404
20504 – Gifted and Talented Programs. Special learning experiences for students from all
cultural groups, across economic strata, and in all areas of human endeavor identied
with outstanding talent and ability. Gifted and talented students perform or demonstrate
the potential for performing at remarkably high levels of accomplishment when compared
with their chronological peers in such areas as intellectual abilities, leadership abilities,
Denitions: Expenditure Acct
55
creative abilities, artistic abilities, or abilities in specic academics. Prior to scal year
2004, reporting these programs was embedded in the special programs classication.
They are separately identied here because the U. S. Department of Education requested
that they be classied as Special Education for reporting purposes.
20307
20407
20507 – Nonpublic Schools Transfer Programs. Educational programs for eligible students in
nonpublic schools can be nanced with the transfer of the federal funds that have been
allocated in the budget of the local school system.
20308
20408
20508 – School Library Media Programs. Activities concerned with the selection, organization,
management, and use of all school instructional materials, supplies, and equipment
that are processed and/or inventoried by the school media center. Included are books,
periodical subscriptions, licensing agreements for online subscriptions, and audiovisual
and computer equipment with appropriate software and peripherals. Examples include
lmstrip projectors and lmstrips; videocassette recorders/players, cameras, videotapes,
and projectors; audio cassette recorders/players; computers, CD-ROM players and
disks; telephone, telephone lines and modems; printers; and television monitors/
receivers, antennas, satellite dishes, cables, closed circuit, etc.
20309
20409
20509 – Instructional Staff Development. Activities that contribute to the professional or
occupational growth and competence of members of school-based instructional staff
(teachers, instructional aides, psychological personnel, guidance counselors, and library
personnel) during the time of their service to the school system or school. Included
are the exceptional costs incurred for workshops, demonstrations, school visits, and
teacher mentoring programs, such as salaries for substitutes while teachers attend
staff development activities or extra pay for school-based instructional staff attending
summer workgroups to enhance the instructional program. Do not include curriculum
developmentactivitiesperformedbycentralofcepersonnelhere.Thesecostsare
to be recorded in 20216- Administration and Supervision - Instructional Programs.
Sabbaticals for instructional staff should be charged here. Courses for college credit
should be charged to category 212- Fixed Charges and distributed to Instructional Staff
Development on the Fixed Charges Supplemental report group.
20310
20410
20510 – Guidance Services. Activities of counseling students and parents, consultation
with other staff members on learning problems, assisting students in personal social
development, assessing the abilities of students, assisting students as they make their
own educational and career plans, providing referral assistance, and working with other
staff members in planning and conducting guidance programs for students. Guidance
includes the following:
Counseling Services. Activities concerned with the relationship between one or more
counselors and one or more students as counselee, between students and students, and
between counselors and other staff members. These activities help the student understand
Denitions: Expenditure Acct
56
his or her educational, personal, and occupational strengths and limitations; relate his
or her abilities, emotions, and aptitudes to educational and career opportunities; utilize
his or her abilities in formulating realistic plans; and achieve satisfying personal and
social development.
Appraisal Services. Activities that assess student characteristics; are used in
administration, instruction, and guidance; and assist the student in assessing his or her
purposes and progress in career and personality development.
Information Services. Activities for disseminating educational, occupational, and
social information to help acquaint students with the curriculum and with educational
and Career and Technology opportunities and requirements.
Record Maintenance Services. Activities for compiling, maintaining, and interpreting
cumulative records of individual students, including systematic consideration of such
factors as home and family background, physical and medical status, standardized test
results, personal and social development, and school performance.
Placement Services. Activities that help place students in appropriate situations
while they are in school. These could be educational situations, part-time employment
while they are in school, and appropriate educational and occupational situations after
they leave school. These activities also help ease the student’s transition from one
educational experience to another. The transition may require, for example, admissions
counseling, referral services, assistance with records, and follow-up communication
with employers.
20311
20411
20511 - Psychological Services. Activities concerned with administering psychological tests
and interpreting the results; gathering and interpreting information about student
behavior; working with other staff members in planning school programs to meet the
special needs of students as indicated by psychological tests; behavioral evaluation;
planning and managing psychological services, including psychological counseling for
counseling students, staff, and parents. Include all the following activities:
Psychological Testing Services. Activities concerned with administering psychological
tests, standardized tests, and inventory assessments. These tests measure ability, aptitude,
achievement, interests, and personality. Activities also include the interpretation of
these tests for students, school personnel, and parents.
Psychological Counseling Services. Activities in which a school psychologist
or other qualied person is the counselor to one or more students being counseled.
These services help students to perceive, clarify, and solve problems of adjustment and
interpersonal relationships.
Psychotherapy Services. Activities that provide a therapeutic relationship between a
qualied mental health professional and one or more students, in which the students are
helped to perceive, clarify, and solve emotional problems.
Denitions: Expenditure Acct
57
20312
20412
20512 - Adult Education. Instructional programs offered for adults who are pursuing their
basic or continuing education objectives.
Category 206 – Special Education. Activities designed for students who, through appropriate
assessment, have been determined to have temporary or long-term special education
needs arising from cognitive, emotional, and/or physical factors, as dened in the State
Board of Education’s Special Education Bylaw. Only direct special education-related
expenditures are to be charged here.
Guidance services should be charged to Program 10- Guidance within the Instruction
categories, and psychological services should be charged to Program 11 within the
Instruction categories. Nursing and health-related costs should be charged to 208-
Health Services.
20604 Public School Instruction Programs. Instructional activities for students with
disabilities in the public schools of the LEA.
20606 Education Programs in State Institutions. Day and residential programs for students
with disabilities who receive their special education services in a state institution such
as the School for the Blind or the School for the Deaf.
20607 Nonpublic School Programs. Special education day or residential programs provided
to students placed in State-approved nonpublic schools.
20609 Instructional Staff Development. Activities that contribute to the professional or
occupational growth and competence of members of school-based instructional
staff (teachers, instructional aides, psychological personnel, guidance counselors,
and library personnel) during the time of their service to the school system or
school. Included are the exceptional costs incurred for workshops, demonstrations,
school visits, and teacher mentoring programs, such as salaries for substitutes while
teachers attend staff development activities or extra pay for school-based instructional
staff attending summer workgroups to enhance the instructional program. Do not
includecurriculumdevelopmentactivitiesperformedbycentralofcepersonnel
here. These costs are to be recorded in 20616- Instructional Administration and
Supervision. Sabbaticals for instructional staff should be charged here. Courses for
college credit should be charged to category 212 - Fixed Charges and distributed to
Instructional Staff Development on the Fixed Charges supplemental report group.
20615 OfceofthePrincipal (School Administration). Activities concerned with managing
the operation of a particular school or schools, including duties performed by the
principal, assistant principals, non-teaching school-based department chairpersons
assigned full-time to individual schools, school business managers, school clerical
staff, and others in the general supervision of individual school administrative
services. Evaluation of the school staff, assignment of duties to staff, supervision and
maintenance of school records, and coordination of school instructional activities with
LEA instructional activities are examples of school administration. Include the cost of
school building communications and graduation expenses here.
Denitions: Expenditure Acct
58
20616 Instructional Administration and Supervision. Activities associated with directing,
managing, supervising, and evaluating the instructional program to improve instructional
services. Examples are:
• curriculum development activities performed by central ofce personnel,
including management and supervision of curriculum development; and
• development of instructional techniques.
Category 207 – Student Personnel Services. Activities designed to improve student attendance
at school and to prevent or solve student problems in the home, the school, and the
community. Pupil personnel workers and school social workers should be charged
here. Examples of student personnel services are:
• directing, managing, and supervising attendance and social work services;
• identifying non-attendance patterns, analyzing causes of non-attendance,
promoting improved attitudes toward attendance, and enforcing the compulsory
attendance law;
• investigating and diagnosing student problems arising out of the home, school, or
community;
• casework and group work services for the child, parent, or both;
• interpreting the problems of students for other staff members;
• promoting modication of the circumstances surrounding the individual student
that are related to his or her problem;
• acquiring and maintaining records of school attendance, home location, family
characteristics, and census data; and
• preparing pertinent statistical reports.
Category 208 – Student Health Services. Physical and mental health activities that are not
instructional and that provide students with appropriate medical, dental, and nursing
services. Examples are:
• directing and managing health services;
• activities concerned with the physical and mental health of students, including
health appraisal, physical and mental health screening, periodic health
examinations, emergency injury and illness care, nursing services, dental services,
and other health-related services for students; and
• nursing services, such as health inspection, treatment of minor injuries, and
referrals for other health services.
Expenditures for debrillators are to be charged to the area where they are budgeted.
Category 209 – Student Transportation Services. Activities concerned with the conveyance of
students between home, school, and school activities. Included are vehicle operation
services, monitoring services, vehicle servicing and maintenance services, and other
pupil transportation services such as:
Regular Transportation Programs. Transportation for students who do not require
special equipment or personnel to be transported and/or do not require transportation
to special schools. Activities in this program include the transportation of students
Denitions: Expenditure Acct
59
between established school bus stops and the schools that they attend; transportation
of students to the closest LEA-owned, leased, or rented facility that provides necessary
services; and transportation of students to outdoor education school sites for two or
more days.
Special Transportation Programs. Transportation services for public and nonpublic
students who have physical, mental and/or emotional disabilities and are transported
on a “handicap vehicle,” “regular vehicle on a handicap run,” private car, or taxicab. A
“handicap vehicle” is a contracted or publicly-owned vehicle that exclusively transports
students with disabilities. These vehicles require special equipment and/or bus aides,
or are routed to special education schools.
School Activities Transportation. Transportation services to students for eld trips,
to sports, and interscholastic activities, to cooperative education programs, for Career
and Technology purposes, for special programs, and to summer school programs and
day camps.
Do not include the cost of transporting regular students to nonpublic schools,
transportation of the elderly to schools for senior citizen feeding programs, or
services for the community to recreation programs. These costs are to be reported
in 214 - Community Services.
The cost of leased school bus lots should be reported under Rent -- Transportation. If
the lots are owned by the county, the lots should be reported as xed assets.
Category 210 – Operation of Plant. Activities concerned with keeping the physical plant open,
comfortable, and safe for use. Activities include:
21030 Warehousing and Distributing Services. Activities concerned with receiving, storing,
and distributing supplies, furniture, equipment, materials, and mail. Included are
managing and supervising warehousing and distribution services.
21031 Operating Services. Activities concerned with keeping the physical plant clean and
ready for daily use, including operating the heating, lighting, and ventilating systems
(utility costs) and keeping the buildings clean. Costs of building rental and property
insurance (asset coverage) should be charged here. Examples of operating services
are:
• supervision of Operation of Plant Services; and
• directing, managing, and supervising the operation of plant facilities.
Care and Upkeep of Grounds and Buildings. Activities involved in maintaining the
condition of the grounds and facilities, such as snow removal, landscaping, grounds
maintenance, routine maintenance on furniture and movable equipment, utility services,
and custodial services. Include service technicians assigned to repair and maintain
instructional and non-instructional equipment and cost of all service contracts on
movable equipment here.
Security Services. Activities concerned with maintaining order and safety in school
buildings, on the grounds, and in the vicinity of schools. Included are police activities
Denitions: Expenditure Acct
60
for school functions, trafc control on grounds and in the vicinity of schools, building
alarm systems, and hall monitoring services.
Category 211 – Maintenance of Plant. Activities concerned with keeping the grounds, buildings
and xed equipment (other than student transportation assets, which is to be included
in category 209 - Student Transportation, and furniture and movable equipment, which
is to be included in category 210 - Operation of Plant), in their original condition of
completeness or efciency through repair, scheduled and preventive maintenance, or
replacement of property. Included are:
Supervision of Maintenance of Plant Services. Directing, managing, and supervising
the maintenance of plant services and automated management systems.
Upkeep of Grounds, Buildings, and Fixed Equipment. Activities concerned with
preventive maintenance when such maintenance is on a regular schedule, repair
maintenance for unpredictable circumstances, and minor modernizations and alterations
to change the original condition or original function of equipment. Included are costs
of bringing a building into compliance with changing code requirements relating to
accessibility, safety, health, pollution, and re code regulations. Examples are asbestos
removal, blacktop replacement, oor nishes, roof repair and replacement, and repair
and maintenance of xed equipment. When the asset value of a building is increased,
charge the expenditure to 215 - Capital Outlay. Include cost of repair/maintenance
of movable equipment in 210 - Operation of Plant.
Vehicle Maintenance Services (other than Student Transportation Vehicles).
Activities involved in maintaining general purpose vehicles such as trucks, tractors,
graders, and staff vehicles. Included are safety inspections, vehicle repair and
maintenance, painting, greasing, and fueling.
Category 212 – Fixed Charges. Charges of a generally recurrent nature which are not readily
allocable to other expenditure categories. Included are:
• local school board contributions to employee retirement and social security;
• employee insurance benets (health, life, accident, disability, etc.);
• delity insurance, personal liability insurance, and judgements (distribute to
General Support Services on the Fixed Charges supplemental report group);
• interest on current loans; and
• personnel tuition reimbursements for all staff (distribute to the proper category on
the Fixed Charges supplemental report group).
Do not include building rental or property insurance (asset coverage) here;
include these costs in 210 - Operation of Plant. Do not include salaries, supplies,
or equipment in this category.
Category 213 – Food Service. Activities concerned with providing food to students and staff
in school or the LEA as well as a Senior Feeding Program. Only that portion of
expenditures that is not reimbursable are recorded in the Current Expense Fund and
reported as an Interfund Transfer to the Food Service Fund. The Food Service Fund
Denitions: Expenditure Acct
61
shall show all Food Service Interfund Transfers as an Interfund Transfer in the Revenue
account and as expenditures to the appropriate objects/subobjects.
Category 214 – Community Services. Activities that are provided by the LEA for the community
or some segment of the community other than for public school activities and adult
education programs, including all expenditures other than insurance and contributions
to retirement funds for current expense items that are directly related to community
services. Three types of salaries that fall into community services are the prorated
portion of the normal salaries of regular day school employees, additional salaries paid
to regular day school employees for community services, and salaries of personnel
employed specically for some community service activity.
Regular Community Services. Activities that are not directly related to the provision
of education for students of the LEA, including community recreation programs, civic
activities, public libraries, programs of custody and care of children, and community
welfare activities provided by the LEA for the community.
Nonpublic Non-disabled Student Transportation Services. Transportation services
to regular students who attend nonpublic schools.
Community Transportation Programs. Transportation services for the community to
recreation programs and civic activities, for example, the transportation of the elderly
to schools for senior citizens feeding programs.
Category 215 – Capital Outlay. Activities concerned with the cost of directing and managing the
acquisition, construction, and renovations of land, buildings, and equipment. Include
expenditures for land, buildings, improvement of grounds and buildings, construction
or remodeling of buildings and additions, and initial installation and extension of
service systems and other built-in equipment. Included here are site acquisition and
improvement services; architecture and engineering services; educational specications
development services; and building acquisition, construction, and improvement
services. Only expenditures paid for out of current funds are recorded in the Current
Expense Fund. All other capital outlay expenditures are to be recorded in the School
Construction Fund.
NOTE: Expenditures for all repairs to building structures that do not add to the existing
asset value of the facility are to be recorded in 211- Maintenance of Plant.
21534 Land and Land Improvements. Expenditures for the purchase of land and
improvements of new and old sites and adjacent ways. Include grading; landscaping;
seeding and planting; constructing new sidewalks, roadways, retaining walls, sewers
and storm drains; surfacing and treating athletic elds and tennis courts; furnishing and
installing for the rst time xed playground apparatus, agpoles, gateways, fences and
underground storage tanks that are not part of building service systems; and demolition
work.
21535 Buildings and Additions. Construction costs for buildings and additions consisting
of all expenditures for general construction; advertising for contracts; payments on
contracts for construction; installation of plumbing, heating, lighting, ventilating, and
Denitions: Expenditure Acct
62
electrical systems; built-in lockers, elevators, and other built-in equipment; architectural
and engineering services; legal services; travel expenses incurred in connection with
construction; paint and other interior and exterior decorating; and any other costs
connected with planning and constructing buildings or building additions.
21536 Remodeling. Expenditures for major permanent structural alterations including the
initial or additional installation of heating and ventilating systems, electrical systems
and other service systems in existing buildings (including the capital costs of wiring of
classrooms for electronic media capability). Remodeling or improvement of buildings
usually takes place within the existing oor area.
200 Non-Categorized Expenditures. Expenditures in the Debt Service Fund, Food Service Fund,
and the Student Activities Fund are not reported to the category/program/activity level.
These expenditures are reported to the expenditure object only.
Trust/Agency Fund expenditures are reported to the expenditure object only except
for Restricted Programs, which require detailed reporting by category/program/activity
and object/subobject.
The School Construction Fund has three categories. Since these are identical to the
program area designations in 215- Capital Outlay, they will not be repeated here.
Denitions: Expenditure Acct
63
64
The Objects classication is used to describe
the service or commodity obtained as the result
of a specic expenditure. The Subobject is a further
renement of the Object. The rst digit of the three-digit
expenditure code represents the Object, and the remaining two
digits represent the Subobject.
Expenditures are to be reported as follows:
100 Salaries and Wages. Expenditures incurred for personnel on the LEA payroll.
This object may not be used with Categories 204 - Textbooks and Instructional Supplies,
205-Other Instructional Costs, 212-Fixed Charges, or 213-Food Services
101 Substitutes. Salaries paid to teacher substitutes or non-teaching temporary staff.
A distinction between teaching and non-teaching positions should be made when
recording payroll expenditures to the appropriate Category, Program, Service Area,
or Activity. Non-teaching temporary staff supporting instructional programs should
be reported under 102-Other Salaries and Wages.
102 Other Salaries and Wages. Expenditures incurred for all other substitute personnel
on the LEA payroll and recorded to the appropriate Category, Program, Service
Area, or Activity (include all stipends, salaries for overtime, and sabbaticals here).
Include all non-teaching temporary help. As a rule of thumb, if an expenditure is
not for a teacher substitute, it should be here.
103 Teachers – Certied. Salaries and stipends paid to teachers duly certied by
MSDE.
104 Aides and Assistants. Salaries paid to aides and assistant teachers. Payroll
expenditures of non-instructional staff should be reported under Other Salaries and
Wages.
200 Contracted Services. Expenditures for services performed by persons who are not on the
LEA payroll, including equipment repair.
