Proposition 301 was passed for the state of Arizona in 2000. Schools know this proposition as CSF, or Classroom Site Fund. It provides millions of dollars to public and charter schools each year to benefit the salaries and performance pay bonuses directly paid to teachers. As of March 18, 2021, Governor Ducey signed the Senate Bill (SB) 1139 modifying the distribution requirements for monies from CSF. This became effective for fiscal year 2022 audits. Based on these changes, funding received from CSF is no longer required to be recorded in three separate buckets (project 1011, 1012, 1013). However, schools still need to track the expenses separately in order to determine allowability of costs (because your auditor will need to test compliance).
The SB 1139 has expanded the allowability of expenses. There will no longer be the need to report expenses in the three project codes as previously defined. The Budget and AFR templates for reporting to ADE have been updated to exclude projects 1011, 1012, 1013. All funding will be rolled into project 1010.
CSF monies can be spent on the following allowable costs, without restriction of allocation –
The new Legal Compliance Questionnaire only has three questions related to CSF compliance. The main question ensures schools are in compliance with ARS 15-977. Per ARS 15-977, student support services is defined as noted in the USFR – assess and improve the students’ well-being and to supplement the teaching process. There are additional categories under student support services, such as:
Most schools have carryover funding that was not spent in prior years. This new format will hopefully alleviate some of the restrictions previously met with the project requirements. Some schools have asked “what should they do with the previous carryover restrictions?” Based on discussions with the Auditor General, they cannot provide an opinion on what to do with previous funds carried forward. They recommend obtaining some legal guidance, as the SB 1139 did not specifically address carryover funds.
CSF monies have slightly more flexibility when allocating costs. Be sure to track your expenses and document the school’s methodology on any costs that leave room for judgment.
For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.