State Board approves R277-113 on LEA fiscal and auditing policies; delays accrual section to May

The Utah State Board of Education on a second and final reading approved rule R277-113, the LEA fiscal and auditing policies, and directed staff to return section 8 (the accrual accounting provision) to the full board at its May meeting for additional work and clearer language.

Member Davis, a board member who moved the substitute motion, said the rule’s accrual and contra-revenue accounting requirements have been a years‑long, technical point of contention for local education agencies (LEAs). “It has literally taken me five 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, describing the operational and cost burden the accrual language would impose on districts.

Board members who questioned the motion focused on two themes: whether the proposed rule language aligns with GAAP and recent state legislation about school fees, and the practical cost and systems burdens on LEAs to implement daily accrual accounting. Several members noted monitors and auditors can already review certain records in student information systems (SIS), but that full daily accrual compliance would require finance and SIS systems to “talk to each other,” a change Member Davis said could cost “hundreds of thousands of dollars” for some districts.

Member Davis said staff will work with the agency auditor and LEA business administrators to refine the rule language and to draft consistent guidance on whether LEAs should record school‑fee revenue as contra revenue or as expenditures under governmental accounting standards. The substitute motion approved by the board included specific instruction that R277-113 be returned with revised language for section 8 at the May full board meeting.

Votes and formal action: the board approved the motion on second and final reading; the board’s tally was recorded in the meeting as 11 in favor, 1 no vote, and 3 abstentions. The recorded no vote was Member Carrie; the recorded abstentions were Member Brinton, Member Boggess, and Member Green. The board’s public announcement of the result said the motion “passes.” The motion also included a clear instruction to bring back section 8 (accrual provisions) for further consideration at the May full board meeting.

Why it matters: the rule governs how LEAs record and report fee revenues and related accounting entries under state requirements and GAAP. The board’s decision to approve the rule while pausing on accrual language reflects a compromise to keep rulemaking on schedule while giving staff and stakeholders time to address complex technical and financial concerns.

Details and context: Member Davis described audits and monitoring examples—such as a fee waiver link pointing to the wrong web page and missing policy text on supply lists—to illustrate the kinds of compliance issues monitors find. Members and a business administrator who spoke to board members during the discussion traced the issue back to 2021 and said local business officials have repeatedly raised concerns about daily accrual requirements. Members noted some textbook fees have been removed statewide and that recent legislation about extracurricular fees (referred to in discussion as “Mark Strong’s bill”) affects the fee landscape; board staff and legal counsel said the board’s proposed rule language will be reviewed for consistency with state law.

Next steps: staff will redraft section 8 with input from the agency auditor and LEA business administrators and present the revised language at the board’s May full meeting.