205 Rent. Costs for renting land, buildings, equipment, and vehicles. Rental of
buildings should normally be charged to Category 210-Operation of Plant, rental
of student transportation equipment should be charged to Category 209-Student
Transportation, and rental of equipment should be charged to the category in which
the charge would be made if the equipment were being purchased. Expenditures
for operating leases are charged here.
206 Outside Food Service. Expenditures for outside contracted food services (i.e.,
catering) hired to provide meals in schools. (Used with Fund 5 - Food Service
Fund only).
207 Independent Audit Cost. Expenditures for an independent accounting rm to
perform an annual audit on the LEA.
65
Object/
Subobject
Dimension
209 Other Contracted Services. All other contracted services that cannot be included
above. Include the following here:
Purchased Professional/Technical Services. Services which by their nature can
be performed only by persons with specialized skills and knowledge. Included
are professional and technical services of auditors, architects, engineers, dentists,
medical doctors, lawyers, consultants, teachers, accountants, systems analysts,
technical services programmers, graphic artists, caterers, etc.
Repairs and Maintenance Services. Expenditures for repairs and maintenance
services not provided by LEA personnel. This includes contracts and agreements
covering the upkeep of buildings and equipment. (Used with categories 209 - Student
Transportation, 210-Operation of Plant, and 211-Maintenance of Plant only).
Cleaning Services. The cost of trash removal, disposal, snow removal, lawn care,
and custodial services. (Used with category 210- Operation of Plant only).
Construction Services. Amounts for constructing, renovating, and remodeling
paid to contractors. (Used with category 215- Capital Outlay, or Fund 3- School
Construction only).
Student Transportation Services. Amounts paid to other persons or agencies
(except LEAs) for transporting children to and from school and other activities.
(Used with category 209 - Student Transportation and 214 - Community Services
only).
Advertising. Expenditures for announcements in professional publications,
newspapers or broadcasts over radio and television.
Printing and Binding. Expenditures for job printing and binding, usually
according to specications of the LEA. This includes designing and printing forms
and posters as well as printing and binding LEA publications. (Do not include the
cost of purchasing standard forms; these costs are to be recorded in object 329 -
Other Supplies and Materials.)
Food Service Management. Expenditures for the operation of a local food service
facility by other than employees of the LEA, including contracted services, but
excluding direct expenditures for food, supplies, labor, and equipment that should
be charged to the appropriate object. (Used with Fund 5 - Food Service Fund
only.)
300 Supplies and Materials. Articles or materials which meet any one or more of the following
conditions: (1) lasts for less than one year, (2) better to replace than repair, (3) is not
an independent unit, (4) loses its identity through incorporation into a different or more
complex unit, (5) does not exceed a minimum dollars value, (6) is consumed in use, (7) is
expendable, and/or (8) is inexpensive.
321 Textbooks. Expenditures for textbooks, workbooks, manuals, trade books, reference
materials, and other printed forms of communication intended for the classroom
use only. (Used with the 20401 - Regular Programs, 20402 - Special Programs,
20403 - Career and Technology Education Programs, 20604 - Special Education
Public School Instruction Programs, and 20412 - Adult Education.)
Object/Subobject Dimension
66
322 Library Media. Expenditures for library media collections that are cataloged,
processed, and organized by the professional library or school media center. Include
printed and audiovisual forms of information such as books, lms, magazines,
etc; and electronic forms of information, such as computer software and manuals,
prerecorded VHS tapes, compact disks, laser disks, etc.; and other supplies such
as computer cables, connectors, etc. (Used with program/activity area 2021604-
Professional Media Support, and 20408- School Library Media Services).
325 Food. Expenditures for food purchased and used. Include all costs for USDA
commodities used including storage, transportation, and processing. (Used with
Fund 5-Food Service Fund only).
328 Food Related Supplies. Expendable supplies used in the preparation of food, such
as disposable cups, plates, spoons, forks, etc. (Used with the Fund 5-Food Service
Fund only).
329 Other Supplies and Materials. Expenditures for all supplies (other than those listed
above) for the LEA. Examples include paper, pencils, pens, chalk, lm, classroom
manipulatives, blank tapes and diskettes, and other consumables. Include freight,
cartage, and postage here.
400 Other Charges. Expenditures for employee benets and other miscellaneous expenditures
that cannot be classied elsewhere.
408 Other Purchased Services. Expenditures for purchased services not included in
Object 2 - Contracted services, including the following:
• Travel. Expenditures for transportation, meals, hotel, and other expenses
associated with travel for LEA personnel. Payments for per diem in lieu of
reimbursements for subsistence (room and board) are also charged here.
• Insurance(otherthanemployeebenets). Expenditures for all types of non-
employee insurance coverage, including property, liability, and delity. (Used
with category 212 - Fixed Charges, category 210 - Operation of Plant, or fund
5 - Food Service only) .
• Communications. Expenditures for services provided by persons or businesses
to assist in transmitting and receiving messages or information, including
telephone and modem. (Used with programs 20215 and 20615 - Ofce of the
Principal or category 210 - Operation of Plant only).
• Non-energy utility services. Expenditures for water/sewage from private or
public utility companies. (Used with category 210 - Operation of Plant ).
412 Employee Retirement. Employer’s share of payments to the state, county, or city
retirement system that provide payments to those who retire from service by reason
of age, disability, or length of service. (Used with category 212 - Fixed Charges
and Fund 5 - Food Service, only. These expenditures are pro-ratable to all other
category/program/activity areas in Fund 9 - Fixed Charges Supplement).
Object/Subobject Dimension
67
413 Social Security. Expenditures for employer’s share of employee social security
payments. (Used with category 212 - Fixed Charges and Fund 5-Food Service,
only. These expenditures are pro-ratable to all other category/program/activity
areas in Fund 9 - Fixed Charges Supplement)
414 Other Employee Benets. Expenditures for group insurance plans such as life
insurance, health insurance, accident insurance, unemployment compensation plans,
workmen’s compensation, tuition reimbursement, and other employee benets
(used with category 212 - Fixed Charges and Fund 5 - Food Service only. These
expenditures are pro-ratable to all other category/program/activity areas in Fund 9 -
Fixed Charges Supplement.). Do not include dues and fees here, but include these
in 499 - Miscellaneous Other Charges.
424 Energy Services. Expenditures for energy, including gas, oil, coal, gasoline, and
services received from private or public utility companies for energy services.
(Expenditures for building operations are used with category 210 - Operation of
Plant).
450 State Payment On-Behalf of the LEA for Teachers/Employees Retirement.
451 Payments by Other than the State On-Behalf of the LEA. Expenditures incurred
by third parties on behalf of the LEA, but not recorded in LEA accounts ledgers;
this amount must agree with the revenue reported as payments by others on behalf
of the LEA.
499 Other Miscellaneous Charges. Other miscellaneous expenditures that cannot be
classied elsewhere. Included are:
Dues and Fees. Expenditures or assessments for membership in professional or
other organizations or payments to a paying agent for services rendered.
Judgements. Expenditures from current funds for all judgements against the LEA
determined by court decisions that are not covered by liability insurance but are
of a type that might have been covered by insurance. (Used with program 20101-
General Support Services only.)
Miscellaneous Expenditures. Expenditures for interest on short-term notes,
refunds or prior year’s expenditures, and amounts paid for goods or services not
properly classied elsewhere.
500 Property. Expenditures for the acquisition of new or replacement xed assets including
equipment, vehicles, buildings, school sites, and other property.
551 Land. Purchase costs of land, including expenditures for drawings, specications,
and other fees to contractors directly related to the acquisition and improvement of
sites, such as landscaping, architect fees, appraisal fees, search and title, insurance,
site surveys, and condemnation proceedings. (Used with Category 215 - Capital
Outlay and Fund 3 - School Construction only.)
Object/Subobject Dimension
68
552 Buildings and Additions. Expenditures to acquire existing buildings. Included
are expenditures for installment or lease payments that have a terminal date and
result in the acquisition of buildings. Include expenditures for built-in items that
become an integral part of the building when added. Do not charge expenditures
for contracted construction of buildings, major permanent structural alterations, and
initial or additional installation of heating and ventilating systems, re protection
systems, and other service systems in existing buildings here. These are charged to
object 2 - Contracted Services. (Used with Category 215 - Capital Outlay and Fund
3 - School Construction only.)
554 Other Equipment. Expenditures for initial or additional purchase of equipment.
Include expenditures for machinery, vehicles, furniture and xtures, and other
furnishings. (Equipment that is an integral part of the building or building service
is included under subobject 552 - Buildings and Additions.)
555 Depreciation - Proprietary Funds. The portion of the cost of a xed asset that is
charged as an expense during the reporting period (scal year). The method used
to record depreciation must be in accordance with GAAP. (Used with proprietary
funds only.)
556 Depreciation - Governmental Funds. A memo only item to report the portion of
the cost of xed assets that would be charged as an expense during a particular
period in a proprietary fund.
600 Principal. Payments for the retirement of debt, other than current loans, excluding the
amount of interest payment. (Used only with Fund 4 - Debt Service.)
661 Long-Term Bonds. Expenditures for the redemption of long-term county bonds.
662 State Loans. Expenditures for the redemption of state loans.
700 Interest. Expenditures for the payment of interest on bonded indebtedness, other than
current loans, excluding the amount of principal payments. (Used only with Fund 4 - Debt
Service.)
761 Long-Term Bonds. Expenditures for interest on long-term county bonds.
762 State Loans. Expenditures for interest on state loans.
800 Transfers. Payments to other LEAs or transfers between major fund types within the
LEA. Transfer accounts represent the release of funds from one account to another account
where the expenditure will be reported.
881 Transfers to Maryland LEAs. Payments to other Maryland LEAs for tuition and
transportation services.
882 Transfers to Other LEAs. Payments to LEAs in other states for tuition or
transportation fees. Include the portion of any MSDE grants awarded to one LEA
which will be acting as an agent for several LEAs. (Report the entire grant as a
general fund revenue, but report only the portion of the expenditures which directly
Object/Subobject Dimension
69
benet the LEA in the appropriate expenditure category in the Current Expense
Fund. Report the balance of the expenditures as a transfer to the Trust/Agency
Fund, and record that portion as a Revenue and Expenditure within that Fund.)
885 Transfers to Others. Payments to state institutions, nonpublic schools, and other
non-LEAs for tuition, or pass-through expenditures to other agencies. (Do not
include payments to the parent government here; they are to be charged to the
appropriate expenditure category/program/activity by object/subobject.)
886 Interfund Transfers. Transfers of nancial resources between the major Fund types
of the LEA. (Report Food Service revenues that are appropriated to the general
fund as a transfer out of category 213 - Food Service)
888 Internal Service Fund Transfers. Transfers of expenditures from one cost center
in the LEA to the Internal Service Fund (ISF). This account is suggested as a
means of eliminating the duplication of expenditures when reporting total current
expenditures in accordance with the budget categories requirements of Section
5-101 of the Education Article of the Annotated Code of Maryland that makes no
provision for ISFs. This account is for LEA use only, is not to be reported to the
Maryland State Department of Education, and is not referenced in other sections of
this Manual. Expenditures in this account should duplicate expenditures in the ISF
where expenditures shall be captured in the categories and objects outlined in this
Manual. Example:
Instructional supervisors need 1,000 twenty-page manuals printed. The print shop
operates as an ISF (enterprise operation) and charges 5 cents per copy to cover
all operating and production costs. The print shop records an Interfund Transfer
of $1,000 and the supervisor records an expenditure of $1,000, charged to ISF
Transfers. The print shop records the cost of supplies, materials, equipment,
contracted services, etc. to cover operating expenses. Both the Current Expense
Fund (CE Fund) and the ISF have recorded the revenue and the expenditure, but the
duplicated revenue and expenditures are eliminated because they appear as transfer
accounts.
When reporting to MSDE, the expenditures in the ISF need to be reported as part of
the CE Fund. This can be accomplished by reporting the ISF on a separate Restricted
or Unrestricted Expenditure Report and reporting revenue and expenditures as
outlined above.
Preferably, the IS Fund should be rolled up into the CE Fund prior to submitting
the report to MSDE thereby eliminating the necessity of reporting the Interfund
Transfer (In) account or the Internal Service Fund Transfer (Out) account.
890 Indirect Cost Recovery. Transfers between the General Fund (Unrestricted
Current Expense Fund) and the Special Funds (Restricted Current Expense Fund).
Expenditures in this subobject are to be reported as a negative amount on the
Unrestricted Expenditures Report where the actual expenditures are recorded under
the appropriate object/subobject and a debit on the individual Restricted Program
Reports. The negative amount to this line item will offset the positive amount of
the line item for which the expenditure was made (salaries, supplies, etc.) and,
therefore, will net to zero on the Consolidated Current Expense Fund report.
Object/Subobject Dimension
70
Background
The Maryland Public Charter School Act authorizes
the establishment of public charter schools in Maryland.
The Maryland statute, Title 9, Education Article, Annotate
Code of Maryland, invites the creation of public charter schools
to help introduce an alternative means within a public school system to
provide innovative learning opportunities and creative educational approaches
to improve the education of all students.
Maryland denes a public charter school as a public school that is nonsectarian, is chosen by
parents for their children, and is open to all students on a space available basis. A public charter
school can be either a newly created school or a conversion of an operating public school. A
public charter school operates with the approval of a local board of education in accordance with a
written Charter Agreement executed between the local board of education and the administrative
entity operating the public charter school. As a public school, a public charter school is subject to
federal, state and local laws prohibiting discrimination and must comply with all applicable health
and safety laws.
Each local board of education establishes policies and procedures that describe the process to be
used by public charter school applicants in that school system. Public charter school operators must
follow those procedures and use the application process established by the local board of education
in the jurisdiction where the public charter school will operate. Public charter schools operate under
the supervision of the public chartering authority from which its Charter Agreement is granted.
Detailed information on current charter school policies and procedures may be obtained from
the Director – Ofce of School Innovations, that operates under the Deputy State Superintendent
for Instruction and Academic Acceleration, Maryland State Department of Education (MSDE).
Information is also available on the MSDE website at www.marylandpublicschools.org/MSDE.
Fiscal Issues
There are three potential sources of funding for charter schools:
• federal start-up funds that are sub-granted by MSDE via a competitive application
process;
• local education agency (LEA) funds (federal, state, local) that are allocated on
the same basis as other public schools in the school system; and
• funds, managed by the private non-prot chartering school operator, that are
obtained from either private sources or federal sub-grants (other than federal
start-up funds).
Federal start-up funds sub-granted by MSDE are issued as:
• planning and Design Grants directly to the non-prot chartering school operator
(these grants are awarded after local boards of education approve the chartering
group’s plans); and
• implementation Grants to the applicable LEA in support of the specic chartering
school. These one-time start-up grants are for chartering schools that are either
in operation or are fully approved for operation.
71
Charter Schools
Federal, State and Local Funds
A local board of education will disburse to public charter schools an amount of county, State and
federal money that is commensurate with the amount disbursed to other public schools in the local
jurisdiction. Additionally, surplus educational materials, supplies, furniture and other equipment
may be given to the public charter school by the state or the local board of education. Charter
school federal regulations concerning Special Education, Title I, Part A, and other formula grants
under the No Child Left Behind (NCLB) Act make it clear that LEAs must allocate these resources
to charter schools in a fair and timely manner. Details on these rules and regulation may be
obtained at the MSDE website or by contacting the MSDE Charter Schools Ofce.
A private, non-prot chartering school operator may raise private funds to help support the school.
These fund raising activities are governed by applicable federal and state regulations. An LEA does
not have control over these funds, but may as a part of its oversight role, ensure that these activities
conform to Internal Revenue Service and state regulations governing non-prot organizations.
Financial Reporting
As a public school, a public charter schol must comply with all laws and regulations governing
public schools in Maryland. This includes meeting audit regulations. An LEA may integrate
charter school audits with its regular external audit process. If the charter school has an independent
performance audit, which is allowable if the school’s charter so provides, the LEA should review
that audit.
Charter school expenditures and revenues are to be reported using the guidelines in the Financial
Reporting Manual for Maryland Public Schools and expenditures and revenues are to be integrated
with the LEA’s nancial reporting system. They also are to be included in the Consolidated Report
and any other required nancial reports.
Charter Schools
72
Maryland’s State Superintendent of Schools
is required to monitor the nancial status of
each local school system and report their ndings
on a bi-annual basis to the Governor and the General
Assembly. Section 5-114 of the Education Article, Annotated
Code of Maryland requires each local school superintendent or chief
executive ofcer to le a bi-annual report on the nancial status of their
local school system with the State Superintendent and attest to the accuracy of
each report when the report is submitted. The bi-annual reports shall be led with the
Maryland State Department of Education (MSDE) by December 31 and April 30 of each
scal year. The required reporting periods required are July 1-November 30 (due December 31)
and July 1- March 31 ( due April 30).
The information required in the report is for General Fund operations (the General Fund may be
different from the Current Expense Fund classication as currently dened by MSDE). A local
school system could have one fund that includes both unrestricted and restricted funds (for example,
grants). This school system would report all the revenues and expenses of these classications.
Another system could have separate funds for unrestricted and restricted funds and would include
only the General Fund data in the report.
The forms for the Bi-Annual Report (SB-894) are available on the MSDE website www.
marylandpublicschools.org. The form is in Excel format and includes embedded formulas.
Additionally, the Superintendent’s Certication form is provided and may be printed from the
site for signatures. Complete the blank areas of the form by providing the requested information.
The percent of scal year elapsed would be 42% for the July through November reporting period,
and 75% for the July through March reporting period. The approved budget columns would be
the adopted budget, adjusted for any approved transfers and/or supplements as of the close of the
reporting period.
Completedformsandcerticationshouldbemailedbytheduedateto:
Maryland State Department of Education
Audit Ofce
200 W. Baltimore Street
Baltimore, Maryland 21201
Revenues:
1. Year-to-Date Revenues - Revenues actually received as of the close of the reporting
period.
2. Anticipated Revenues - The best estimate of additional revenues to be received between
the report period and year-end.
3. Projected Total Revenues – Total of revenues to be received by year-end (year-to-date plus
anticipated revenues).
4. Percent of Budget – Year-to-date revenue/approved budget.
5. Variance from the Percentage of Year Elapsed – Compare the percentage of revenue budget
received with the percentage of the year elapsed, and record the difference in this column
(negative amounts should be proceeded by a minus sign). An explanation is required for
any variance in excess of 10 percentage points of the percentage of the year elapsed.
73
Bi-Annual
Report
Example: the percentage of year elapsed is 42%, local appropriation received is 55%,
federal revenue received is 20%, and all other revenue categories are 40%. An explanation
would be required for the local appropriation excess percentage of 13% and the decit
percentage in federal revenue of -22%. No explanation would be required for the other
sources of revenues because they are all within 10 percentage points of the lapsed year
percentage.
