2012 -- H 8008

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LC02224

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO EDUCATION - SCHOOL COMMITTEES AND SUPERINTENDENTS -

SCHOOL DISTRICT ACCOUNTING COMPLIANCE

     Introduced By: Representatives Brien, and Newberry

     Date Introduced: March 28, 2012

     Referred To: House Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 16-2-9.4 of the General Laws in Chapter 16-2 entitled "School

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Committees and Superintendents" is hereby amended to read as follows:

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     16-2-9.4. School district accounting compliance. -- (a) The office of auditor general

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and the department of elementary and secondary education shall promulgate a uniform system of

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accounting, including a chart of accounts based on the recommendations of the advisory council

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on school finance, and require all accounts of the school districts, regional school districts, state

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schools and charter schools to be kept in accordance therewith; provided, that in any case in

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which the uniform system of accounting is not practicable, the office of auditor general in

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conjunction with the department of elementary and secondary education shall determine the

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manner in which the accounts shall be kept. The uniform system of accounting shall also include

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a standardized budget process to ensure districts can annually assess investment priorities and

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incorporate long range planning.

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      (b) For the purpose of securing a uniform system of accounting and a chart of accounts

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the advisory council on school finances, as defined in section 16-2-9.2 may make such surveys of

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the operation of any school districts, regional school district, state school or charter school as they

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shall deem necessary.

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     (c) Upon completion of the implementation of the uniform chart of accounts, all the

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school districts, regional school districts, state schools, and/or charter schools, shall implement a

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regents’ approved budget model, and utilize best practices established by the department of

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education for long range planning, budget development, and budget administration and reporting.

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      (c)(d) If any school district, regional school district, state school or charter school fails to

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install and maintain the uniform system of accounting, including a chart of accounts and

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approved budget model, or fails to keep its accounts and interdepartmental records, or refuses or

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neglects to make the reports and to furnish the information in accordance with the method

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prescribed by the office of auditor general and the department of education or hinders or prevents

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the examination of accounts and financial records, the auditor general and the commissioner of

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education and/or their respective designee(s) shall may make a report to the superintendent of

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schools of the local education agency, the school committee chairperson, the mayor or town

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manager, and the president of the town council, and/or for a charter school, to the board of

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trustees or directors, as applicable, the board of regents for elementary and secondary education

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in writing, specifying the nature and extent of the failure, refusal, neglect, hindrance, or

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prevention, and the board of regents is hereby authorized and directed to review the matter so

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reported. If the regents commissioner shall find that failure, refusal, neglect, hindrance, or

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prevention exists and that the school district, regional school district, state school or charter

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school should properly comply in the matter so reported, the regents commissioner shall direct

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the school district, regional school district, state school or charter school, in writing, to so comply.

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If the failure, refusal, neglect, hindrance, or prevention shall continue for a period of ten (10) days

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following the written direction, the regents commissioner may withhold distribution of state aid to

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said school district, regional school district, state school or charter school.

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     (e) The department of elementary and secondary education shall conduct periodic

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reviews and analysis of school revenues and expenses. The department shall also review and

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monitor compliance with the approved budget model and best practices. The department shall

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identify those local education agencies considered to be at risk of a year-end deficit or a structural

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deficit that could impact future years. Such potential deficits shall be identified based on the

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periodic reviews, which may also include on-site visits and reporting in accordance with the

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provisions of section 45-12-22.2. Potential deficits shall be reported to the office of municipal

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finance, office of auditor general, superintendent, chairman of the school committee, mayor or

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town manager, and the president of the town council, of the applicable school district, regional

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school district, or state school, and/or for a charter school, to the board of trustees or directors, as

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applicable.

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     SECTION 2. Section 45-12-22.2 of the General Laws in Chapter 45-12 entitled

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"Indebtedness of Towns and Cities" is hereby amended to read as follows:

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     45-12-22.2. Monitoring of financial operations -- Corrective action. -- (a) The chief

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financial officer of each municipality and each school district within the state shall continuously

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monitor their financial operations by tracking actual versus budgeted revenue and expense.

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      (b) The chief financial officer of the municipality shall submit a report on a monthly

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basis to the municipality's chief executive officer, each member of the city or town council, and

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school district committee certifying the status of the municipal budget from all fund sources,

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including the school department budget from all fund sources, or regional school district budget

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from all fund sources. The chief financial officer of the municipality shall also submit a quarterly

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report on or before the 25th day of the month succeeding the end of each fiscal quarter to the

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division of municipal finance, the commissioner of education, and the auditor general certifying

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the status of the municipal budget, including the school budget that has been certified by the

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school department. Each quarterly report submitted must be signed by the chief executive officer,

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chief financial officer as well as the superintendent of the school district and chief financial

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officer for the school district. The report has to be submitted to the city/town council president

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and the school committee chair. It is encouraged, but not required, to have the council

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president/school committee chair sign the report. The chief financial officer of the school

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department or school district shall certify the status of the school district's budget and shall assist

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in the preparation of these reports. The monthly and quarterly reports shall be in a format

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prescribed by the division of municipal finance, the commissioner of education, and the state

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auditor general. The reports shall contain a statement as to whether any actual or projected

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shortfalls in budget line items are expected to result in a year-end deficit, the projected impact on

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year-end financial results including all accruals and encumbrances, and how the municipality and

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school district plans to address any such shortfalls. In the event that the school reporting is not

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provided, then state education aid may be withheld pursuant to the provisions of section 16-2-

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9.4(d).

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      (c) If any of the quarterly reports required under subsection (b) above project a year-end

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deficit, the chief financial officer of the municipality shall submit to the state division of

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municipal finance, the commissioner of education, and the auditor general a corrective action

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plan signed by the chief executive officer and chief financial officer on or before the last day of

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the month succeeding the close of the fiscal quarter, which provides for the avoidance of a year-

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end deficit or structural deficit that could impact future years, and the school superintendent shall

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also comply with the provisions of section 16-2-11(c) to assist in this effort. The plan may

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include recommendations as to whether an increase in property taxes and/or spending cuts should

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be adopted to eliminate the deficit. The plan shall include a legal opinion by municipal counsel

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that the proposed actions under the plan are permissible under federal, state, and local law. The

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state division of municipal affairs may rely on the written representations made by the

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municipality in the plan and will not be required to perform an audit.

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      (d) If the division of municipal finance concludes the plan required hereunder is

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insufficient and/or fails to adequately address the financial condition of the municipality, the

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division of municipal finance can elect to pursue the remedies identified in section 45-12-22.7.

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      (e) The reports required shall include the financial operations of any departments or

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funds of municipal government including the school department or the regional school district,

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notwithstanding the status of the entity as a separate legal body. This provision does not eliminate

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the additional requirements placed on local and regional school districts by sections 16-2-9(f) and

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16-3-11(e)(3).

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     SECTION 3. This act shall take effect upon passage.

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LC02224

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO EDUCATION - SCHOOL COMMITTEES AND SUPERINTENDENTS -

SCHOOL DISTRICT ACCOUNTING COMPLIANCE

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     This act would require all school districts, regional school districts, state schools, and

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charter schools to implement a budget model approved by the commissioner of education. This

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act would also provide that state education aid could be withheld for failure to comply with

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school reporting requirements.

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     This act would take effect upon passage.

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LC02224

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