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Requirements for Local Operating Funds and Associated Local Funds

FPP S.009

Agency Requirements

Section 1 – Procedures for a local fund where no related fund for making payments or processing payroll exists in USAS

Agencies must create a D23 fund for all local funds that are designated as a local operating, custodial, bond or trust fund that infers the respective D22 appropriated fund (D22 fund).

See below for procedures by type of local fund for creating a new D23 fund.

Note: The D22 fund on an existing D23 fund cannot be changed if balances have already posted to the D23 fund. Instead, create a new D23 fund with the correct D22 fund.

Local Funds – Operating

For each Local Fund – Operating that will be reported in a separate column in the AFR, establish at least one D23 fund in USAS that infers the D22 fund 9999 – Operating Funds Held Outside the State Treasury and the D24 fund – XXXX.

Example:
D23 Fund Fund Description D22 Fund (inferred) D24 Fund (inferred)
XXXX Local Fund – Operating 9999 XXXX

If the D23 fund will be reported in a column with other similar D23 funds, please contact your financial reporting analyst for assistance in determining the correct D24 fund to infer on the D23 profile.

Local Funds – Custodial

For each Local Fund – Custodial that will be reported in a separate column in the AFR, establish at least one D23 fund in USAS that infers the D22 fund 9995 – Custodial Funds Held Outside the State Treasury and the D24 fund – XXXX.

Example:
D23 Fund Fund Description D22 Fund (inferred) D24 Fund (inferred)
XXXX Local Fund – Custodial 9995 XXXX

If the D23 fund will be reported in a column with other similar D23 funds, please contact your financial reporting analyst for assistance in determining the correct D24 fund to infer on the D23 profile.

Local Funds – Bond

For each Local Fund – Bond that will be reported in a separate column in the AFR, establish at least one D23 fund in USAS that infers the D22 fund 9994 – Bond Funds Held Outside the State Treasury and the D24 fund – XXXX.

Example:
D23 Fund Fund Description D22 Fund (inferred) D24 Fund (inferred)
XXXX Local Fund – Bond 9994 XXXX

If the D23 fund will be reported in a column with other similar D23 funds, please contact your financial reporting analyst for assistance in determining the correct D24 fund to infer on the D23 profile.

Local Funds – Trust

For each Local Fund – Trust that will be reported in a separate column in the AFR, establish at least one D23 fund in USAS that infers the D22 fund 9993 – Trust Funds Held Outside the State Treasury and the D24 fund – XXXX.

Example:
D23 Fund Fund Description D22 Fund (inferred) D24 Fund (inferred)
XXXX Local Fund – Trust 9993 XXXX

If the D23 fund will be reported in a column with other similar D23 funds, please contact your financial reporting analyst for assistance in determining the correct D24 fund to infer on the D23 profile.

Section 2a – Procedures for a local fund where a related fund for making payments or processing payroll already exists in USAS

Certain agencies have local D23 funds held with the Texas Treasury Safekeeping Trust Company or at local banks that use USAS to issue payments. The fund that reports the expenditure activity in USAS is a local USAS operating fund.

The local D23 fund records the revenue activities and transfers cash periodically to the local USAS operating fund to cover payments and payroll. This primarily applies to self-directed, semi-independent (SDSI) agencies. See Section 3 – Procedures for moving cash from a local fund into a USAS operating fund of this FPP for procedures on this process.

Local Funds – Operating

D23 funds that share the same D24 fund make it possible for the balances and activities in both the local fund and the local USAS operating fund to be reported in the same column for AFR purposes.

For each Local Fund – Operating, establish at least one D23 fund in USAS that infers the D22 fund 9999 – Operating Funds Held Outside the State Treasury and the D24 fund – XXXX that will also be used on the corresponding D23 fund for the local USAS operating fund.

Local Funds – Trust

As noted below, agencies must create a D23 fund for a local fund that is designated as a local trust fund that infers the respective D22 fund.

Note: Do not change the D22 fund on an existing D23 fund as this will create exceptions for transactions already posted to the fund. Instead, create a new D23 fund with the correct D22 fund.

For each Local Fund – Trust, establish at least one D23 fund in USAS that infers the D22 fund 9993 – Trust Funds Held Outside the State Treasury and the D24 fund – XXXX that will also be used on the corresponding D23 fund for the local USAS operating trust fund.

Section 2b – Procedures for the Local USAS Operating Fund used to make payments for a local fund

Local USAS Operating Funds

For each Local USAS Operating Fund, establish at least one D23 fund in USAS that infers the assigned D22 fund 10XX – Agency Name Local Operating Fund and a D24 fund – XXXX that will also be used on the corresponding D23 fund that infers D22 fund – 9999 Operating Funds Held Outside the State Treasury.

Example: Local USAS Operating Fund

An agency has a D23 fund 0585 that infers D22 fund 9999 and uses USAS to process the payments for the fund. The D22 fund 1001 has been assigned for the corresponding local USAS operating fund that is used for processing payments. The agency established D23 fund 1001 for the local USAS operating fund. Both D23 funds – 0585 and 1001 – infer D24 fund 1001.