Expenditures:
1. Year-to-Date Actual – Expenditures through the end of the reporting period.
2. Encumbrances – Amount at the end of the reporting period.
3. Available Balance – Approved budget amount less expenditure and encumbrance
amounts.
4. Percent of Budget Spent – Total of expenditures and encumbrances divided by the total
approved budget.
5. Variance from Percentage of Year Elapsed – Compare the percentage of expenditure budget
(expenditures and encumbrances) spent with the percentage of the year elapsed and record
the difference in this column. Provide an explanation as required in example number 5
above (Revenues).
Superintendent’sCertication:
1. Complete the form by lling in the required information.
2. If no cash ow or decit spending problems are anticipated, check the spaces in the two
areas that say “do not” anticipate.
3. If cash ow or decit spending problems are anticipated, check the space “do” anticipate. A
decit is dened as a negative fund balance in the General Fund of 1% or more of General
Fund revenue at the end of the scal year.
4. When the “I do anticipate decit spending” line is checked, the bi-annual report must include
a description of the problem(s) causing the cash ow and/or decit spending concerns, and
a Corrective Action Plan meeting the requirements of Section 5-114(e) of the Education
Article, Annotated Code of Maryland.
5. The Superintendent’s Certication form is to be completed with the required signatures.
Bi-Annual Report
74
Bi-Annual Report
75
Bi-Annual Reporting Requirements Under Senate Bill 894
Superintendent’sCertication
Local School System: _________________________________________________
______ Period Ending November 30, 2008 (report due to MSDE by December 31, 2008)
______ Period Ending March 31, 2009 (report due to MSDE by April 30, 2009)
This report reects the nancial status of the system’s Current Expense Fund (General
Fund).
Required elements:
Revenues, by source (local, state, federal, other);
Expenditures, by category (as defined in the Financial Reporting Manual)
o Current approved budget;
o Year-to-date actual;
o Encumbered or obligated expenditures;
o Percent of budget spent or encumbered; and
Explanations, as necessary, if there is a variance of more than ten percentage points
in any category between percent of budget obligated or received to date and percent
of fiscal year elapsed.
(Each system may submit the attached template or a similar document that contains all
of the required elements listed above.)
Check all that apply:
______ The attached schedule of year-to-date revenues and expenditures accurately reflects
the financial position of the __________________________ Public Schools.
______ Based on my knowledge of the system’s financial position, I do not anticipate any
issues or problems associated with cash flow during this fiscal year.
______ Based on my knowledge of the system’s financial position, I do not anticipate any
issues or problems associated our ability to operate within our budgeted resources and avoid
a deficit situation at the end of the fiscal year.
______ Based on my knowledge of the system’s financial position, I do anticipate an issue
or problem related to cash flow and/or deficit spending. I have attached a description of the
possible problem(s) and a corrective action plan.
_______________________________________ ____________________
Superintendent’s Signature Date
_______________________________________ ____________________
Chair/President, Board of Education’s Signature Date
_______________________________________ ____________________
Chief Finance Officer’s Signature Date
Please submit certification and report to MSDE Audit Office, 200 West Baltimore Street, Baltimore, Maryland 21201
76
Maintenance
of Effort (MOE)
The Annotated Code of Maryland Education
Article Section 5-202 requires each county
governing body to maintain scal effort in local
funding for elementary and secondary public education.
This section of the law denes the eligibility criteria for the
county government and its Local Education Agency (LEA) to receive
state aid provided under the section.
Under this statute, local funding is required to be provided at the greater of the
local share of the Foundation Program or the product of the county’s full time equivalent
enrollment used for the current scal year and the local appropriation on a per pupil basis from
the prior scal year.
CerticationStatement
On or before March 15 of each year, the Maryland State Department of Education’s (MSDE)
Division of Business Service sends the current scal year Certication Statement - State Share of
the Foundation Program form to each Local School Superintendent to attest whether his/her school
system received at least the amount calculated as the required Maintenance of Effort (MOE) level.
The form is pre-lled with the enrollment data, approved nonrecurring costs, and the local share of
the Foundation Program amounts. It is due back to MSDE no later than April 21 of the same year.
It acts as the reconciliation between the Appropriation reported to the MSDE Division of Business
Services, and the Highest Local Appropriation to the School Operating Budget.
The term highest local appropriation means the highest amount of public funds designated for
a school operating budget at any point during the scal year. In-kind services provided by the
county government may not be included in the appropriation gures toward the calculation of
maintenance of effort.
The statute provides that program shifts between the county and school system operating budgets
cannot be used to satisfy the MOE requirement.
Additionally, section 5-202(d)(3) provides that “the calculation of the county’s highest local
appropriation to its school operating budget shall exclude:
(i) a nonrecurring cost that is supplemental to the regular school operating budget, if the
exclusion qualies under regulations adopted by the State Board; and
(ii) a cost of a program that has been shifted from the county school operating budget to the
county operating budget.”
The Exhibit A is the sample of the Certication Statement form.
Any LEA not complying with the requirements of local MOE will be subject to the withholding or
suspended payment of State funds under the Education Article section 5-213.
A county may request a temporary waiver or partial waiver of the MOE provisions under the
guidance of COMAR 13A.02.05.04 when its scal condition signicantly impedes the county's
ability to fund the MOE requirement.
77
Maintenance of Effort
78
Maintenance of Effort
79
80
81
Non-
Recurring
Cost Waiver Request
In conjunction with the calculation of the
required level of local maintenance of effort,
Education Article Section 5-202 (d)(3) provides that
“the calculation of the county’s highest local appropriation
to its school operating budget shall exclude a nonrecurring cost
that is supplemental to the regular school operating budget, if the
exclusion qualies under regulations adopted by the State Board.” The
Maryland State Board of Education adopted the Code of Maryland Regulation
(COMAR) Title 13A.02.05 to administer the process of ling the local maintenance
of effort that encompasses the approval of the county
*
request for nonrecurring cost
exclusion.
COMAR chapter 13A.02.05.03 denes qualifying nonrecurring costs categories eligible for
exclusion from the calculation of the local maintenance of effort. The Maryland State Department
of Education (MSDE) reects those categories in a set of forms to be used by the county when
submitting its request for approval of nonrecurring cost items.
The county government may request the exclusion of nonrecurring costs between January 1 and
March 31 of the scal year prior to the applicable scal year. No later than March 1 of each year,
the MSDE Division of Business Services sends letters to each county administrator and local
school superintendent transmitting the set of forms to be used as the written request to exclude
qualifying nonrecurring costs. Before submitting the written request, the county shall confer with
their respective local board. The county shall send a copy of the written request to their respective
local board. The deadline for submission of requests is March 31 of the scal year preceding the
applicable scal year.
The county may decide to appropriate additional funds to its school operating budget during a scal
year. The county shall obtain written approval from the Department to classify any additional
appropriation as a nonrecurring cost.
Exhibit B is a sample of the nonrecurring cost forms by qualifying categories. Each form provides
columns to indicate whether the school system and the county government are in agreement with
regard to each specied item. The last form is to be used to indicate other unique one-time
qualifying nonrecurring costs upon which the local school board and county government mutually
agree. In addition, the certication statement on this form covers the items checked as “agreed”
on all forms.
The county’s submission to MSDE should include the complete set of forms, including those
that do not carry a requested item. Those forms should be marked “not applicable” or otherwise
indicate that no request is being made for items in that category.
The Department of Education shall inform the local board of education and the county whether
the qualifying nonrecurring costs that are supplemental to the regular school operating budget
are approved for exclusion from the calculation of the county's highest local appropriation to its
school operating budget. This notication shall be within 30 days from receipt of the written
request, but no later than May 1 of the scal year preceding the applicable scal year.
The county or the local board may appeal to the State Board within 15 days of the date of a
decision to approve or reject a cost as nonrecurring.
* County refers to any or all of Maryland’s 23 Counties and Baltimore City.
82
Exhibit B: Non-Recurring Cost Waivers
SAMPLE
83
Exhibit B: Non-Recurring Cost Waivers
SAMPLE
84
Exhibit B: Non-Recurring Cost Waivers
SAMPLE
85
Exhibit B: Non-Recurring Cost Waivers
SAMPLE
86
Exhibit B: Non-Recurring Cost Waivers
SAMPLE
87
Exhibit B: Non-Recurring Cost Waivers
SAMPLE
88
89
The State Board of Education expressed a
strong interest in support that is received by
school systems; i.e., support that does not represent
actual funds appropriated to the school system. Because
such support is not reected in a school system’s budget, there
exists a belief that a budget does not fully portray the level of support
provided to LEAs.
This support has been dubbed “on-behalf” payments and recently was the subject
of study by the State Board of Education’s Commission to Study Local Maintenance of
Effort. The Commission reported that “these services are made available by local governments
and various agencies to support schools and school systems, and should be identied in audits.
Examples of on-behalf payments believed to qualify are police and nursing staff on school campuses
who are paid by the local department of safety and the local department of health, respectively.
Equally important to consider is that some school systems offer services to local governments; for
example, facilities may be used for community meetings and recreational activities. Reporting
on-behalf support would provide a more comprehensive look at both budgets and local spending
for education.”
The Commission chairs recommended that:
• MSDE should develop denitions and provide training to school system and local
government nance ofcers to achieve consistency in reporting and interpreting
on-behalf payments; and
• local support, including on-behalf payments, will be reported as a supplement to
the required maintenance of effort in MSDE’s annual Fact Book.”
It is the position of MSDE that, regardless of the source, on-behalf payments that are considered
material to the nancial statements should be disclosed or booked in accordance with Generally
Accepted Accounting Principals (GAAP).
On-Behalf
Payments
Instructions for Completing the
Annual Financial Report Forms
Appendix A
Appendix A
Appendix A
A-i
The Annual Financial Report (AFR) is divided in three sections as follows:
Section Due Date
A - Consolidated Report November 15
B - Unrestricted Grants November 15
C - Restricted Grants
• Locally restricted grants November 15
• MSDE grants ending June 30th or later September 30
• MSDE grants ending before June 30th 60 days after ending
The Consolidated Report is the complete picture of revenues and expenditure by fund type for the
state scal year beginning July 1 and ending June 30 of each year. The foregoing requirements and
instructions pertaining to the ling of Annual Financial Report for Restricted Grants, Unrestricted
Grants, Consolidated Current Expense Fund, School Construction Fund, Debt Service, Food
Service Fund, Student Activity Fund, and Trust and Agency Fund. The term “Annual” applies to
the period covered by the state scal year.
The Financial Reporting Manual for Maryland Public Schools adopts the Budgetary Basis of
Accounting for the presentation of the Consolidated Report and the collection of the underlying
data. As stated earlier, this Manual presumes adherence to GAAP but dictates a unique structure
for Maryland LEAs based on federal and state reporting requirements. LEAs must use the accrual
basis of accounting for proprietary funds and nonexpendable trust funds and, the modied accrual
basis of accounting for all other funds with a notable variation in the Current Expense Fund.
The Current Expense Fund is subdivided into Unrestricted Grants (Programs) and Restricted Grants
(Programs). The modied accrual basis accounting rules for recognizing revenue and expenditures
applies in full to the reporting of unrestricted grants. Unrestricted grants generate the fund balance
for the current expense fund.
For restricted grants, expenditures are recognized when the liability is incurred and, revenue can be
recognized only to the extent of the expenditures. The particular features of the Budgetary Basis of
accounting allow the treatment of encumbrances outstanding at the end of the grant period as grant
expenditures as long as their liquidations are within 90 days following the grant ending date.
At the ending date of a restricted grant the reporting scheme should be:
Revenue = Expenditures
Expenditures = Cash Outlays + Accounts Payable + Outstanding Encumbrances.
Restricted grants do not carry any fund balance.
On the 90th day following the ending date of the grant, the above equation should change to:
Revenue = Expenditures
Expenditures = Cash Outlays + Accounts Payable.
Ideally, the full amount of encumbrances should have been converted to either cash outlays or
accounts payable without altering the corresponding recognized revenue and expenditures. Often,
encumbrances are liquidated at lesser amounts requiring adjustments to revenue, expenditures, and
balance sheet items as they are interrelated.
A-ii
REQUIREMENTS FOR RESTRICTED GRANTS REPORTING
The following procedures for scal year reporting apply to all restricted grants awarded by the
Maryland State Department of Education (MSDE) and locally restricted grants, which are not
specically exempted by state or federal law.
Denitions
The denitions below provide guidance toward the preparation of the nancial data to be submitted
electronically via the Web Based Grants Annual Financial Report (AFR) System.
Restricted Grant. A grant that must be used for specic categorical purposes as determined by the
grantor. Restricted grants require the ling of Restricted Annual Financial Reports.
Restricted Grant Annual Financial Report. This nancial report is required annually for each
restricted grant as part of the Annual Financial Report, which contains program expenditure
information and matching revenue recognized in the reporting scal year. Restricted grant
expenditures must equal restricted grant recognized revenue.
Restricted Grant Annual Financial Report Due Date. MSDE Grants: The due date of Annual
Financial Report for Restricted Grants issued by the Maryland State Department of Education with
period ending on June 30th is September 30th of the same calendar year. For a grant ending on
a calendar year day other than June 30th, the due date is the 60th day following the grant ending
date.
Restricted Grant Annual Financial Report Due Date. LEA Grants: The due date of a LEA
restricted grant is November 15th, the same date for ling the Consolidated Annual Financial
Report.
Restricted Grant Annual /Final Report. Restricted Grant Annual Financial Reports submitted
for a grant at the completion of the grant period showing no encumbrances outstanding. To be
an Annual/Final Report, the following conditions must be true:
• the grant period must not exceed one scal year; or
• the grant period has expired and all payables and encumbrances have been liquidated by
the due date for reporting.
All restricted grants ending on June 30th must le Annual/Final Restricted Program Report on
September 30th of the same calendar year.
Final Restricted Grant Annual Financial Report. All Restricted Grant must be nalized within
120 days of the grant ending date. The Grants AFR System compiles cumulative grant expenditures
up to the reporting date; it is the LEA’s responsibility to remove all encumbrances and to mark the
Type of Report of the grant master record as “Final.” The Annual Restricted Financial Report may
be marked “Final” report if the grant period did not exceed one scal year and encumbrances were
not outstanding as of the input date of the report.
Date of Completion. The earlier of the date when all grant activities are completed or the date
when assistance ends (grant ending date), as stated on the Notice of Grant Award document or any
amendments thereto.
Appendix A
A-iii
Encumbrances. They are approved purchase orders or other commitments for goods, which (orders
and/or goods) have not yet been received. To be a valid encumbrance, a contractual agreement
must exist.
Liquidation of Encumbrances. Conversion of encumbrances to cash payments or payables upon
the receipt of goods and invoice. A grantee must liquidate all encumbrances incurred under the
award not later than 90 days after the end of the grant period.
Accounts Payable. Goods and/or services rendered received within the accounting period for
which invoices have been received; accounts payable are recorded as liabilities on the Balance
Sheet against expenditures reported in the Annual Financial Report.
Accrued Charges. Expenses incurred during the accounting period for services received but which
are not payable until the subsequent scal period.
Expenditures at the closing of the grant period of a Restricted Annual Financial Report.
Cash outlays plus Accounts Payable, Accrued Charges, and Encumbrances outstanding at the end
of the grant period.
Expenditures as of the Due Date of the Final Restricted Annual Financial Report. Cash
outlays plus Accounts Payable and Accrued Charges.
CerticationStatement.A signed statement attesting to the validity of the nancial information
being submitted on the Restricted Annual Financial Reports.
Instruction for Reporting Indirect Cost Charged to Restricted Grants
Indirect costs associated with accounting, auditing, budgeting, disbursement services, management
information systems, and purchasing are allowable to the extent of the Restricted Indirect Cost
Rate approved for federal programs; for state restricted grant, the allowable rate must be the
Restricted Indirect Cost Rate for federal grant or 2 percent, whichever the lower rate. Grantees
obtain approvals to use the rate by including indirect costs on the award budget. To calculate
the indirect cost amount, grantees must apply the approved rate to the total direct costs minus
equipment costs.
The formula for allocating the budgeted indirect cost amount without exceeding the total grant
amount is the following:
(Total grant expenditures - equipment) x Indirect Cost Rate x (1 + Indirect Cost Rate ) Example:
A $50,000 grant is awarded; $10,000 is the expenditure for equipment. The LEA Restricted
Indirect Cost Rate is 2.5%
$50,000
- 10,000
$40,000 x (.025 x 1.025) = $976 Amount to be recovered in Business Support Services
and Centralized Support Services
Check: $976 x ($40,000 - $976) = .025
$10,000 + $976 + $39,024 = $50,000 Direct expenditures before Equipment = $39,024
Appendix A
LEA must report the calculated indirect cost amount under Administration Category as a positive
amount of transfer of indirect cost recovery to the restricted grant and as a negative amount to
the Unrestricted Current Expense Grant. This reporting is necessary for eliminating intra-fund
transfers within the Current Expense Fund when compiling the Consolidated Current Expense
Fund Report.
SpecialInstructionsforlingRestrictedGrantEndingatadateotherthanJune30
th
.
MSDE restricted grants carrying ending dates after June 30
th
, of a given calendar year are subject
to multi scal years reporting.
Using scal year 2006 reporting as example, an LEA having a restricted grant beginning on July1,
2005 and ending on September 30, 2006, must use the Web Based Grants AFR System to le the
restricted grant annual nancial report for scal year 2006 on September 30, 2006.
The revenue arising from encumbrances outstanding as of June 30, 2006 must be adjusted to the
actual liquidated amount on September 28, 2006 for the annual nancial reporting on September 30,
2006. Encumbrances not liquidated by September 28, 2006 should be carried for annual reporting
in the following scal year 2007.
An LEA must le on November 29, 2006 another annual report for the period covering July 1
to September 30, 2006 of the scal year 2007. Then, it is appropriate to input the amount of
encumbrances outstanding as of September 30, 2006, if any, to the corresponding grant master
record as memorandum entry; otherwise, the grant should be led as Restricted Grant Annual
/Final Report. If there are encumbrances outstanding on September 30, 2006, the LEA must le
the nal report for scal year 2007 on December 29, 2006.
Filing Restricted Grant Annual Financial Report
By September 30
th
of each calendar year, LEAs must have input to the Grants AFR System all
nancial data pertaining to economic events incurred within the state scal year ending on June
30th of the same year for all MSDE issued awards requiring Annual Restricted Grant Report.
