Board approves R277-113 on second reading, delays accrual section to May meeting

The board approved R277-113, titled “LEA fiscal and auditing policies,” on second and final reading and asked staff to return with updated language for the rule’s accrual-accounting section at the May full-board meeting.

Member Davis, who moved the substitute motion, said the accrual and contra-revenue accounting requirements have been the subject of repeated debate. “It has literally taken me 5 years and probably the last few hours to finally understand what I haven't understood about this…requirement for accrual and contra revenue accounting in our LEAs,” Member Davis said. She said many local education agencies (LEAs) are not doing full accrual now and that doing so will require systems that communicate—student information systems and finance systems—which she estimated can cost “hundreds of thousands of dollars” to implement.

The motion approved the draft policy on second and final reading and directed staff to bring back section 8, the accrual-accounting portion, at the May full-board meeting. Chair Davis confirmed the substitute motion and called for a vote. The motion passed 11 in favor, 3 abstentions and 1 opposed.

Why it matters: The rule governs how LEAs record and report revenues and expenditures. Board members and some business administrators have argued for consistency in choosing between GAAP options—recording certain transactions as contra revenue or as expenditure—while others have raised concerns about the technical burden of daily accrual practices and student privacy.

Discussion and concerns

Member Davis described two distinct issues in the rule: the choice between contra revenue and expenditure accounting under GAAP, and a separate requirement for daily accruals. She said the GAAP choice leaves LEAs with two equivalent accounting options and favors consistency across LEAs. The accrual requirement, she said, effectively demands daily entries tied to student registration and attendance, which many districts do not perform and which would require costly system integration.

Member Lear questioned whether the proposal would allow parents to see other families’ payment information and urged protection of student privacy; Member Davis replied the proposal would not permit parents to view other parents’ payment status and that monitors and auditors have access today only via existing records. Member Bollinger and others thanked Davis for taking the issue back to staff and committee work, noting long-standing objections among business administrators since 2021.

Clarifying details and examples cited during discussion included monitor findings at a charter school: a fee-waiver application link that “takes you to the wrong place on the website,” and a missing policy statement on a supply-list page that was found on another page. Member Davis also noted that some textbook fees have been eliminated and referenced recent legislation affecting school fees.

Action and next steps

The board’s action approves R277-113 draft 1 on second and final reading, with an explicit direction that section 8 addressing accrual accounting be revised and returned to the full board in May. Member Davis said she will work on language with the board auditor, Debbie Davis, the finance team and input from LEAs.

Votes at a glance

- Motion: Approve R277-113 LEA fiscal and auditing policies draft 1 on second and final reading and return section 8 (accrual) to the May full-board meeting. Mover: Member Davis. Second: stated on the record but not attributed to a named member in the transcript. - Outcome: Approved. Tally: 11 yes, 1 no, 3 abstain. Named votes recorded in the meeting record: Abstain — Member Brinton, Member Bogus, Member Green. No — Member Carrie.

The board then closed carryover business and moved to the next agenda items.