Fund Description D23 Fund D22 Fund (inferred) D24 Fund (inferred)
Local Fund – Operating 0585 9999 1001
Local USAS Operating Fund 1001 1001 1001

Local USAS Operating Trust Funds

For each Local USAS Operating Trust Fund, establish at least one D23 fund in USAS that infers the assigned D22 fund 08XX – Agency Name Local Operating Funds and the D24 fund – XXXX that will also be used on the corresponding D23 fund that infers D22 fund – 9993 Trust Funds Held Outside the State Treasury.

Example: Local USAS operating trust fund

An agency has a D23 fund 2801 that infers D22 fund – 9993 and uses USAS to process the payments for the fund. The D22 fund 0801 has been assigned for the corresponding local USAS operating trust fund used for processing payments. The agency established D23 fund 0801 for the local USAS operating trust fund, both D23 funds – 2801 and 0801 – infer D24 Fund 0801.

Fund Description D23 Fund D22 Fund (inferred) D24 Fund (inferred)
Local Fund – Trust 2801 9993 0801
Local USAS Operating Trust Fund 0801 0801 0801
Example: Local USAS operating trust fund with two local trust funds reported in the same column on the AFR

An agency has two D23 funds – 2801 and 3801 – for local funds designated as trust that infer D22 fund 9993. Both funds use USAS to process their payments. The D22 fund 0801 has been assigned for the corresponding local USAS operating trust fund used for processing the payments.

The agency established two separate D23 local operating trust funds – 0801 and 4801 – to account for the activity of each of the local funds, respectively. The D23 funds will be reported in the same column on the AFR.

Fund Description D23 Fund D22 Fund (inferred) D24 Fund (inferred)
Local Fund – Trust 2801 9993 0801
Local USAS Operating Trust Fund 0801 0801 0801
Local Fund – Trust 3801 9993 0801
Local USAS Operating Trust Fund 4801 0801 0801

Section 3 – Procedures for moving cash from a local fund into a USAS operating fund

An agency must use the following coding block to move cash into a USAS operating fund – only to the extent needed to cover operating expenses.

Batch Type Doc Type TC COBJ Amount
2 D 195 3847 $XX.XX

Important Note: Agencies should not carry excessive balances in local USAS operating or operating trust funds at any time. The local USAS operating and operating trust funds do not accrue Treasury interest.

Comptroller Object 3847 – Deposit into the Treasury from Fund Outside the Treasury rolls to Backout – Not Applicable and must be reclassified as a transfer-in at fiscal year-end for AFR reporting purposes. This reclassification transaction may be entered at a summary level on a monthly basis or at fiscal year-end. The related Local Fund – Operating or Local Fund – Trust should report a corresponding transfer-out. For more information on required entries for these funds, see the Transaction Entry section of Self-Directed and Semi-Independent Agencies in the Reporting Requirements for Annual Financial Reports of State Agencies and Universities (FPP A.036).

Local USAS operating and operating trust funds are not subject to the lapse and encumbrance provisions of Encumbrance Report and Lapsing of Appropriations (APS 018) (FPP A.019). They are still subject to the accrual requirements. In addition to this FPP, see Payables/Accrued Expenditures in the AFR website for help on recording accruals.

To facilitate accurate annual state cash reporting, local operating and operating trust fund cash balances in USAS in excess of posted accrued expenditures must be returned to the agency’ Local Fund – Operating and Local Fund – Trust, at least two days prior to the end of each fiscal year using the following coding block:

Batch Type Doc Type TC COBJ Amount
4 9 222 3847 $XX.XX

Note: DAFR8665 will provide cash transaction details and ending balances at the D23 fund level within the D22 fund.

Additional reporting requirements per the GAA (Art. IX, Sec. 17.09)

Under the requirements of the 2020-21 GAA, any state agency that receives, spends or administers revenue held outside the state treasury is required to submit financial data on the funds to the Comptroller’s office. The Comptroller’s office works with the Legislative Budget Board to prepare a report based on the local funds data for each regular session of the Legislature.

Required biennial reporting using provided Excel spreadsheet

The reporting requirements are due to the Comptroller’s office by Dec. 11.

For 2020, each agency and SDSI must:

  1. Complete the Required Biennial Local Funds Reporting Excel spreadsheet provided in this fiscal policy and procedure (FPP) to report funds held outside the state treasury
  2. Submit the completed spreadsheet by Dec. 11 to ACO.Reports@cpa.texas.gov

For spreadsheet questions, contact Drey Lord at 512-475-0897 or by email at drey.lord@cpa.texas.gov.

Note: The Excel spreadsheet contains column headings for the required data listed below. This data request assumes that your agency complies with the Comptroller’s annual reporting requirements related to the reporting of balances for deposits and investment held in a local bank accounts and/or accounts for investments (including repurchase agreements). See NOTE 3 – Deposits, Investments and Repurchase Agreements.

The report data for the fiscal 2020-21 biennium due Dec. 11, 2020, must include:

  • Title
  • Fund Number
  • The legal/statutory basis for fund or revenue held outside the state treasury
  • Allowable uses of the fund or revenue held outside the treasury
  • A list of programs for which the fund or revenue is being or can be spent
  • Projected Fiscal Year 2021 totals listed by the General Ledger account that corresponds to an asset class
  • For previously reported USAS data, contact Drey Lord at the Comptroller’s office. See the Contacts area in this fiscal policy and procedure for details.