On September 30
th
, each LEA should print the LEA’s Restricted Program Report Summary by Fiscal
Year and the AFR By LEA reports out of the Grants AFR system. The LEA’s Chief Financial Ofcer
or the designee by LEA’s Superintendent should review both reports and attest to their accuracy and
completeness with a dated signature and title in the provided spaces of the Certication Statement
at the bottom of the last page of the LEA’s Restricted Program Report Summary by Fiscal Year.
This signed certication report should be faxed to 410-333-3953 and mailed to:
Maryland State Department of Education
Ofce of Local Financial Reporting
Division of Business Services
200 West Baltimore Street
Baltimore MD 21201
Appendix A
A-iv
Filing the Consolidated Report
The Grants AFR System collects from each LEA the nancial data on grant-by-grant basis and
consolidates them into the LEA Summary by Fund Report. The following are required forms for
ling:
1. Certication Statement Page A-2-1;
2. Statement of Liabilities and Fund Balances Page A-2-2;
3. Statement of Changes in Fund Balance – All Fund and Account Groups Page A-2-3;
4. Annual Financial Report – Debt Service Fund Page A-2-4; and
5. Summary By Fund for Fiscal Year 20__ Printed out from the AFR Grant System.
CerticationStatement
The Consolidated Report in paper format is the representation of the LEA Superintendent (or Chief
Executive Ofcer) asserting that the electronic data led with the Maryland State Department of
Education are true and accurate as they are summarized on the accompanying forms.
The LEA must use data from the Summary By Fund printout to complete items 2 through 4, except
for the Supplement A-3 Status of School Debt on page A-2-4, which requires external data to be
provided by the county government.
It must be noted that the Grant AFR system must carry the data in compliance with the following
specication:
Statement Of Assets, Liabilities, And Fund Balances
Use the budgetary basis of accounting to report items on this statement for the following Funds:
• Current Expense, Schools Construction;
• Food Services; and
• General Fixed Assets are to be reported at the historical cost or estimated cost without
regard to depreciation.
Statement Of Changes In Fund Balances
Use the budgetary basis of accounting and bring totals forward from revenue and expenditure
totals reported by fund.
Beginning Balance = Prior year closing balance (as reported on prior year AFR)
Ending Balance = Beginning Balance + Revenue - Expenditures ± Prior Period Adjustments
The Ending Balances on the Statement of Change in Fund Balances must agree with the corresponding
Fund Balances (or Investments in General Fixed Assets) total amounts on the Statement of Assets,
Liability, and Fund Balances.
Appendix A
A-v
CURRENT EXPENSE FUND EXPENDITURES
Provide a summary of the Current Expense Fund expenditures by category and object. The totals
reported here should agree with the summarization of the Unrestricted and Restricted Reports
and with the information contained in the Audit Report. Where there are differences between
categories of expenditure, reconciliations must be submitted to the MSDE Audit Ofce.
School Construction Fund
Report on a modied accrual basis of accounting, recognizing revenue when the expenditures are
made. Report the proceeds of bonds under “Other Sources - Sale of Bonds” rather than as local
appropriations.
Debt Service Fund
Use this page to report the amount of debt principal and interest repayment by the local government
for LEA debt. Do not leave this page blank. If there is no LEA debt, write “NONE” on the
page.
Status Of School Debt
Complete this page from information obtained from the local government. Indicate the original
balance on July 1 in column 1, any additional amounts borrowed in column 2, all redemptions in
column 3, and the June 30
th
balance outstanding in column 4.
Food Service Fund
The Grant AFR system is programmed to compile Food Service data under the government-type
special revenue fund. LEA opting proprietary-type enterprise fund should provide converted data
appropriate for special revenue fund with an explanation of the reconciling items.
Student Activity Fund
Report revenue and expenditures of student-operated or student-sponsored operations under
Fiduciary Fund accounting basis using the following equations:
Revenue = Expenditures.
Because the student body has a direct claim against the collected assets, the LEA must not carry
any fund balance in the balance sheet of the student activity fund; its presentation should be:
Assets = Liabilities.
It should be noted that the Annual Financial Reports use budgetary basis of accounting; therefore,
the reported Fund Balance data must be different from GAAP basis of accounting as represented
in the audited nancial statements. The reconciliation between GAAP balance sheet and AFR
balance sheet is always required.
The Consolidated Report
This report will be compared to information contained in the LEA Annual Audit
Report and all discrepancies must be reconciled and submitted to MSDE by
Appendix A
A-vi
December 31, after the close of the scal year. The Consolidated Report will also be compared to
the summary report prepared by MSDE from the portions of the AFR veried against the Summary
By Fund printed out of the Grant AFR web based system. All three reports must be in substantial
agreement before the AFR is considered nal.
Where To Send The Annual Financial Report
Send the signed certication statement accompanying by all AFR forms to:
Maryland State Department of Education
Division of Business Services
Ofce of Local Financial Reporting
200 West Baltimore Street
Baltimore, MD 21201-2595
Appendix A
A-vii
Appendix A
Page 1
A-viii
Consolidated Annual Report Due Date:
November 15
Local Education Agency
ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDING June 30, 20 ____
Authorized by Sections 2-205, 5-101, and 5-111 of the
Education Article of the Annotated Code of Maryland
Note: for descriptions of codes and denitions of terms, refer to the
Financial Reporting Manual for Maryland Public Schools, Revised 2009.
CerticationStatement
I hereby certify that the gures reported in the FY 2009 Annual Report are
true and correct to the best of my knowledge and belief, that they accurately
reect the revenues and expenditures in accordance with the denitions in
the Financial Reporting Manual for Maryland Public Schools, Revised 2009,
and that they can be veried from the nancial records of
(LEA)
Signature of Superintendent of Schools Date
Name of Preparer Date Telephone Fax Number
MSDE 0213 Rev 5/2007
Appendix A
Page 2
A-ix
Local Unit
ANNUAL FINANCIAL REPORT
for the year Ending June 30, 2007
STATEMENT OF ASSETS, LIABILITIES, AND FUND BALANCES
CODES
CURRENT
EXPENSE
1
SCHOOL
CONSTRUCTION
3
FOOD
SERVICE
5
STUDENT
ACTIVITIES
6
GENERAL
FIXED ASSETS
8
CURRENT ASSETS
Cash & Cash Equivalent
3.01
Temporary Investments
3.02
Accounts Receivable
3.20
Inventories
3.70
Other Current Assets
3.95
TOTAL CURRENT ASSETS
GENERAL FIXED ASSETS
Land and Land Improvements
3.83
Buildings and Additions
3.84
Furniture and Equipment
3.85
Construction in Progress
3.89
TOTAL GENERAL FIXED ASSETS
LIABILITIES
Payroll Deductions/Withholdings
4.50
Deferred Revenue--Transportation
4.73
Other Deferred Revenue
4.74
Other Liabilities
4.99
TOTAL LIABILITIES
Investments in General Fixed Assets
7.50
Fund Balance -- Unreserved
7.10
Fund Balance -- Reserved
7.12
Consolidated Annual Report
Appendix A
Page 3
A-x
Local Unit
ANNUAL FINANCIAL REPORT
for the year Ending June 30, 2007
STATEMENT OF ASSETS, LIABILITIES, AND FUND BALANCES
CODES
CURRENT
EXPENSE
1
SCHOOL
CONSTRUCTION
3
FOOD
SERVICE
5
STUDENT
ACTIVITIES
6
GENERAL
FIXED ASSETS
8
Opening Balance
July 1, 2009
7.01
Revenue Increase
Expenditure Decrease
Prior Period Adjustments
7.00
Ending Balance
June 20, 2008
Appendix A
Page 4
A-xi
Consolidated Annual Report
Local Unit
ANNUAL FINANCIAL REPORT
for the Year Ending June 30, 2008
DEBT SERVICE FUND
SUMMARY OF REVENUES, EXPENDITURES, AND TRANSFERS
REVENUES
LOCAL APPROPRIATION 4.1.01.00.00.0.00 $
OTHER REVENUE 4.1.05.00.00.0.00
STATE
Construction Aid 4.1.20.45.00.0.00
Other 95.00.0.00
TOTAL STATE
OTHER RESOURCES 4.1.20.20.00.0.00
Interfund Transfers 99.00.0.00
Other
TOTAL OTHER RESOURCES
TOTAL REVENUE
EXPENDITURES
OTHER CHARGES* 4.2.00.00.00.4.95
PRINCIPAL
County Long-term Bonds 6.61
State Loan 6.62
TOTAL EXPENDITURES
INTEREST
County Long-Term Bonds 7.61
State Loan 7.62
TOTAL INTEREST
TOTAL DEBT SERVICE $
* Includes short-term charges incurred for long-term obligations.
TYPE OF DEBT
BALANCE
OUTSTANDING
JULY 1, 2006
TRANSACTION
BALANCE
OUTSTANDING
JUNE 30, 2008
ADDITIONAL
BORROWED
AMOUNT
REPAID
COUNTY LONG-TERM BONDS
STATE LOANS
SHORT-TERM LOANS
TOTAL
CURRENT EXPENSE FUND
SUPPLEMENT A-3 STATUS OF SCHOOL DEBT
(This section is not from data entry, but to be lled out directly.)
Instructions for Completing the
Annual Budget Forms
Appendix B
Section 5-101 of the Education Article of the Annotated Code of Maryland contains the provisions
relating to the preparation and submission of an annual budget by each County Board of Education
and the Board of School Commissioners of Baltimore City. The Annual Budget forms (MSDE
7521) are specically authorized under §5-111 (a) (2).
Due Date Budgets must be submitted within 30 days of the county/city government
approval under §5-102 (e) (2).
Acceptable Budgets must be submitted on the following MSDE forms:
Forms
1. Certication Statement;
2. Current Expense Fund Revenue;
3. Current Expense Fund Expenditures – Summary by Category;
4. Full-Time Staff Employed;
5. School Construction Fund - Revenues and Expenditures;
6. Debt Service Fund – Revenues and Expenditures; and
7. Current Expense Fund Special Education Addendum.
Send Forms Send one copy of the completed and signed budget forms and
one copy of the printed Operating Budget to:
Maryland State Department of Education
Division of Business Services
Ofce of Local Financial Reporting, 8th oor
200 West Baltimore Street
Baltimore MD 21201-2595
DO NOT SEND COPIES TO OTHER MSDE OFFICES
When preparing the local budget in conformance with Maryland law, refer to the denitions in the
Financial Reporting Manual for Maryland Public Schools, Revised 2009 to assure the appropriate
categorization of budget items. Include revenue from all sources, restricted or unrestricted,
including federal funds that may not as yet have been allocated to a specic expenditure category.
These funds must be included in revenue and identied in the expenditure section as “Undesignated
Federal Funds.” Every effort should be made to allocated the “Undesignated Federal Funds” by
Expenditure Object. Stafng for these programs should be listed under the suspense category
“Undesignated Federal Funds.” However, these positions may not be excluded and must be
reclassied to the appropriate budget category when reporting actual staff employed to MSDE’s
Division of Accountability and Assessment for the November staff report.
When reporting revenue, the proper funding source must be identied. Money that is passed
through from one government to another while retaining the original programmatic intent does
not lose its identity in transfer. For example, if the federal government provides funds for the
infants and toddlers program, and this money is distributed to the Ofce of Children and Youth
who then redirects the funds to the LEAs for the infant and toddler’s program, the funding should
be identied as federal revenue rather than state revenue.
Appendix B
B-i
RevenueClassications
Local appropriations are monies received out of funds set aside periodically by the appropriating
body (county or city government) for school purposes. Appropriations do not include funds
received by the LEA from other sources, such as gifts and bequests or funds generated by the
LEA through rental of LEA facilities, user fees, tuition, earnings from investments, loans, debt
proceeds, or sale of assets. The local appropriation for Current Expense Recurring Cost should be
presented separately along with the local appropriation for Current Expense Nonrecurring Cost as
approved by MSDE.
State revenue is funding from any state agency that originated as a state program, such as Basic
Current Expense Aid, State Handicapped Aid, Extended Elementary, etc.
Federal revenue is funding that originated as a federal program and is distributed directly to the
LEA from the federal government or passed through another agency to the LEA while retaining
programmatic intent.
Other Sources/Transfers are funds received from sources representing transfers from one
agency to another, conversion of assets to cash, or other funds that occur an obligation for future
repayment.
Expenditure categories/objects are dened in the Financial Reporting Manual for Maryland Public
Schools, Revised 2009 and will not be elaborated here.
Appendix B
B-ii
Appendix B
B-iii
(Local Unit)
ANNUAL BUDGET
for the Fiscal Year Ending June 30, 20 ___
Authorized under §5-101, §5-102, and §5-111 of
Education Article of the Annotated Code of Maryland
Refer to the Financial Reporting Manual for Maryland Public Schools, Revised 2009
for definitions of accounts to be reported on this budget.
CERTIFICATION STATEMENT
To the Board of County Commissioners or the County/City Council:
In accordance with the requirements of the Acts of the General Assembly, and the rules
and regulations of the State Board of Education, and on and with the advice of the
State Superintendent of Schools, the Board of Education herewith submits the item-
ized school budget, showing the nancial needs and estimated federal, state, local, and
other revenue sources of the County/City for Current Expenses, School Construction,
and Debt Service.
Agreeably, thereto you are hereby requested to provide from County/City sources the
following appropriation, respectively:
Current Expense -- Recurring Appropriation $
Current Expense -- Nonrecurring Appropriation $
Total Appropriation $
School Construction $
Debt Service $
Duly submitted by: Date:
, President
, Secretary
The above appropriations from County/City
sources have been approved.
Signature of President or Chair of
the County/City Council or County
Commissioners
Preparer
Telephone
Date
B-iv
ANNUAL BUDGET
_______________________________
Local Unit
20 _____ - 20 _____
CURRENT EXPENSE FUND REVENUE
REVENUES
LOCAL APPROPRIATIONS 1.1.01.00.00.0.00 $
OTHER REVENUE* 1.1.05.XX.XX.0.00 $
STATE REVENUE
Foundation 1.1.20.01.XX.X.XX $
Economically Disadvantaged (Comp Ed & EEEP) 1.1.20.02.XX.X.XX
Special Education** 1.1.20.07.XX.X.XX
LEP 1.1.20.24.XX.X.XX
Guaranteed Tax Base 1.1.20.25.XX.X.XX
Transportation 1.1.20.39.XX.X.XX
Governor’s Teacher Salary Challenge 1.1.20.56.XX.X.XX
Other (specify) 1.1.20.99.XX.X.XX
TOTAL STATE REVENUE
1.1.20.XX.XX.X.XX $
FEDERAL REVENUE
Title I-A - Local System Grants $ $
Title I-A - School Improvement
Title I-B1 - Reading First
Title I-B3 - Even Start
Title I-C - Migrant Education
Title I-D - Neglected and Delinquent
Title I-F - Comprehensive School Reform
Title II-A - Teacher Quality
Title II-D - Education Technology
Title III-A - Language Acquisition
Title IV-A - Safe & Drug-Free Schools
Title IV-B - 21st Century Learning Centers
Title V-A - Innovative Education
Title VI-B2 - Rural & Low-Income Schools Prog.
Title VIII - Impact Aid
Homeless Children and Youth
IDEA - Special Education
Perkins Career and Technology Education
Other (specify)***
TOTAL FEDERAL REVENUE
1.1.30.XX.XX.X.XX $
OTHER RESOURCES/TRANSFERS****
1.1.99.99.XX.X.XX $
TOTAL REVENUE
$
PRIOR BALANCE AVAILABLE
1.1.40.00.XX.X.XX $
TOTAL REVENUE, TRANSFERS AND FUND BALANCE
$
* Tuition, payments and fees, earnings on investments, rentals, gifts and other non-state, non-federal revenue sources.
** Should include state revenues from formula funding as well as non-public placement funding.
*** Add lines as needed for all other fund sources in the Current Expense Fund.
****Nonrevenue and transfers.
NOTE:Do not include revenue for School Construction Fund, Debt Service Fund, or Food Service Fund.
B-4
MSDE DBS 04/2004
Appendix B
B-v
ANNUAL BUDGET
_______________________________
Local Unit
20_____ - 20_____
CURRENT EXPENSE FUND EXPENDITURES
SUMMARY BY CATEGORY AND OBJECT
Category
Salaries
and
Wages
1.00
Contracted
Services
2.00
Supplies
and
Materials
3.00
Other
Charges
4.00
Equipment
5.00
Transfers
8.00 Total
1201 Administration $ $ $ $ $ $ $
1202 Mid-level Administration
Ofce of the Principal
Administration & Supervision
1203 Instructional Salaries
1204 Textbooks & Instructional Supplies
1205 Other Instructional Costs
1206 Special Education
1207 Student Personnel Services
1208 Health Services
1209 Student Transportation
1210 Operation of Plant
1211 Maintenance of Plant
1212 Fixed Charges
1213 Food Service
1214 Community Services
1215 Capital Outlay
Undistributed Federal Funds
TOTAL EXPENDITURES $ $ $ $ $ $ $
Supplementary Information:
Expenditures for Adult Education $
Expenditures for Summer School $
B-5
MSDE-7521 5/2004
Appendix B
B-vi
Appendix B
ANNUAL BUDGET
_______________________________
Local Unit
20_____ - 20_____
FULL-TIME EQUIVALENT STAFF EMPLOYED
POSITION TYPE
Total
FTE
Adminis-
tration
01
Mid-level Administration
02
Instructional
Salaries &
Wages
03
Special
Education
06
Student
Personnel
Services
07
Ofce of the
Principal
Administration
& Supervision
Superintendent, Deputy,Assc, Asst
Directors, Coord.,Superv.,Specialists
Principal
Vice Principal
Teachers
Therapists
Guidance Counselor
Librarian
Psychologist
PPW/SSW
Nurse
Other Professional Staff
Secretaries and Clerks
Bus Drivers
Aides - Paraprofessionals
Other Staff
TOTAL FTE STAFF*
B-6
MSDE-7521 5/97
B-vii
Appendix B
ANNUAL BUDGET
_______________________________
Local Unit
20_____ - 20____
FULL-TIME EQUIVALENT STAFF EMPLOYED
POSITION TYPE
Health
Services
08
Student
Transporta-
tion
09
Operation of
Plant
10
Maintenance
of
Plant
11
Food
Service
13
Community
Services
14
Capital
Outlay
15
Superintendent, Deputy,Assc, Asst
Directors, Coord.,Superv.,Specialists
Principal
Vice Principal
Teachers
Therapists
Guidance Counselor
Librarian
Psychologist
PPW/SSW
Nurse
Other Professional Staff
Secretaries and Clerks
Bus Drivers
Aides - Paraprofessionals
Other Staff
TOTAL FTE STAFF*
B-7
MSDE-7521 5/97
Appendix B
B-viii
ANNUAL BUDGET
Local Unit
20 _____ - 20 _____
SCHOOL CONSTRUCTION FUND
REVENUES AND EXPENDITURES
ACCOUNT AMOUNT
REVENUES
LOCAL APPROPRIATIONS 3.1.01.00.00.0.00
OTHER REVENUE
Earnings on Investments 3.1.05.30.00.0.00
Other .99.00.0.00
TOTAL OTHER REVENUE $
STATE
Construction Aid 3.1.20.45.00.0.00
Other .99.00.0.00
TOTAL STATE $
OTHER RESOURCES
Sale of Equipment 3.1.99.01.00.0.00
Sale of Bonds - Investments .03.00.0.00
State Loans .04.00.0.00
Interfund Transfers .20.00.0.00
Other .99.00.0.00
TOTAL OTHER RESOURCES $
TOTAL REVENUES / OTHER RESOURCES $
EXPENDITURES
Land and Land Improvements 3.2.00.00.00.5.51
Buildings and Additions 5.52
Interfund Transfers 5.54
TOTAL EXPENDITURES 8.86
NOTE: Total Revenue must equal Total Expenditures.
