ISBE Revises Rules to Create Fiduciary Funds and Revise Accounting for Student Activity Funds and the Tort Immunity Fund

Effective May 12, 2020, ISBE changed its rules for accounting for Tort Immunity and Judgement Funds and Student Activity Funds, and added a new category of Fiduciary Funds by amending 23 Ill. Admin. Code 100. These changes will begin with fiscal year 2021 budget and fiscal year 2021 annual financial report.

Fiduciary Funds (New)

The new category of Fiduciary Funds established by the Governmental Accounting Standard Board’s Statement 84 (“GASB 84”) is defined as funds received from an independent, outside source in which the school board is solely acting in an administrative capacity and therefore only has fiduciary responsibility for the funds, but does not have any control over the funds. The revised rules describe the district’s fiduciary role and the responsibilities of the fiduciary fund’s treasurer. These fiduciary funds will include an outside, independent scholarship fund in which a district does not have discretion to decide how the funds are attained or awarded.

Student Activity Fund Accounting

Regarding Student Activity Funds, ISBE amended its rules to provide that the school board, superintendent, or district employees have direct involvement with the decisions of how student activity funds are spent or attained. Due to this involvement and in accordance with GASB 84, the school board must now report student activity funds within the Educational Fund cash balance, fund balance, revenues, and expenditures.

Tort Immunity Expenditure Accounting

To maintain consistent cost per pupil reporting with other states, beginning on July 1, 2020, all expenditure functions will be opened for reporting expenditures within the Tort Immunity and Judgement Fund to avoid classifying all such expenses as general administration costs. In its reporting of the revised rules, ISBE reminds districts that only expenditures that comply with the Local Governmental and Governmental Employees Tort Immunity Act (745 ILCS 10) may be charged to the Tort Fund. If a district plans to extend taxes for tort levy purposes, it should develop a Risk Management Plan in consultation with the District’s legal counsel and independent auditor that stipulates the risk management measures the district utilized and the types of expenditures to be obligated against the tort levy. These expenditures against the tort levy must be noted in the Schedule of Tort Immunity Expenditures contained within the Annual Financial Report.

Additional information on these changes and School District/Joint Agreement budget forms can be found on ISBE’s website. Please contact Heather Brickman, Steve Richart, or your HLERK attorney with questions regarding ISBE’s revised funding rules.

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