Arkansas Administrative Code
Agency 005 - DEPARTMENT OF EDUCATION
Division 01 - Division of Fiscal and Administrative Services
Rule 005.01.07-002 - ADE 264: Rules Governing the Arkansas Financial Accounting and Reporting System and Annual Training Requirements

1.01 These rules are promulgated pursuant to Ark. Code Ann. §§ 6-11-105, 6-20-1805, 6-20-2004, 6-20-2104, 6-20-2202, 6-20-2207 and Act 1006 of the 86th Arkansas General Assembly.

2.01 These rules shall be applied to all school districts, open enrollment charter schools, and education service cooperatives for the purposes of accounting and reporting revenues and expenditures and for providing required training.

3.01 Annual Financial Report and Budget (AFRB) - the annual electronically submitted report of the revenues and expenditures for the prior fiscal year and the budget of revenues and expenditures of school districts, open enrollment charter schools, and education service cooperatives filed with the Department by September 15 of each school year as required by Ark. Code Ann. § 6-20-2202.

3.02 Annual Record - AFRB.

3.03 Approved Budget - a budget that has received the required written notification from the Department that the budget presented was not identified as deficient as of February 15 of the current year.

3.04 APSCN - Arkansas Public School Computer Network

3.05 Arkansas Financial Accounting Handbook - the uniform chart of accounts and related codes which are established by the Department and incorporated into these rules as the "Arkansas Handbook, and used for accounting and financial reporting of all public schools, school districts, open enrollment charter schools, and education service cooperatives.

3.06 Athletic Expenditures - all direct and indirect expenses related to interschool athletic programs, prorated if necessary.

3.07 Budget - the annual budget of expenditures and receipts required in Ark. Const. Art. 14 § 3, and Ark. Code Ann. §§ 6-13-620(7) and 6-20-2202. The budget is submitted on or before September 15 as part of the AFRB.

3.08 Budget Approval - required written notification from the Department that the budget presented was reviewed for compliance with the mandated requirements under Ark. Code Ann. § 6-20-2202.

3.09 Budget Review - the process of determining if the budget submitted meets the mandated expenditure requirements in effect for the appropriate year.

3.10 Deficient - a finding by the Department auditors that budget or financial accountability reports do not meet the requirements of state law or rules of the SBE.

3.11 Department - the Arkansas Department of Education.

3.12 Interschool Athletic Program - any athletic program which is organized primarily for the purpose of competing with other schools, public or private; or any athletic program which is subject to regulation by the Arkansas Activities Association.

3.13 Interschool Scholastic Activities - any interschool activity program that is outside the regular curriculum, excluding interschool athletic programs as defined by Ark. Code Ann. § 6-20-2002(3), which is organized primarily for the purpose of competing with other schools, public or private; or any program or activity, excluding interschool athletic programs as defined by Ark. Code Ann. § 6-20-2002(3), which is subject to regulation by the Arkansas Activities Association.

3.14 Interschool Scholastic Activity Expenditures - all direct and indirect expenses related to interschool scholastic activities, prorated if necessary.

3.15 Material Findings - a financial condition that jeopardizes the fiscal integrity of the school district.

3.16 SBE - the Arkansas State Board of Education.

3.17 Special Needs Categories - the state funding categories of Alternative Learning Environments, English Language Learners, National School Lunch Act funding, and Professional Development.

3.18 State Funds - all money derived from state revenues, specifically including but not limited to, distributions from the Department of Education Public School Fund Account and uniform rate of tax ad valorem property taxes distributed to a public school or school district.

3.19 Tier I & II Employees - those employees described as Tier I or Tier II employees in § 7 of this rule.

3.20 Tier I & Tier II Training - that training described as Tier I or Tier II training in § 7 of this rule.

3.21 Valid Comparisons - comparisons deemed to be relevant to the subject material in substance and scope.

4.01 The AFRB shall be electronically submitted in the format required by the Department.

4.02 The Department shall establish the format of the AFRB by no later than August 1 of each year and the Department shall provide written notice via Commissioner's Memo of the date the AFRB format is available for use by the public school districts, open enrollment charter schools, and education service cooperatives.

4.03 The AFRB shall be filed electronically with the Department by September 15 of each year.

4.04 The Department shall establish and implement a uniform chart of accounts and related codes known as the Arkansas Financial Accounting Handbook (Arkansas Handbook) which shall be the uniform chart of accounts and codes utilized in reporting revenues and expenditures.

4.05 The Arkansas Handbook shall be the chart of accounts and codes utilized by school districts, open enrollment charter schools and education cooperatives in making the record of actual revenues and expenditures and the annual budget of revenues and expenditures required by these rules.