B-8
MSDE-7521 REV 6/2003
Appendix B
B-ix
ANNUAL BUDGET
Local Unit
20 _____ - 20 _____
DEBT SERVICE FUND
REVENUES AND EXPENDITURES
ACCOUNT AMOUNT
REVENUES
LOCAL APPROPRIATIONS 4.1.01.00.00.0.00 $
OTHER REVENUE 4.1.05.99.00.0.00 $
STATE
Construction Aid 4.1.20.45.00.0.00
Other .99.00.0.00
TOTAL STATE $
OTHER RESOURCES
Interfund Transfers 4.1.99.20.00.0.00
Other .99.00.0.00
TOTAL OTHER RESOURCES $
TOTAL REVENUE $
EXPENDITURES
OTHER CHARGES 4.2.00.00.00.4.00
PRINCIPAL
County Long-Term Bonds .6.61
State Loan .6.62
TOTAL PRINCIPAL
INTEREST
County Long-Term Bonds .7.61
State Loan .7.62
TOTAL INTEREST $
TOTAL DEBT SERVICE EXPENDITURES $
NOTE: Total Revenue must equal Total Expenditures.
B-9
MSDE-7521 REV 6/2003
Appendix B
B-x
ANNUAL BUDGET
Local Unit
20 _____ - 20 _____
CURRENT EXPENSE FUND
SPECIAL EDUCATION ADDENDUM
ACCOUNT AMOUNT
SPECIAL PROGRAMS FOR THE HANDICAPPED
INSTRUCTIONAL PROGRAMS
PUBLIC SCHOOL PROGRAMS 12.06.04.00.0.00 $
STATE INSTITUTIONS .06.00.0.00
NONPUBLIC SCHOOL PROGRAMS .07.00.0.00
STAFF DEVELOPMENT .06.00.0.00
SCHOOL ADMINISTRATION .15.00.0.00
SCHOOL INSTRUCTIONAL SUPPORT .16.00.0.00
NONDISTRIBUTED EXPENDITURES (Substitute Salaries) $
TOTAL SPECIAL EDUCATION EXPENDITURES $
B-10
MSDE-7521 REV 6/2003
The Annual Financial Reporting System
Appendix C
The Annual Financial Report (AFR) is authorized by Sections 2-205, 5-101, and 5-111 of the
Education Article of the Annotated Code of Maryland. Information about revenues and expenditures
of the Maryland Local Education Agencies (LEAs) is collected to meet the nancial reporting
requirements of both the state and the federal governments. From this annual data collection,
an LEA nancial data base from which statewide comparative statistics may be prepared is
developed.
The Annual Financial Report is one of the reports the State Board and the State Superintendent
required from LEAs within the parameter of the Section 5-111(a) of the Annotated Code of
Maryland. It should be distinguished from the following reports:
1. Annual Audit Report due the Maryland State Department of Education (MSDE) by
September 30
th
of each year under Section 5-109 of the Annotated Code of Maryland;
2. Annual Report under Section 5-111(b) of the Annotated Code of Maryland; and
3. Semi-Annual School System Operations Report under Section 5-111(d) of the Annotated
Code of Maryland.
The Annual Financial Report is due in entirety by November 15 of each year. Discrepancies
between this report and the Annual Audit Report, due to the Maryland State Department of
Education (MSDE) Audit Ofce by September 30 of each year, require reconciliations to be sent
to the MSDE Audit Ofce upon submission of the AFR.
Section 5-101 of the Education Article of the Annotated Code of Maryland species the budget
and reporting requirements for Maryland LEAs. The Financial Reporting Manual for Maryland
Public Schools, Revised 2009 (the Manual) contains the descriptions of the accounts that are
required to be reported on the AFR.
The AFR forms outline the minimum details required to complete the AFR reporting requirements.
These forms are formatted for electronic display as well as for printed output. LEAs must have
mechanisms available to recongure nancial information maintained locally to meet these
minimum requirements.
The AFR data must be submitted electronically via the Web Based Grants Annual Financial Report
System. User guides – LEA’s User Guide and MSDE Staff’s User Guide, are made available for
each user group at the website home page http://grantsafr.msde.state.md.us.
The available data input options are: Key-in Data Menu Screen and electronic import of formatted
AFR/Grant data le. Formatted data output reports must be reviewed by the responsible preparer
and certied by the local schools superintendent to meet the MSDE reporting requirements.
The MSDE Ofce of Local Financial Reporting administers the data input and the report ling
processes.
The Grant-Annual Financial Reporting system is designed to accomplish the following
functions:
a. maintain a system of accounts for periodic data collection;
b. create grant master data records and grant detail data records for all grants either issued
by MSDE or provided by other sources – direct state source, direct federal source,
Local source, private funding etc.; and
Appendix C
C-i
c. provide standard reports to meet various users’ needs – payment generation and
analysis, ling requirements, and indirect cost rate calculation.
The server dedicated to these functions is operated as an Online Transaction Processing (OLTP)
Oracle database system. It supports grants creation, updates for data entry as well as report
generation. This server interfaces with the Financial Data Warehouse (FDW) that maintains the
nancial accounting data of MSDE. Also it interfaces with the state Relational Standard Accounting
and Reporting System – R*STARS triggers the scheduling and/or authorizing the grant remittance
advices to LEAs.
Users access this system through Oracle Application Server Portal for data input and updates and
run reports using Cognos Impromptu Web Reports through a Web browser.
Account Codes for Financial Data Collection
The structure of the Maryland State Department of Education (MSDE) account code is hierarchical.
The design is multi-dimensional and allows the aggregation of nancial data within any eld.
Expansion of the hierarchy will allow more nite accounting while facilitating extraction of details
required by MSDE. The following Exhibits are published in Excel le format and downloadable
at the website home page http:\\grantsafr.msde.state.md.us:
The Exhibit 1-A, Default Fund Source Revenue Account Table; and
The Exhibit 2-A, Default Detail Account Code Table.
Creation of Master Data Record for Grant issued by MSDE
Every grant issued by MSDE has been created in the state Relational Standard Accounting and
Reporting System – R*STARS. During every weekend, the MSDE Financial Data Warehouse
(FDW) system server interfaces with the R*STARS mainframe system to download refreshed
nancial data and/or new grant data. Subsequently, the MSDE Grant-AFR system server interfaces
with the MSDE FDW system server to overwrite the old transaction data with the newly refreshed
data and import the new R*STARS grant data in the form of grant master starting records.
The MSDE Grants AFR system user control group must update the Grant Master record with all
required elements as contained in its corresponding Notice of Grant Award to enable the display of
the grant record on the menu screen to LEA user.
TheDataeldelementsoftheMasterGrantare:
1. LEA Code: assigned code for each of 23 counties (01 to 23) and Baltimore City (30);
2. Grant Number: eight digits number provided by MSDE or created by LEA;
3. Local ID: assigned by LEA, must be unique for each grant;
4. Grant Monitor: MSDE administrator of the grant;
5. Fund Source: Combination of revenue code and Fund source from pull down menu
screen;
6. Begin Date: Start date per MSDE Notice of Grant Award or Locally assigned date;
7. End Date: End date per MSDE Notice of Grant Award or locally assigned date.;
8. Report Type: Annual or Final from pull down menu;
9. Approved Budget: amount of Award;
Appendix C
C-ii
Appendix C
C‑iii
9. Approved Budget: amount of Award;
10. Cash Received to Date: cumulative amount remitted to LEA from FMIS automatic
update;
11. AFR Required: Yes or No from pull down menu;
12. Expenditures: automatic update of reported expenditures cumulative across scal
years from Grant Detail data le;
13. Encumbrances: Memorandum entry of Encumbrances outstanding as of the last report
date;
14. Status Report: there are four payment options:
• Manual Invoice – Invoice by LEA, MSDE assigned option;
• Type I-Monthly – Finance Status Report, MSDE assigned option;
• Type II- Bimonthly, MSDE assigned option; and
• Not Applicable-Non MSDE Grant, LEA assigned option;
15. Received Date: Last Date of Data entry in Grant Detail Record;
16. Amount Due: automatic Calculation of difference between Cash Received to Date
and Expenditures reported to date; positive amount is the refund due back to MSDE;
negative amount is the payment owed to LEA;
17. Check Amount: amount to be refunded to MSDE;
18. Check Number: ordinal number of the LEA’s Refund Check Voucher;
19. Administration – Federal: special disclosure of spending from Federal source;
20. Administration–Non-Federal: special disclosure of spending from Non-Federal source;
21. Local Contribution: local funding to meet the grant requirement for matching funds;
and
22. Maintenance: state and local funds supporting the maintenance of effort required by the
Carl D. Perkins Act.
In the background of the Fund Source input menu, lies the Default Fund Source Revenue Account
Table. This Table carries the combination of the fund source (a 4 digit‑code also known in the
R*STARS environment as Agency Fund) with the matching revenue account code. Every time an
Agency Fund is created in the R*STARS for MSDE, a new combination of fund source code and
revenue account code must be also created to update the Default Fund Source Table in the Grant
AFR system.
All grants issued by MSDE must be updated with the correct fund source and revenue account
codes combination in accordance with their respective Notice of Grant Award. When creating
non‑MSDE grant master, the LEA must use the Fund Source input menu screen to pull down the
appropriate combination of fund source and revenue account code.
Creation of Master Data Record for Non-MSDE Grant by the LEA
The LEA can create a local grant master record. In order to secure a unique number for each non‑
MSDE issued grant, the LEA must access the system “New Grant Data Form” menu screen and
use the following numbering scheme:
• rst two digits represent scal year; i.e., 09 for scal year 2009;
• next two digits represent LEA Code; i.e., 01 for Allegany County Public
Schools;
• next four digits represent unique alphanumeric characters of LEA choice.
Appendix C
C‑iv
The LEA user must use the screen Edit Grant Master Information ‑ LEA to update the grant master
record of MSDE issued grant. To update the master record of non‑MSDE issued grant LEA must
use Edit Grant Master Data – Non MSDE menu screen.
Once a grant is created it cannot be deleted by the LEA user. The LEA must address its deletion
request to the MSDE Ofce of Local Financial Reporting.
Creation of Grant Detail Data Record
For the purpose of reporting information on grant revenue and its relevant expenditures, the
LEA must create Grant Detail Data record for each Grant Master Record. Its creation involves
pulling down of selected identifying data from the corresponding grant master record and insertion
of account code input lines via the system menu screen Enter New Grant Detail Data. In the
background of the grant detail data input screen, lies the Default Grant Detail Table. This table
carries the accounts coded in accordance with the reporting structures provided by the Financial
Reporting Manual.
Once the grant detail data record is created one may use the Edit Grant Detail Data screen to enter
data to the appropriate line accounts.
Data Collection via Electronic Import Of Formatted AFR/Grant Data File
The import process requires the preparation of the data le containing records according to the
specied record layout in Text File format. Starting in scal year 1999, each line record must carry
143 characters in length.
The specication of the record layout is based on the combination of the grant master data
elements and the account code data elements as shown below:
Column Length Data Element Data type
1‑2 2 LEA Numeric
3 1 Fund Numeric
4 1 Class Numeric
5‑6 2 Category Numeric
7‑8 2 Program Numeric
9‑10 2 Activity Numeric
11 1 Object Numeric
12‑13 2 Sub‑object Numeric
14‑25 12 Dollar Amount Numeric
26‑29 4 Fund (Revenue) source Numeric
30‑37 8 Grant Document number Numeric
38‑47 10 Local Grant Number Alphanumeric
48‑59 12 Original Grant Amount Numeric
60‑71 12 Cash Received Numeric
72‑83 12 Cash Expenditures Numeric
84‑91 8 Payables Numeric
92‑99 8 Encumbrances Numeric
100‑109 10 Administration‑Federal Numeric
110‑119 10 Administration‑Nonfederal Numeric
120‑129 10 Career & Tech. Maintenance of Effort Numeric
130‑133 4 Fiscal Year Numeric
134‑143 10 Local Contributions Numeric
The data le import is a two-stage processing: converting the LEA submitted text le into the
Oracle data base format and then uploading compatible data records to the server main data base
les. In order to avoid massive errors from this mass processing procedure, LEA must ensure that
the submitted text le carry the correct reporting Fiscal Year and correct LEA data elements.
The LEA must use the Exhibit 1‑A, Default Fund Source Revenue Account Table, and the Exhibit
2‑A, Default Detail Account Code Table, as references for combining the account code data element
into each grant record. The incorrect combination of data elements into a record causes the import
processing to ignore and reject that record.
Financial Status Report – Grant Payment Generation
The MSDE Accounting Branch uses the Grant Turn‑Around Report as a basis for approving
monthly payments of restricted grants issued to LEAs. The required data is the cumulative amount
of expenditures from the beginning of the grant period to the end of the month reported, excluding
outstanding encumbrances. It is important to adhere to the deadline set by the MSDE Accounting
Branch for each month reporting. For example, the remittances to LEAs in early February 2009 are
based on cumulative expenditures incurred through December 31, 2008 of the scal year 2009; in
this case the MSDE Accounting Branch set the deadline for data input as January 13, 2009. LEAs
are usually notied of the deadline by e-mail at the start of each month. Any data entered after the
deadline will be considered for payment in the following month.
Appendix C
C‑v
Payment Generation
The Grant-Annual Financial Reporting system provides the following function applications to the
MSDE Accounting Branch for processing the remittance of grant fund to LEA:
• Generate Payments;
• View Payment Reports;
• Edit Payments;
• Create R*STARS Interface (input) File;
• Payment Type Override;
• Edit Payment Customized; and
• View Payment Archives.
Published Reports
There are 17 reports published via the Cognos Web Portal in the report section. The Upfront
News Index contains standardized grants information in the form of reports. After logging on to
Upfront, the user can explore the News Index and open Impromptu Web Reports (IWR) News
Box entries under the Published Grants heading. Those published reports are classied into three
groups: Required Reports for Annual Filing, Indirect Cost Rates Calculation Reports, and Other
Look-up Reports.
Required Reports for Annual Filing
1. Grants Included in FY annual Financial Report LEA’s Restricted Program Report
Summary by Fiscal Year:
• This output form lists total expenditures of all grants that the LEA reported as incurred
through June 30 in the reporting scal year. It contains the Certication Statement that
the designated LEA’s nancial ofcer has conrmed the reported gures to be true and
correct under his/her signature as of the ling date (on or before September 30
th
of the
reporting calendar year) with MSDE.
2. Restricted Program Report by FY AFR by Grant by Fiscal Year :
• This output form has three reporting sections:
• the top portion brings over the data recorded in the grant master le as the last date
of the data entry to the grant detail record.
• the middle portion provides revenue, detailed expenditures and related balance
sheet items (when applicable) by accounts for each reported grant by scal year.
• the bottom portion provides the reporting of supplemental data on the distribution
of Fixed Charges (Fund 9) by program category. The total amount reported in
Fund 9 must match the total reported xed charge in Fund 1(or Fund 7 when
appropriate).
• The user can retrieve either restricted or unrestricted grants according to their
identication number and the specied scal year.
• In the case of a restricted grant report, a single line of revenue reported must equal the
total of detail expenditures reported.
• In the case of an unrestricted grant report, multi-line revenues are allowed without
the requirement for matching detail expenditures. Furthermore, the unrestricted grant
Appendix C
C-vi
report carries the reporting of revenue, expenditures, and balance sheet items by fund
for the Funds 1, 3, 4, 5, 6, and 7.
3. Cumulative Restricted Program Report: This output form presents the total program
revenue and expenditures by account for the entire grant period, which may overlap more
than one scal year. The presentation has the same features of the AFR by Grant by Fiscal
Year. This report is useful when one analyzes the revenues and expenditures for compliance
with the MSDE approved budget (C-1-25) or the entire grant period.
4. AFR by LEA: This output form provides the entire scal year nancial data as each LEA
reported to MSDE for all grants in sequential number basis. The document has the same
features of the AFR by Grant by Fiscal Year and is appropriate for each LEA to keep as
hard copy of the Annual Financial Report ling.
5. AFR for All LEAS: This output form is the aggregation of the AFR by LEA from all 24
LEAs. This voluminous document is limited to MSDE staff users for monitoring review
and analysis.
6. LEA Summary by Fund: This output form presents the LEA’s nancial data summarized
by category within each fund (Funds 1, 3, 4, 5, 6, 7, and 9). This printout must be used as basis
for ling the Consolidated Annual Financial Report signed by the LEA’s superintendent of
schools or chief executive ofcer and due to the Maryland State Department of Education
on November 15 of each year.
Indirect Cost Rates Calculation Reports
The Maryland State Department of Education (MSDE) has, in cooperation with the U.S.
Department of Education (ED), developed an indirect cost proposal to be used by local educational
agencies (LEAs) in the state. The MSDE as the state educational agency (SEA) has been delegated
authority by ED to review and approve indirect cost rates submitted by LEAs. In order to recover
indirect costs on federal awards, an LEA must have an approved federal indirect cost rate. A new
indirect cost rate must be obtained for every scal year beginning on July 1 of each calendar year.
The classication of expenditures will conform to the category object codes used in the Financial
Reporting Manual for Maryland Public Schools.
Indirect Cost Rate Information
An indirect cost rate is a means of determining, in a reasonable manner, the percentage of allowable
general management costs that benet each federal program or activity. Indirect costs are generally
administrative costs such as the salaries and expenses for staff engaged in organization-wide
(general) activities.
The recovery of indirect costs on grants is subject to the availability of funds. Once a rate is
approved, it is applied to the net direct costs expended or direct cost base. The direct cost base is
dened as total direct costs less equipment purchases, alterations and renovations, the portion of
individual subawards exceeding $25,000, and pass-through funds.
According to the Code of Federal Regulations (CFR Title 34 Part 80-Subpart A, Section 80.3),
Subaward or Subgrant means an award of nancial assistance in the form of money, or property in
Appendix C
C-vii
lieu of money, made under a grant to an eligible subgrantee. The term includes nancial assistance
when provided by contractual legal agreement, but does not include procurement purchases, nor
does it include any form of assistance which is excluded from the denition of grant in this part.
The costs of a professional service for auxiliary expertise normally provided in-house would not
be treated as a subaward and are not subject to the exclusion of amounts over $25,000.
A contract with a software vendor to provide technical support and enhancement of existing
business software would not be considered as a subaward.
For the purpose of Indirect Cost Rate Plan calculation, LEAs must notify MSDE when letting any
subgrant in excess of $25,000. The portion of the subgrant exceeding $25,000 will be excluded
from the distribution base.
Federal law or grant conditions may limit the amount of indirect costs or the indirect cost rate. For
example, if a district has a restricted rate of ve percent and the program legislation allows only a
three percent rate of recovery, then it can recover only indirect costs equal to three percent of the
appropriate base. Recovery of indirect costs on grants is subject to the availability of funds.
Approval Process
An indirect cost rate approval is issued by the SEA for a specic scal year. The rate is valid from
July 1st to June 30th of the applicable scal year. Indirect costs are recovered only to the extent
of direct costs incurred. The indirect cost rate is applied to the direct cost base as dened on page
two, second paragraph of this plan, not to the grant award total.
The sources of information utilized to determine indirect cost rates are the LEA’s Annual
Financial Report (AFR) and the detail accounts collected through the Computerized Grants
– Annual Financial Application System. Therefore, it is essential that LEAs classify expenditures
uniformly and consistently. Types of expenditures, which are identied as indirect costs, shall not
also be included as direct costs. All expenditures detailed on the AFR must have been incurred
and records supporting the costs must be maintained by the LEA. An approved indirect cost rate is
obtained by following the instructions provided to LEAs. Those instructions are contained in this
Plan.
ClassicationofCost
Direct Costs: Direct costs are those that can be identied specically with a particular cost
objective. These costs may be charged directly to grants, contracts, or to other programs against
which costs are nally assigned. Typical direct costs chargeable to a grant include, but are not
limited to:
1. Compensation of employees for the time devoted and identied specically to the
performance of those programs;
2. Cost of materials acquired, consumed, or expended specically for the purpose of those
programs;
3. Travel expenses incurred specically to carry out the program; etc.
Appendix C
C-viii
Indirect Costs: Indirect costs are those not readily identiable with the activities of the grant
but incurred for the joint benet of those activities and other activities of the organization. In
accordance with OMB Circular A-87, indirect costs are:
• Incurred for a common or joint purpose beneting more than one cost objective; and
• Not readily assignable to the cost objective specically beneted, without effort disporportionate
to the results achieved.
A cost may not be allocated to a federal program as an indirect cost if any other cost incurred for the
same purpose, in like circumstances, has been assigned to a federal program as a direct cost. Typical
examples of indirect costs may include: procurement, payroll, personnel functions, maintenance
and operations of space, data processing, accounting, auditing, budgeting, communications
(telephone, postage), etc.
Unallowable Costs: OMB Circular A-87 classies certain items of cost as unallowable. Unallowable
costs cannot be charged to federal awards. For rate computation purposes, unallowable costs should
be included in the allocation base if such costs benet from allowable indirect activities. Examples
of unallowable are bad debts; contingencies; entertainment; nes/penalties; general governance;
and contributions/donations to outside organizations.
Excluded Costs: Certain items of costs are classied as extraordinary or distorting expenditures
and are excluded from the computation of the indirect cost rate. Excluded costs include subawards
exceeding $25,000, equipment, capital outlay (Building & Fixtures), debt service, judgments
against the school district, certain transfers, and internal service fund expenditures. Indirect cost
recoveries are also categorized as excluded costs.
Rate Types
1. Restricted Rates
As dened in the Education Department General and Administrative Regulations (EDGAR) at
34 CFR 75.563 and 76.563, restricted rates apply to grants that are made under federal programs
with supplement-not-supplant requirements. This means that the funds are for support in addition
to state and local funding. Such amounts are intended to supplement, but in no way replace local
funds. Most of the federal grants that the LEA obtains through the department have supplement-
not-supplant requirements and a restricted indirect cost rate must be used on the programs.
The restricted indirect cost rate pool (numerator) includes only expenditures of general manage-
ment costs andxedcharges as dened below:
General Management Costs: Consist of the salaries and expenses for employees performing
accounting, payroll preparation, or personnel management activities. Those activities that are lim-
ited to one school, subject, or phase of operation, are not general management costs such as the
salaries and expenditures related to the direction and supervision of such functions as instruction,
guidance, attendance, transportation, community services, and student services. The costs of these
functions are considered direct costs.
Generally, salaries and expenses for auditing, budgeting, payroll, personnel, purchasing, and em-
ployee relations are examples of services which typically benet several activities and programs
Appendix C
C-ix
Appendix C
for which costs may be attributed by means of an indirect cost proposal. For LEAs this would in-
clude most of the costs recorded in Business and Other Support Services. In theory, all such costs
can be charged directly. However, practical limitation and consideration of efciency in account-
ing preclude such an approach and therefore these costs are considered indirect.
As stated in EDGAR 76.565, “general management costs mean the costs of activities that are
for the direction and control of the grantee’s affairs that are organization-wide. An activity is not
organization-wide if it is limited to one activity, one component of the grantee, one subject, one
phase of operations, or other single responsibility. General management costs include the costs of
performing a service function, such as accounting, payroll preparation, or personnel management,
that is normally at the grantee’s level even if the function is physically located elsewhere for con-
venience or better management.”
When calculating a restricted indirect cost rate, the term “General Management Costs” does not
include expenditures for:
1. The governing body (members of the board of education) of the grantee;
2. Compensation of the chief executive ofcer (Superintendent of a school district) of the
grantee and heads of component ofces; and
3. The operation of the immediate ofces of these ofcers.
The superintendent’s and board of education’s salary, benets, communications/ telephone charg-
es and other expenditures related directly to the operation of the Superintendent’s and board of
education ofces, specically, are not included in indirect costs and are considered, for rate com-
putation purposes, to be disallowed costs in the calculation of the restricted indirect cost rate.
Charges for individuals whose time is divided between district-wide management responsibilities
and specic program or administrative activities will be based on Personal Activity Reports pre-
pared at least monthly in compliance with OMB Circular A-87. If the Superintendent is part-time,
both Superintendent-time and non-Superintendent-time must be captured by time distribution re-
cords.
An individual principal’s salary, benets and expenditures related to the operation of the princi-
pal’s immediate ofces are also not considered indirect costs. These costs are unallowable and are
considered to be direct costs for the restricted rate computation purposes.
Fixed charges: Fixed charges classied as indirect costs are limited to those amounts which are
associated with general management costs. The xed charges can be viewed as appended to those
administrative functions, and the classication rules are the same as those applied to salaries.
These expenditures are exclusively identied as:
a. Employee retirement
b. Social Security
c. Pension fund payments
d. Premium expenditures for:
(1) employee insurance
(2) liability insurance
e. Unemployment and workers compensation, and
f. All similar costs normally considered being employee fringe benets.
C-x
Appendix C
Note that per OMB Circular A-87, payments to separating employees for termination benets
and/or unused leave (“terminal leave costs”) are treated as indirect costs when computing the
Restricted and Unrestricted indirect cost rate with one exception. When computing the Restricted
indirect cost rate, unused leave costs to employees who are indirect for the Unrestricted Rate, but
direct for the Restricted Rate (i.e. superintendent and their ofce), are considered direct cost pay-
ments for rate calculation purposes only. Payments to separating employees for unused leave are
NOT charged as direct costs to any federal awards. All Post Retirement Health Benets (“PRHB”)
will be treated as indirect costs for both the Restricted and Unrestricted rate regardless of where
the employees’ salary is recorded with one exception. For purposes of calculating the restricted
rate, PRHB costs associated with Superintendent, Chief Executive Ofcer (CEO) of components
(as dened by EDGAR 76.565(d)(2)) and their immediate ofces will be treated as direct.
Direct occupancy and space maintenance costs cannot be charged directly to restricted programs
unless approved in advance by the Secretary of The U.S. Department of Education (34 CFR 76.568
(c).
The Maryland State Department of Education (MSDE) and Maryland’s 24 Local School Systems
(LEAs) agree to adopt the Simplied Method as provided in the OMB Circular A-87.
The distribution base is computed as total direct costs less equipment purchases, alterations and
renovations, the portion of individual subawards exceeding $25,000, and pass-through funds.
The total expenditures used for the Federal Indirect Cost Restricted Rate calculation must be from
the Current Expense Fund as provided in the Financial Reporting Manual for Maryland Public
Schools. Local School Systems use the intra-fund transfer code to credit the unrestricted fund for
the portion of indirect costs charged to the restricted fund. While the terms are similar, the Unre-
stricted Fund and Restricted Fund are not associated with the Restricted Indirect Cost Rate and
Unrestricted Indirect Cost Rate.
The Maryland State Department of Education (MSDE) and Maryland’s 24 Local School Systems
(LEAs) agree to adopt the Fixed Rate policy and procedures provided by OMB Circular A-87.
“Fixed rate” means an indirect cost rate which has the same characteristics as a predetermined
rate, except that the difference between the estimated costs and the actual, allowable costs of the
period covered by the rate is carried forward as an adjustment to the rate computation of a subse-
quent period.
For example, Maryland LEAs use the expenditures in the Current Expense Fund for scal year
2009 to calculate the Federal Indirect Cost Restricted Rate that becomes the xed rate to be ap-
plied to the net direct cost expenditures of the Restricted Federal Grant in the scal year 2011.
When actual costs are known for FY 2011, these will be used for carry-forward in determining
the FY 2013 rates. Likewise the xed rates for FY 2012 (based on FY 2010 actual expenditures)
will be used for calculating the federal xed carry forward rate for FY 2014. The Maryland State
Department of Education (MSDE) and Maryland’s 24 Local School Systems (LEAs) are willing
to renegotiate the Predetermined Fixed Rate with Carry Forward Plan every ve years from scal
year 2011.
C-xi
Appendix C
2. Unrestricted Rates
The indirect cost unrestricted rate applies to grants not subject to the supplement but not sup-
plant legislative restriction. It can also apply to Food Service Fund (Fund 5) which derives ben-
ets from administrative services expenditures that are incurred and captured in Current Expense
Fund (Fund 1).
A. Indirect Cost
In addition to the expenditures indentied for the Restricted Rate calculation the following are al-
lowable costs for the Unrestricted Rate computation:
a. Expenditures for the General Administration - Executive Administration Services are clas-
sied as an indirect cost separately from the General Administration – Board of Education Ser-
vices, which shall remain as unallowable costs in the direct cost base.
b. Expenditures for Other Operation of Plant – 2103100XXX (unallowable for Restricted
Rate calculation) are allowable indirect costs for Unrestricted Rate purpose.
B. Direct Cost Base
The following adjustments must be made to Direct Costs, Unallowable Costs, and Excluded Costs
as classied in the Restricted Rate calculation:
a. Include Food Service expenditures net of inter-fund transfer under object 886 and equip-
ment exclusion;
c. Reclassify Executive Administration Service by transferring the identied expenditures
amount from direct cot base to allowable indirect cost pool;
d. Reclassify Other Operation of Plan expenditures and related xed charges from direct cot
base to allowable indirect cost pool.
C. ClaricationontheuseoftheGeneralAdministrativeAccount
In the Current Expense Fund – Fund 1, the account code 2012100XXX General Administration
Services captures the combination of Board of Education Services and Executive Administration.
For the purpose of calculating Indirect Cost Unrestricted Rates for FY 2011 (using FY 2009 data)
and for FY 2012 (using FY 2010 data), we will work with each LEA to break up the Executive
Administration Services as allowable indirect cost from the Board of Education Services which is
unallowable and belongs in the distribution base.
For illustrative purpose and due to the fact that we are unable to differentiate the Board of Educa-
tion Services from Executive Administration Services at the time of the negotiated agreement,
we included the total amount of General Administration Services (excluding equipment) in the
distribution base in the same manner we did when calculating the Indirect Cost Restricted Rate.
Starting in FY 2011, we will assign the code 2012101XXX for General Administration Services-
Board of Education Services, and the code 2012102XXX for General Administration Services-
Executive Administration.
D. ClaricationontheuseofContractedServicesObjectinFoodServiceFund
The object 206 is to be used only in Food Service Fund- Fund 5, for Outside Food Services Con-
tract expenditures. This item is included in Food Service Expenditures toward the calculation of
Unrestricted Rate.
C-xii
LEAs must use the object 209 to capture Food Service Management Contract in Food Service
Fund - Fund 5. This item is included in Food Service Expenditures toward the calculation of Un-
restricted Rate.
E. ClaricationontheclassicationofSuppliesandMaterialsintheFoodServicesFund
The object code 325 is used only for capturing Food Service Fund – Fund 5 expenditures for food
supplies purchased and used. USDA commodities used, including storage, transportation and pro-
cessing, are to be reported under this object code. This item is included in Food Service Expendi-
tures toward the calculation of Unrestricted Rate.
The object code 328 is only for capturing expenditures for food related supplies that are expend-
able and used in the preparation of food such as disposable cups, plates, spoons, forks, etc… in
Food Service Fund – Fund 5. This item is included in Food Service Expenditures toward the cal-
culation of Unrestricted Rate.
ProleofLEAs
Maryland State Department of Education
1. Which basis of accounting is used by the LEAs?
All Maryland LEAs use GAAP basis for local external reporting. However, MSDE re-
quired that LEAs use budgetary (modied accrual) basis when submitting their nancial
data through the Grant AFR System.
2. Number of LEAs in the State:
24
3. Number of LEAs requesting indirect cost rates:
24
4. Describe Rates calculated:
Restricted Rate and Unrestricted Rate
5. Type of Rate calculated:
Fixed Rate with Carry Forward Adjustment. The rst year of carry-forward adjustment
will be for the FY 2013 rates.
6. Frequency of indirect cost rates calculated:
Annually
7. Are the salaries and related costs of Superintendents, Deputy Superintendents, and
Heads of components, adjusted in the Restricted Rate calculation?:
Yes
8. Are unused leave payments charged directly to federal awards?:
No
9. Are all building related expenditures in the direct cost base for calculation of the
restricted indirect cost rate?
Yes. They are occupancy and maintenance costs.
10. Doesthebaseincludeonlytherst$25,000ofsubawardexpenditures?
Yes. The amount in excess of $25,000 in each individual subaward is excluded from the
base.
11. Are any types of retirement incentives included in the proposal or planned in the next
scalyear?
There is no retirement incentive included in the proposal or planned in the next scal year.
Appendix C
C-xiii
Supplies and Equipment
Appendix D
Distinguishing between supplies and equipment is imporatant to an LEA for several reasons:
• The distinction can affect calculations of cost of operations and cost per student since
equipment is not allowable as an expenditure item in many per pupil calculations.
• The distinction may assist in deciding how to control or keep track of an item (for example,
all equipment may be annually inventoried).
• The distinction may bear on insurance decisions because supplies and moveable equipment
are generally insured as part of the contents while built-in equipment is insured as part
of the structure.
• The distinction can affect the amount of federal aid allocated to an LEA because many
funding programs that use per student costs limit the ways in which funds may be spent
and may exclude equipment.
• The distinction can affect indirect cost recovery. Equipment is a non-allowed cost for
determining the rate and for determining the grant amount to which the rate can be
applied.
Two basic approaches may be used to distinguish between supplies and equipment. The rst is to
develop a list of items with a classication of each item as either a supply item or an equipment
item. The second is to develop a set of criteria to be used in making a determination about an
item.
The rst approach is not recommended. Lists require continuous maintenance, are inexible, and
may conict with state or federal regulation. The second approach, however, provides exibility
and incorporates common sense in determining the designation of supplies and equipment.
Criteria For Distinguishing Supply And Equipment Items
Supplies
A supply is any article or material that meets one or more of the following conditions:
• it does not last more than one year;
• it is better to replace than to repair;
• it is not an independent unit; and/or
• it does not exceed a minimum dollar value (see Equipment denition in this Appendix).
Supplies are consumed in the normal course of business operations. Typical examples of supplies
are paper, workbooks, tapes, cartridges, and fuel. Supplies may include small equipment and
furniture that does not exceed a minimum dollar amount and would be replaced if defective, such
as calculators, certain tools, and plastic chairs.
Equipment
An equipment item is a moveable or xed unit of furniture or furnishings, an instrument, a machine,
an apparatus, or a set of articles that meet all of the following conditions:
• it lasts longer than one year;
• it is better to repair than to replace;
Appendix D
D-i
• it retains its original shape, appearance, and character with use;
• it does not lose its identity through fabrication or incorporation into a different or more
complex unit or substance;
• it exceeds a capitalization level equal to the lesser of a minimum dollar value established
by the entity for nancial statement purposes or $5,000; and
• it is a sensitive item with an acquisition cost of $500 or more.
Sensitive items are capital or non-capital items such as recording devices, portable tools, cameras,
notebook computers, and other small items that are prone to theft and are concealable in a handbag
or briefcase. Items that are too large for concealment in a handbag or briefcase (such as desktop
computers, projectors, and printers) shall be considered sensitive items if there is a history of loss
or theft.
A useful tool for determining whether an item is a supply or equipment is the following owchart.
At the rst NO response, the item is identied as a supply, not as equipment.
Flow Chart for
Distinguishing Equipment from Supplies
*
YES NO
Lasts longer than one year ↓ → Supply
Repair rather than replace ↓ → Supply
Independent unit rather than being
incorporated into another item ↓ → Supply
Exceeds minimum dollar value ↓ → Supply
Equipment
* This diagram was conceived by James Bliss, Ph.D., Assistant Superintendent for Business Services, Grandview
Consolidated School District, Grandview, Missouri; and Stuart Graf, CPA, of the American Institute for Certied
Public Accountants (AICPA).