5.01 Beginning in 2008-2009 school year, by February 15 of each year, the Financial Accountability Unit shall review the AFRB to determine if the financial records are deficient. Any error related to the coding and reporting of financial information that causes a material misstatement of financial information will be cause for determining a deficiency. A material misstatement occurs whenever the submitted data has more than a five percent (5%) variance from the correct data or when corrective action is not taken after the Department has sent written notification to a district, open-enrollment charter school or education service cooperative regarding specific errors discovered in the AFRB.

5.02 The AFRB review will include, but is not limited to:

5.03 The Department shall notify in writing, via certified mail, the superintendent or director of the school districts, open enrollment charter schools or education service cooperatives whose financial records are found to be deficient.

5.04 The school district, open enrollment charter school or education service cooperative will have thirty (30) days to respond to the Department's notification. The response may include, but is not limited to:

5.05 The response shall not be considered a right of appeal.

5.06 If the review determines the financial records of any school district, open enrollment charter school or education service cooperative are deficient as defined in Section 5.01 or otherwise not properly maintained or submitted by the school district, open enrollment charter school, or education service cooperative or are not administered in accordance with state laws, SBE rules, or the Arkansas Handbook, then state-funded grants and/or aid that the district would be eligible to receive shall be withheld until the financial issues have been resolved.

5.07 The SBE may require the superintendent or director and board members explain and/or appear before the SBE to explain why the district is not complying with state laws or rules.

5.08 Upon written notice of approval by the Financial Accountability Unit, the Department shall file copies of the approved budget with the school district, open enrollment charter school, or education service cooperative, and the county treasurer.

5.09 It is the duty of the State to monitor school districts, open enrollment charter schools, or education service cooperatives financial records, Arkansas Comprehensive School Improvement Plan, or any other pertinent records, to ensure the following:

5.10 The Department shall have the authority to review, analyze and inspect the financial records of any school district, open enrollment charter school or education service cooperative in order to verify that a school district, open enrollment charter school or education service cooperative is correctly and accurately reporting revenues and expenditures.

5.11 The Department shall submit a report to the Governor, the Senate Interim Committee on Education, and the House Interim Committee on Education by February 15 of each year concerning public school and public school district expenditures required by law.

6.01 The Department shall publish by July 1 of each year, via Commissioner's Memo, a list of all required financial accountability reports with due dates.

6.02 The Department shall submit a written notice via certified mail on or before February 15 of each year to those school districts, open enrollment charter schools and education service cooperatives whose budget or financial reports are identified as deficient. Likewise, the Department will issue a Commissioner's Memo on or before February 15 of each year indicating which school districts, open enrollment charter schools or education service cooperatives budgets are identified as approved.

6.03 Each county clerk is required to provide to the Department an annual Abstract of Assessment by March 15 of each year.

6.04 The Department may withhold state aid from any school district, open enrollment charter school or education service cooperative that fails to file its budget or any other required report with the Department by the deadline established on the list of all required financial accountability reports, provided that the Department has met the deadline for providing information pertinent to meeting the deadlines.

7.01 The Department shall establish two (2) tiers of required training.

7.02 The two (2) persons per educational entity required to attend shall each obtain twelve (12) hours of Initial Training and instruction necessary to demonstrate basic proficiency as determined by the Department, including but not limited to:

7.03 After obtaining the Initial Training, the two (2) persons required to attend shall obtain four (4) hours of Tier I annual training and instruction in order to maintain basic proficiency in the topics described in Section 7.02 of these rules.

7.04 Tier II training shall include, but is not limited to, employees who make decisions about selecting codes or who have a limited number of codes that they can use.

8.01 Any school district or open enrollment charter school that does not comply with and meet the requirements of these rules, shall, after receiving notice as required by law, be identified by the Department as being in fiscal distress.

8.02 Any education service cooperative that does not comply with and meet the requirements of these rules shall be sanctioned by the SBE.

8.03 Any licensed classroom teacher or administrator of a school, school district, open enrollment charter school or education service cooperative that provides false expenditure information may have his or her license placed on probation, suspended or revoked pursuant to procedures utilized in accord with Ark. Code Ann. § 6-17-410.

8.04 Persons failing to obtain required training by December 31 of the calendar year and who fails to cure any training deficiency by March 1 of the following year without filing a request for extension of time and after receiving proper notice shall be unable to continue in his or her position of employment effective on the date of receipt of notification from the superintendent of the school district, open enrollment charter school or education service cooperative.

8.05 If a person fails to obtain all required training by December 31, this failure shall constitute one (1) citation against the school district, the open enrollment charter school or an admonishment to the education service cooperative.

8.06 Beginning in 2008-2009 school year, any school district that submits erroneous data to the Arkansas Department of Education that causes a material misstatement of any student or financial information shall receive a citation. A material misstatement is one in which the submitted data has more than a five percent variance from the correct data. If a material misstatement occurs for two consecutive years, the school district shall receive a probationary violation in the district's Standards for Accreditation report issued by the Arkansas Department of Education.