Appendix D
D-ii
Fund Source Codes
and
Catalog Numbers
Appendix E
Fund (revenue) source codes must be provided for each Restricted Program Report included
with the Annual Financial Report (AFR) submission. These codes provide the means by which
expenditures are summarized by level of government and by major appropriation areas.
Grants received by LEAs from MSDE will contain a fund source code to identify the appropriation
source. The four-digit code is provided on all MSDE Notice of Grant Awards (as shown on the
example on the following page). It should be included on all Restricted Program Annual Financial
Report cover sheets.
All other restricted program reports submitted to MSDE must also contain a fund source code. If
a fund source code is not available, please contact the nancial reporting specialist in the Division
of Business Services for the proper code.
Shown below is a key for understanding the four-digit MSDE Fund Source:
First digit level of government (local, state, federal)
1 = State
2 = State
3 = Special State
4 = (not used)
5 = Federal
6 = Federal
7 = (not used)
8 = Federal
9 = Reimbursable Funds – These could be any of the above –
details would be provided with the grant award.
Second and third digits These numbers were assigned sequentially as the funds were
identied.
Fourth digit This represents the appropriation year for the fund source. In the
case of some funds, grants from multiple appropriation years might
be available during the same time frame. This is used to differentiate
them.
The Catalog of Federal Domestic Assistance (CFDA) code for a grant will be shown on all MSDE
Notice of Grant Awards (as shown on the example on the following page). If you obtain the grant
directly from the federal government or from another source, please check the grant document. If
still unsure, you may nd assistance at http://12.46.245.173/cfda/cfda.html.
Appendix E
E-i
Date Vendor No. MC Grant No. Date
New Amendment No. Grant Period: From
Grant Name
Recipient Agency Name
Recipient Agency Address
Program Manager’s Name, Title, Phone
MSDE Program Manager’s Name, Division, Phone
ADDITIONAL INFORMATION
1. This grant award consists of and is subject to the mandatory Grant Provisions and acceptance of the Assurances on the
attached sheet.
MARYLAND STATE DEPARTMENT OF EDUCATION
NOTICE OF GRANT AWARD
MSDE ACCOUNT CODE INFORMATION
L
I
N
E
No.
PCA AOBJ AMOUNT FUND
PMT
SCHED CODE
(o) Inv
(1) Mo
(2) Bi-Mo
REVENUE
SOURCE
Fed (F)
or State (S)
CFDA
No.
REVENUE
SOURCE
TITLE
GRANT
END DATE
MATCHING
FUNDS
(%N)
AFR
REQUIRED
(Y/N)
Amount of Current Grant
Previously Awarded This Grant
Total
FOUR-DIGIT
FUND
NUMBER
FEDERAL
CFDA
NUMBER
APPROVAL
Assistant State Superintendent/Ofce Head Date
E-ii
Appendix E
MANDATORY GRANT PROVISIONS
• By accepting federal and/or state funds, the grantee shall comply with the Americans with Disabilities Act (ADA), Public Law 101-336, all requirements imposed
by the applicable Code of Federal Regulations, and all guidelines and interpretations issued pursuant thereto. Grantee shall assure that its facilities are accessible
to individuals with disabilities as required by the ADA and applicable regulations. The grantee’s facilities, services, and programs will be accessible to persons
with disabilities. The grantee shall not discriminate against individuals with disabilities in the provision of its services and programs unless to do so would be an
undue burden or result in fundamental alteration in the program as those terms are used in the ADA and its implementing regulation. The State reserves the right
to inspect the grantee’s facilities at any time to deter mine if the grantee is in compliance with ADA. The grantee shall bear sole responsibility for assuring that
its programs conforms for the section 501© of the ADA (42 USC 12201) as a bona de benet plan.
The grantee shall indemnify and hold the State harmless in any administrative proceeding or action brought pursuant to the ADA for all damages, attorneys’ fees,
litigation expenses and costs, if such action or proceeding arises from the acts of grantee, grantee’s employees, agents or subgrantees.
• By accepting federal funds, the recipient hereby agrees to establish and maintain scal control and fund accounting procedures, as Set forth in 34 CFR Part 74, in
order to ensure proper disbursement of, and accounting for, federal funds for the program purpose.
• The recipient also agrees to establish and maintain scal control and fund accounting procedures as provided by State law and the Financial Reporting Manual
for Maryland Public Schools, where applicable.
• By accepting federal and/or State funds, the recipient hereby agrees to repay any funds that have been nally determined through the federal or State audit resolu
-
tion process to have been misspent, misapplied or otherwise not properly accounted for, and further agrees to pay any collections fees that may subsequently be
imposed by the federal and/or State Government.
• By accepting federal funds, the recipient agrees that the amount of the grant award is contingent upon the receipt of federal funds.
• By accepting federal funds, the recipients certify that they have complied with Federal Executive Order 12549, Debarment and Suspension set forth in 34 CFR
Part 85, and that, a signed Certication Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion form has been led with Maryland State Depart
-
ment of Education Project Monitor.
• Grantee shall insure that programs and projects that offer web-based or technology band instructional products or programs which are funded in total or in part
through this grant will operate in compliance with Section 508 of the Federal Rehabilitation Act of 1973 as amended and Section 7-910 of the Education Article,
Annotated Code of Maryland.
• Vendors, subgrantees, and/or consultants; including ofcers and employees shall comply with the Family Education Rights and Privacy Act at all times (20
U.S.C. §123g).
E-iii
Appendix E
Appendix E
Cost Principles
and
State-Funded Grants
Appendix F
Objective
This Appendix to the Financial Reporting Manual for Maryland Public Schools establishes
principles for determining the allowable costs incurred by grantees under restricted state funded
grant programs. The principles are for the purpose of cost determination and are not intended to
identify the circumstances or dictate the extent of state or grantee participation in the nancing of
a particular program or project.
Policy
The application of these principles is based on the premises that:
• grantees are responsible for the efcient and effective administration of state
awards through the application of sound management practices.
• grantees assume responsibility for administering state funds consistent with
underlying agreements, program objectives, and the terms and conditions of the
state award.
• each grantee, in recognition of its own unique combination of staff, facilities, and
experience, will have the primary responsibility for employing whatever form of
organization and management techniques may be necessary to assure proper and
efcient administration of state awards.
Application
These principles will be applied by all MSDE Divisions in determining costs incurred by grantees
under restricted state-funded grant programs.
Denitions
Approved or Authorization of the Awarding Division - documentation evidencing consent prior
to incurring a specic cost. If such costs are specically identied in a State award document or
budget, approval of the document constitutes approval of the costs.
Award - grants, cost reimbursement contracts, and other agreements between grantees and
MSDE.
Cost Objective - a function, organizational subdivision, contract, grant, or other activity for which
cost data are needed and for which costs are incurred
Awarding Division - (a) with respect to a grant, cooperative agreement, or cost reimbursement
contract, the MSDE Division, and (b) with respect to a subgrant, the party that awarded the
subgrant.
Costs - an amount, as determined on a cash, accrual, or other basis acceptable to the awarding
division. It does not include transfers to a general or similar fund, or encumbered amounts.
Grantee - the entity that is responsible for the performance or administration of all or some part
of the State award; e.g., local school boards, library boards, community colleges, and nonprot
institutions.
Appendix F
F-i
Restricted Award - State funds provided to a grantee that are restricted to a particular use and
require an approved budget, statement of assurances, and ling of a Restricted Annual Financial
Report. The Bridge to Excellence in Public Schools Act eliminated most state restricted grants.
BASIC GUIDELINES
Factors Affecting Allowableness of Costs
To be allowable under state awards, costs must meet the following general criteria:
• They must be necessary and reasonable for proper and efcient performance and
administration of state awards.
• They must be allocable to state awards under the provisions of this Attachment.
• They must be authorized or not prohibited under state or local laws or regulations.
• They must conform to any limitations or exclusions set forth in these principles, state
laws, or other governing regulation as to type or amount of cost items.
• They must be consistent with policies, regulations, and procedures that apply uniformly
to both state awards and other activities of the grantee.
• They must be accorded consistent treatment. A cost may be assigned only to a state
award as a direct cost. There are no circumstances where other costs incurred for the
same purpose in like circumstances will be allocable to the state award as an indirect
cost.
• Except as otherwise provided for in this Appendix, they must be determined in
accordance with generally accepted accounting principles (GAAP).
• They must not be included as a cost or used to meet cost sharing or matching requirements
of any other state award in either the current or a prior period, except as specically
provided by state law or regulation.
• They must be net of all applicable credits.
• They must be adequately documented.
Reasonable Costs
A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by
a prudent person under the circumstances prevailing at the time the decision was made to incur the
cost. The question of reasonableness is particularly important when grantees or their subdivisions
are predominately state funded. In determining reasonableness of a given cost, consideration shall
be given to:
a. whether the cost is of a type generally recognized as ordinary and necessary for the operation
of the grantee or the performance of the state award;
b. the restraints or requirements imposed by such factors as:
• sound business practices;
• arms length bargaining;
• state and other laws and regulations; and
• terms and conditions of the state award;
c. market prices for comparable goods or services;
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F-ii
d. whether the individuals concerned acted with prudence in the circumstances considering
their responsibilities to the grantee, its employees, the public at large, and the state
government; and
e. signicant deviations from the established practices of the grantee that may unjustiably
increase the state award’s cost.
Allocable Costs
A cost is allocable to a particular award if the goods or services involved are chargeable or assignable
to such in accordance with relative benets received. Any cost allocable to a particular state
award under the principles provided for in this Appendix may not be charged to other state awards
to overcome fund deciencies, to avoid restrictions imposed by law or terms of the state awards, or
for other reasons. However, this prohibition would not preclude grantees from shifting costs that
are allowable under two or more awards in accordance with existing program agreements.
Applicable Credits
Applicable credits refer to those receipts or reduction of expenditure-type transactions that offset
or reduce expense items allocable to state awards as direct costs. Examples of such transactions are
purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds
or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits
accruing to or received by the grantee relate to allowable costs, they shall be credited to the state
award either as a cost reduction or cash refund, as appropriate.
Composition of Cost
1. The total cost of State awards is comprised of the allowable direct cost of the program, plus
indirect costs, less applicable credits.
2. No universal rule exists for classifying certain costs as either direct or indirect under every
accounting system. A cost may be direct with respect to some specic service or function,
but indirect with respect to the state award or other nal cost objective. Therefore, it is
essential that each item of cost be treated consistently in like circumstances either as a
direct or an indirect cost. Guidelines for determining direct and indirect costs charged to
state awards are provided in the sections that follow.
Direct Costs
Direct costs can be identied specically with a particular nal cost objective. Typical direct costs
chargeable to State awards are:
• compensation of employees for the time devoted and identied specically to the
performance of those awards;
• cost of materials acquired, consumed, or expended specically for the purpose of those
awards;
• equipment and other approved capital expenditures; and
• travel expenses incurred specically to carry out the award.
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F-iii
Indirect Costs are those:
• incurred for a common or joint purposes benetting more than one cost objective; and
• not readily assignable to the cost objectives specically benetted, without effort
disproportionate to the results achieved.
The term “indirect costs,” as used herein, applies to costs of this type originating in the grantee
department and those incurred by other departments in supplying goods and services.
Interagency Services
The cost of services provided by one division to another within the grantee, or agency of government
to the grantee, may include allowable direct costs of the services plus a prorated share of indirect
costs.
Selected Items of Cost
1. Administrative costs.
a. Compensation for grant coordinators and their clerical support is an allowable cost.
b. Indirect costs associated with accounting, auditing, budgeting, disbursement services,
management information systems, and purchasing are allowable to the extent of the
Restricted Indirect Cost Rate approved for federal programs, not to exceed a maximum
of 2 percent. Grantees approved to use the rate, by including indirect costs on the award
budget, must apply it to the total direct costs minus equipment costs.
2. Advertising and public relations costs.
a. The term “advertising costs” means the cost of advertising media and associated costs.
Advertising media include magazines, newspapers, radio and television programs, direct
mail, exhibits, and the like.
b. The term “public relations” includes community relations and means those activities
dedicated to maintaining the image of the grantee or maintaining or promoting understanding
and favorable relations with the community or public at large or any segment of the
public.
c. Advertising costs are allowable only when incurred for the recruitment of personnel, the
procurement of goods and services, the disposal of surplus materials, and any other specic
purposes necessary to meet the requirements of the state grant.
3. Advisory councils. Costs incurred by advisory councils or committees are allowable as a
direct cost where authorized by MSDE.
4. Alcoholic beverages. Costs of alcoholic beverages are unallowable.
5. Bad debts. Any losses arising from uncollectible accounts other claims, and related costs, are
unallowable.
6. Bonding costs. Costs of bonding employees and ofcials are allowable to the extent that such
bonding is in accordance with sound business practice.
7. Communications. Costs of telephone, mail, messenger, and similar communication services
are allowable.
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F-iv
8. Compensation for personnel services.
a. General. Compensation for personnel services includes all remuneration, paid currently
or accrued, for services rendered during the period of performance under State awards,
including but not necessarily limited to wages, salaries, and fringe benets. The costs of
such compensation are allowable to the extent that they satisfy the specic requirements of
this Appendix, and that the total compensation for individual employees:
(1) is reasonable for the services rendered and conforms to the established policy of
the grantee consistently applied to both state and non-state activities;
(2) follows an appointment made in accordance with a grantee’s rules and meets merit
system or other requirements established by state law, where applicable; and
(3) is determined and supported as provided in subsection G.
b. Reasonableness. Compensation for employees engaged in work on state awards will be
considered reasonable to the extent that it is consistent with that paid for similar work in
other activities of the grantee. In cases where the kinds of employees required for state
awards are not found in the other activities of the grantee, compensation will be considered
reasonable to the extent that it is comparable to that paid for similar work in the labor
market in which the grantee competes for the kind of employees involved. Compensation
surveys providing data representative of the labor market involved will be an acceptable
basis for evaluating reasonableness.
c. Unallowable costs. Costs that are unallowable under other sections of these principles
shall not be allowable under this section solely on the basis that they constitute personnel
compensation. Examples of unallowable costs are:
(1) the cost of severance payments, sabbatical leave, and bonuses; and
(2) payments for unused sick leave or annual leave except when an employee
terminates or retires.
d. Fringe benets.
(1) Fringe benets are allowances and services provided by employers to their employees
as compensation in addition to regular salaries and wages. Fringe benets include, but
are not limited to, the costs of leave, employee insurance, pensions, and unemployment
benet plans. Except as provided elsewhere in these principles, the costs of fringe
benets are allowable to the extent that the benets are reasonable and are required by
law, grantee-employee agreement, or an established policy of the grantee.
(2) The cost of fringe benets in the form of regular compensation paid to employees
during periods of authorized absences from the jobs such as for annual leave, sick
leave, holidays, court leave, military leave, and other similar benets are allowable if:
(a) they are provided under established written leave policies;
(b) the costs are equitably allocated to all related activities, including state awards,
and
(c) the accounting basis (cash or accrual) selected for costing each type of leave is
consistently followed by the grantee.
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F-v
(3) When a grantee uses the cash basis of accounting, the cost of leave is recognized in
the period that the leave is taken and paid for. Payments for unused leave when an
employee retires or terminates employment are allowable in the year of payment.
(4) The accrual basis may be used only for those types of leave for which a liability as
dened by Generally Accepted Accounting Principles (GAAP) exists when the leave
is earned. When a grantee uses the accrual basis of accounting, in accordance with
GAAP, allowable leave costs are the lesser of the amount accrued or funded.
(5) The cost of fringe benets in the form of employer contributions or expenses for social
security; employee life, health, unemployment, and worker’s compensation insurance
(except as indicated below in section 21- Insurance and Indemnication); pension plan
costs (see subsection “e” below); and other similar benets are allowable, provided
such benets are granted under established written policies. Such benets shall be
allocated to state awards and all other activities in a manner consistent with the pattern
of benets attributable to the individuals or group(s) of employees whose salaries and
wages are chargeable to such State awards and other activities.
e. Pension plan costs.
(1) Pension plan costs should be computed using the rates provided by the
Maryland State Retirement Agency and/or other pension boards.
(2) The state government shall receive an equitable share of any previously allowed
pension costs (including earnings thereon) that revert or inure to the grantee in
the form of a refund, withdrawal, or other credit.
f. Post-retirement health benets. Post-retirement health benets (PRHB) refers to costs of
health insurance or health services not included in a pension plan covered by subsection
e above for retirees and their spouses, dependents, and survivors. PRHB costs may be
computed according to rates in the contract(s) between the grantee and the provider(s) of
the benets.
g. Support of salaries and wages. These standards regarding time distribution are in addition
to the standards for payroll documentation.
(1) Charges to state awards for salaries and wages will be based on payrolls documented
in accordance with generally accepted practice of the grantee and approved by a
responsible ofcial of the organization.
(2) No further documentation is required for the salaries and wages of employees who
work in a single cost objective.
(3) Where employees work on multiple activities or cost objectives, a distribution of
their salaries or wages will be supported by personnel activity reports or equivalent
documentation that meets the standards in subsection
(4) Such documentary support will be required where employees work on:
(a) more than one state award; and
(b) a state award and a non-state award or activity.
(5) Personnel activity reports or equivalent documentation must meet the following
standards:
(a) they must reect an after-the-fact distribution of the actual activity of each
employee;
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F-vi
(b) they must account for the total activity for which each employee is compensated;
(c) they must be prepared at least monthly and must coincide with one or more pay
periods;
(d) they must be signed by the employee and supervisor; and
(e) budget estimates or other distribution percentages determined before the services
are performed do not qualify as support for charges to state awards, but may be used
for interim accounting purposes, provided that:
(i) the grantee’s system for establishing the estimates produces reasonable
approximations of the activity actually performed;
(ii) at least quarterly, comparisons of actual costs to budgeted distributions based
on the monthly activity reports are made. Costs charged to state awards to
reect adjustments made as a result of the activity actually performed may be
recorded annually if the quarterly comparisons show the differences between
budgeted and actual costs are less than ten percent; and
(iii) the budget estimates or other distribution percentages are revised at least
quarterly, if necessary, to reect changed circumstances.
(6) Salaries and wages of employees used in meeting cost sharing or matching requirements
of state awards must be supported in the same manner as those claimed as allowable
costs under state awards.
h. Donated services.
(1) Donated or volunteer services may be furnished to a grantee by professional and
technical personnel, consultants, and other skilled and unskilled labor. The value of
these services is not reimbursable. However, the value of donated services may be used
to meet cost sharing or matching requirements.
(2) To the extent feasible, donated services will be supported by the same methods used by
the grantee to support the regular personnel services.
9. Contingencies. Contributions to a contingency reserve or any similar provision made for
events the occurrence of which cannot be foretold with certainty as to time or intensity, or with
an assurance of their happening, are unallowable. The term “contingency reserve” excludes
self-insurance reserves (see subsection 21.c.), and post-retirement health and other benet
reserves (see subsection 8.f.) computed using acceptable actuarial cost methods.
10. Contributions and donations. Contributions and donations, including cash, property, and
services by grantees to others, regardless of the recipient, are unallowable.
11. Cost sharing or matching.
a. All contributions, including cash and third party in-kind, shall be accepted as part of the
grantee’s cost sharing or matching when such contributions meet all of the following
criteria:
(1) are veriable from the grantee’s records;
(2) are not included as contributions for any other state assisted project or program;
(3) are necessary and reasonable for proper and efcient accomplishment of project or
program objectives;
Appendix F
F-vii
(4) are allowable under the applicable cost principles;
(5) are not paid by the state under another award, except where authorized by statute to be
used for cost sharing or matching;
(6) are provided for in the approved budget when required by MSDE; and
(7) conform to other provisions of this Appendix, as applicable.
b. Values for recipient contributions of services and property shall be established in accordance
with the applicable cost principles. If MSDE authorizes recipients to donate buildings or
land for construction or facilities acquisition projects or long-term use, the value of the
donated property for cost sharing or matching shall be the lesser of:
(1) the certied value of the remaining life of the property recorded in the recipient’s
accounting records at the time of donation; and
(2) the current fair market value. However, when there is sufcient justication, MSDE
may approve the use of the current fair market value of the donated property, even if it
exceeds the certied value at the time of donation to the project.
c. Volunteer services furnished by professional and technical personnel, consultants, and other
skilled and unskilled labor may be counted as cost sharing or matching if the service is
an integral and necessary part of an approved project or program. Rates for volunteer
services shall be consistent with those paid for similar work in the recipient’s organization.
In those instances in which the skills are not found in the grantee’s organization, rates shall
be consistent with those paid for similar work in the labor market in which the recipient
competes for the kind of services involved. In either case, paid fringe benets that are
reasonable, allowable, and allocable may be included in the valuation.
d. When an employer other than the recipient furnishes the services of an employee, these
services shall be valued at the employee’s regular rate of pay (plus an amount of fringe
benets that are reasonable, allowable, and allocable, but exclusive of overhead costs),
provided these services are in the same skill for which the employee is normally paid.
e. Donated supplies may include such items as expendable equipment, ofce supplies,
laboratory supplies, or workshop and classroom supplies. Value assessed to donated
supplies included in the cost sharing or matching share shall be reasonable and shall not
exceed the fair market value of the property at the time of the donation.
f. The method used to determine cost sharing or matching for donated equipment, buildings
and land for which title passes to the recipient may differ according to the purpose of the
award, if (1) or (2) apply.
(1) If the purpose of the award is to assist the recipient in the acquisition of equipment,
buildings or land, the total value of the donated property may be claimed as cost
sharing or matching.
(2) If the purpose of the award is to support activities that require the use of equipment,
buildings, or land, normally only depreciation or use charges for equipment and
buildings may be made. However, the full value of equipment or other capital
assets and fair rental charges for land may be allowed, provided that MSDE has
approved the charges.
g. The value of donated property shall be determined in accordance with the usual
Appendix F
F-viii
accounting policies of the recipient, with the following qualications.
(1) The value of donated land and buildings shall not exceed its fair market value at the
time of donation to the recipient as established by an independent appraiser (e.g.,
certied real property appraiser or General Services Administration representative)
and certied by a responsible ofcial of the grantee.
(2) The value of donated equipment shall not exceed the fair market value of equipment
of the same age and condition at the time of donation.
(3) The value of donated space shall not exceed the fair rental value of comparable
space as established by an independent appraisal of comparable space and facilities
in a privately owned building in the same locality.
(4) The value of loaned equipment shall not exceed its fair rental value.
(5) The following requirements pertain to the recipient’s supporting records for in-kind
contributions from third parties.
(i) Volunteer services shall be documented and, to the extent feasible, supported
by the same methods used by the recipient for its own employees.
(ii) The basis for determining the valuation for personal service, material,
equipment, buildings and land shall be documented.
12. Defense and prosecution of criminal and civil proceedings, and claims. Legal expenses
required in the administration of state programs are allowable with the prior approval of MSDE.
Legal expenses for prosecution of claims against the state government are unallowable.
13. Depreciation and use allowances. Depreciation and use allowances are means of allocating
the cost of xed assets to periods benetting from asset use. These costs are unallowable.
14. Employee morale, health, and welfare costs. The costs of health or rst-aid clinics and/
or inrmaries, recreational facilities, employee counseling services, employee information
publications, and any related expenses incurred in accordance with a grantee’s policy are
unallowable.
15. Entertainment. Costs of entertainment, including amusement, diversion, and social activities
and any costs directly associated with such costs (such as tickets to shows or sports events,
meals, lodging, rentals, transportation, and gratuities) are unallowable.
16. Equipment and other capital expenditures.
a. As used in this section the following terms have the meanings as set forth below:
(1) “Capital expenditure” means the cost of the asset including the cost to put it in place.
Capital expenditure for equipment means the net invoice price of the equipment
including the cost of any modications, attachments, accessories, or auxiliary apparatus
necessary to make it usable for the purpose for which it is acquired. Ancillary charges,
such as taxes, duty, protective in transit insurance, freight, and installation may be
included in, or excluded from, capital expenditure cost in accordance with the grantee’s
regular accounting practices.
(2) “Capital equipment” means an article of nonexpendable, tangible personal property
having a useful life of more than one year and an acquisition cost that equals the lesser
of:
Appendix F
F-ix
(a) the capitalization level established by the grantee for nancial statement purposes,
or
(b) $1,000.
Capital equipment also includes sensitive items as dened in (5) below having a unit
acquisition cost of $500 or more and a useful life of one year or more.
(3) “Other capital assets” mean buildings, land, and improvements to buildings or land that
materially increase their value or useful life.
(4) “non-capital equipment” is expendable, tangible personal property having unit
acquisition cost less than the capitalization level dened in (2) above, sensitive items
with an acquisiton cost of less than $500 or items with a useful life of less than one
year.
(5) Sensitive items are capital or non-capital equipment items such as recording devices,
portable tools, cameras, and other small items that are prone to theft and concealable in a
handbag or briefcase. Equipment items that are too large for concealment in a handbag
or briefcase such as typewriters, projectors, printers and the like shall be considered
sensitive items if there is a history of loss or theft.
a. Capital expenditures that are not charged directly to a state award may not be recovered
through use allowances or depreciation on buildings, capital improvements, and
equipment.
b. Capital expenditures for equipment, including replacement equipment, other
capital assets, and improvements that materially increase the value or useful life of
equipment or other capital assets are allowable as a direct cost when approved by
MSDE.
c. When replacing equipment purchased in whole or in part with state funds, the grantee
may use the equipment to be replaced as a trade-in or sell the property and use the
proceeds to offset the cost of the replacement property.
17. Fines and penalties. Fines, penalties, damages, and other settlements resulting from violations
(or alleged violations) of, or failure of the grantee to comply with, state or local, laws and
regulations are unallowable except when incurred as a result of compliance with specic
provisions of the State award or written instructions by MSDE authorizing in advance such
payments.
18. Fund raising and investment management costs.
a. Costs of organized fund raising, including nancial campaigns, solicitation of gifts
and bequests, and similar expenses incurred to raise capital or obtain contributions are
unallowable, regardless of the purpose for which the funds will be used.
b. Costs of investment counsel and staff and similar expenses incurred to enhance income
from investments are unallowable.
19. Gains and losses on disposition of depreciable property and other capital assets.
a. Grantees are not accountable for gains and losses on sale, retirement, or other disposition
of capital or non-capital equipment that has been used for four years in the program
funded with the state award.
Appendix F
F-x
b. Grantees are accountable for gains and/or losses on the sale of homes built for resale using
supplies, materials, and equipment charged to state awards.
20. General government expenses. The general costs of government are unallowable except as
provided in section 36, travel costs.
21.Insuranceandindemnication.
a. Costs of insurance required or approved and maintained, pursuant to the state award, are
allowable.
b. Costs of other insurance in connection with the general conduct of activities are allowable
subject to the following limitations:
(1) types and extent and cost of coverage are in accordance with the grantee’s policy
and sound business practice.
(2) costs of insurance or of contributions to any reserve covering the risk of loss of,
or damage to, state government property are unallowable except to the extent that
MSDE has specically required or approved such costs.
c. Actual losses that could have been covered by permissible insurance (through a self-
insurance program or otherwise) are unallowable, unless expressly provided for in the state
award or as described below. However, the state government will participate in actual
losses of a self insurance fund that are in excess of reserves. Costs incurred because of
losses not covered under nominal deductible insurance coverage provided in keeping with
sound management practice, and minor losses not covered by insurance, such as spoilage,
breakage, and disappearance of small hand tools, that occur in the ordinary course of
operations, are allowable.
d. Contributions to a reserve for certain self-insurance programs including workers
compensation, and unemployment compensation are allowable subject to the following
provisions:
(1) The type of coverage and the extent of coverage and the rates and premiums would
have been allowed had insurance (including reinsurance) been purchased to cover
the risks. However, provision for known or reasonably estimated self-insured
liabilities, that do not become payable for more than one year after the provision is
made, shall not exceed the discounted present value of the liability. The rate used
for discounting the liability must be determined by giving consideration to such
factors as the grantee’s settlement rate for those liabilities and its investment rate
of return.
(2) Earnings or investment income on reserves must be credited to those reserves.
(3) Contributions to reserves must be based on sound actuarial principles using
historical experience and reasonable assumptions. Reserve levels must be analyzed
and updated at least bi-ennially for each major risk being insured and take into
account any reinsurance, coinsurance, etc. Reserve levels related to employee-
related coverages will normally be limited to the value of claims
(a) submitted and adjudicated but not paid;
(b) submitted but not adjudicated; and
(c) incurred but not submitted.
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F-xi
(4) Accounting records, actuarial studies, and cost allocations (or billings) must
recognize any signicant differences due to types of insured risk and losses
generated by the various insured activities or agencies of the grantee. If individual
departments or agencies of the grantee experience signicantly different levels of
claims for a particular risk, those differences are to be recognized by the use of
separate allocations or other techniques resulting in an equitable allocation.
(5) Whenever funds are transferred from a self insurance reserve to other accounts
(e.g., general fund), refunds shall be made to the state government for its share of
funds transferred, including earned or imputed interest from the date of transfer.
e. Actual claims paid to or on behalf of employees or former employees for workers’
compensation, unemployment compensation, and similar employee benefits (e.g., s u b -
section 8.f. for post retirement health benets), are allowable in the year of payment
provided:
(1) the grantee follows a consistent costing policy; and
(2) they are allocated as a general administrative expense to all activities of the
grantee.
f. Insurance refunds shall be credited against insurance costs in the year the refund is
received.
g. Indemnication includes securing the grantee against liabilities to their persons and other
losses not compensated by insurance or otherwise. The state government is obligated to
indemnify the grantee only to the extent expressly provided for in the state award, except
as provided in subsection “d,” contributions to a reserve.
22. Interest.
a. Costs incurred for interest on borrowed capital or the use of a grantee’s own funds, however
represented, are unallowable.
b. Financing costs (including interest) paid or incurred on or after the effective date of this
Appendix associated with the unallowable costs of building acquisition, construction, or
fabrication, reconstruction or remodeling is unallowable.
c. Financing costs (including interest) paid or incurred on or after the effective date of this
Appendix associated with otherwise allowable costs of equipment is allowable, subject to
the following conditions:
(1) The nancing is provided (from other than tax or user fee sources) by a bona de
third party external to the grantee;
(2) The assets are used in support of state awards; and
(3) Earnings on debt service reserve funds or interest earned on borrowed funds
pending payment of acquisition costs are used to offset the current period’s cost
or the capitalized interest, as appropriate.
23. Lobbying. The cost of certain inuencing activities associated with obtaining grants, contracts,
cooperative agreements, or loans is an unallowable cost.
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F-xii
24. Maintenance, operations and repairs. Unless prohibited by law, the cost of utilities, insurance,
security, janitorial services, elevator service, upkeep of grounds, necessary maintenance,
normal repairs and alterations, and the like are allowable to the extent that they:
(1) keep property (including State property, unless otherwise provided for) in an
efcient operating condition;
(2) do not add to the permanent value of property or appreciably prolong its intended
life; and
(3) are not otherwise included in rental or other charges for space. Costs that add to the
permanent value of property or appreciably prolong its intended life shall be treated
as capital expenditures (see sections 16.c).
25. Materials and supplies. The cost of materials and supplies is allowable. Purchases should
be charged at their actual prices after deducting all cash discounts, trade discounts, rebates,
and allowances received. Withdrawals from general stores or stockrooms should be charged
at cost under any recognized method of pricing, consistently applied. Incoming transportation
charges are a proper part of materials and supply costs.
26. Memberships, subscriptions, and professional activities.
a. Costs of the grantee’s memberships in business, technical, and professional organizations
are allowable.
b. Costs of the grantee’s subscriptions to business, professional, and technical periodicals are
allowable.
c. Costs of meetings and conferences where the primary purpose is the dissemination of
technical information, including meals, transportation, rental of meeting facilities, and
other incidental costs are allowable.
d. Costs of membership in civic and community, social organizations are allowable as a direct
cost with the approval of the awarding division.
e. Costs of membership in lobbying organizations are unallowable.
27. Motor Pools. The costs of a service organization that provides automobiles to users grantee
units at a mileage or xed rate and/or provides vehicle maintenance, inspection, and repair
services are allowable.
28. Pre-award costs. Pre-award costs are those incurred prior to the effective date of the award
directly pursuant to the negotiation and in anticipation of the award where such costs are
necessary to comply with the proposed delivery schedule or period of performance. Such
costs are allowable only to the extent that they would have been allowable if incurred after the
date of the award and only with the written approval of MSDE.
29. Professional service costs.
a. Cost of professional and consultant services rendered by persons or organizations that
are members of a particular profession or possess a special skill, whether ofcers or
employees of the grantee, are allowable, subject to section 12 when reasonable in relation
to the services rendered and when not contingent upon recovery of the costs from the state
government.
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b. Retainer fees supported by evidence of bona de services available or rendered are
allowable.
30. Publication and printing costs. Publication costs, including the costs of printing (including
the processes of composition, plate-making, press work, and binding, and the end products
produced by such processes), distribution, promotion, mailing, and general handling are
allowable.
31. Rearrangements and alterations. Costs incurred for ordinary and normal rearrangement and
alteration of facilities are unallowable. Special arrangements and alterations costs incurred
specically for a state award are allowable with the prior approval of MSDE.
32. Reconversion costs. Costs incurred in the restoration or rehabilitation of the grantee’s
facilities to approximately the same condition existing immediately prior to commencement
of state awards, less costs related to normal wear and tear, are allowable with prior approval
of MSDE.
33. Rental costs.
a. Subject of the limitations described in subsections b. through d. of this section, rental costs
are allowable to the extent that the rates are reasonable in light of such factors as:
• rental costs of comparable property, if any;
• market conditions in the area;
• alternatives available; and
• the type, life expectancy, condition, and value of the property leased.
b. Rental costs under sale and leaseback arrangements are allowable only up to the amount
that would be allowed had the grantee continued to own the property.
c. Rental costs under less-than-arms-length leases are allowable only up to the amount that
would be allowed had title to the property vested in the grantee. For this purpose, less-than-
arms-length leases include, but are not limited to, those where:
(1) one party to the lease is able to control or substantially inuence the actions of the
other;
(2) both parties are parts of the same grantee; or
(3) the grantee creates an authority or similar entity to acquire and lease the facilities to
the grantee and other parties.
d. Rental costs under leases that are required to be treated as capital leases under GAAP
are allowable only up to the amount that would be allowed had the grantee purchased
the property on the date the lease agreement was executed. This amount would include
expenses such as depreciation or use allowance, maintenance, and insurance. The
provisions of Financial Accounting Standards Statement 13 shall be used to determine
whether a lease is a capital lease. Interest costs related to capital leases are allowable
to the extent they meet the criteria in section 22, interest.
34. Taxes. Taxes that a grantee is legally required to pay are allowable.
35. Training. The cost of training provided for employee development is allowable.
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36. Travel costs.
a. General. Travel costs are allowable for expenses for transportation, lodging, subsistence,
and related items incurred by employees traveling on ofcial business. Such costs may
be charged on an actual cost basis, on a per diem or mileage basis in lieu of actual
costs incurred, or on a combination of the two, provided the method used is applied
to an entire trip, and results in charges consistent with those normally allowed in like
circumstances in non-State-sponsored activities. Notwithstanding the provisions of
section 20, general government, travel costs of ofcials covered by that section, when
specically related to state awards, are allowable with the prior approval of MSDE.
b. Lodging and subsistence. Costs incurred by employees and ofcers for travel, including
costs of lodging, other subsistence, and incidental expenses, shall be considered
reasonable and allowable only to the extent such costs do not exceed charges normally
allowed by the grantee in its regular operations as a result of the grantee’s policy.
c. Commercial air travel. Airfare costs in excess of the customary standard (coach or
equivalent) airfare, are unallowable. However, in order for airfare costs in excess of the
customary standard commercial airfare to be allowable; e.g., use of rst-class airfare,
the grantee must justify and document on a case-by-case basis.
d. Air travel by other than commercial carrier. Cost of travel by grantee-owned, leased, or
-chartered aircraft, as used in this section, includes the cost of lease, charter, operation
(including personnel costs), maintenance, depreciation, interest, insurance, and other
related costs. Costs of travel via grantee-owned, -leased, or -chartered aircraft are
unallowable to the extent they exceed the cost of allowable commercial air travel, as
provided for in subsection c.
37. Under recovery of costs under state agreements. Any excess costs over the state contribution
under one award agreement are unallowable under other award agreements.
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Maryland State Department of Education
Nancy S. Grasmick State Education Building
Division of Business Services
200 West Baltimore Street
Baltimore, Maryland 21201
410.767.0011
410.333.2232 (fax)
Financial Rep
f
Maryland P
orting Manual
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