Author: Donna Crowley

Comments and Reevaluation Requests Due for Fiscal Year 2025 Fair Market Rents (FMRs)

On August 14, HUD published Fiscal Year (FY2025) Fair Market Rents (FMRs), as well as a Federal Register notice, entitled “Fair Market Rents (FMRs) for the Housing Choice Voucher Program, Moderate Rehabilitation Single Room Occupancy Program; and Other Programs; Fiscal Year 2025.” The notice provides details about the FMRs and instructions on how to submit comments or request a reevaluation.

The recently published FMRs take effect October 1, 2024. As explained in 2024 FMR FAQs, “FMRs are an estimate of the amount of money that would cover gross rents (rent and utility expenses) on 40 percent of the rental housing units in an area. FMRs are used in several HUD programs, including determining the maximum amount a Housing Choice Voucher will cover.”

The updated FMRs may result in changes to the rent level subsidies. For areas where FMRs are increasing, owners may be able to raise rents (within defined limits). On the other hand, for areas where FMRs are decreasing, owners may see tighter rent controls. Ultimately, this will impact residents’ costs for rent as well.

Mandatory Small Area FMR (SAMFR) use has been expanded to another 41 metropolitan areas, which are identified in the Federal Register notice.

According to the notice, comments are due before October 1 and requests for reevaluation of FMRs are due 30 days after the Federal Register notice was published (although some sources indicate HUD may accept reevaluation requests submitted before October 1).

The Federal Register notice includes details about how PHAs can submit comments or request a reevaluation. (Others who want to request a reevaluation should work through their local PHA.) Refer to the notice for complete details. Highlights include:

Reference Docket No. FR-6479-N-01 and the notice’s title: “Fair Market Rents for the Housing Choice Voucher Program, Moderate Rehabilitation Single Room Occupancy Program, and Other Programs; Fiscal Year 2025.”
The PHA for the area or PHAs representing at least 50% of voucher tenants in an FMR area must agree reevaluation is necessary.
The requestor must provide HUD with more recent data than the 2022 ACS data used to calculate FY 2025 FMRs. Details are in section V.A.(2) of the Federal Register notice.
Indicate whether the FY 2024 FMR will be maintained or the FY 2025 FMR will be implemented during the reevaluation period. (Per the notice: PHAs requesting reevaluation of newly designated SAFMR areas may adopt FY 2024 SAFMRs or FY 2025 SAFMRs during the reevaluation period. Following the comment period, HUD will post a list, at https://www.huduser.gov/portal/datasets/fmr.html, of the areas requesting reevaluations where FY 2024 FMRs remain in effect.)
Submit electronically via the Federal eRulemaking Portal at https://www.regulations.gov. Submissions can also be made via mail, although electronic submissions are encouraged. The mailing address is Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7^th Street SW, Room 10276, Washington, DC 20410-0500.

As you navigate the FY 2025 FMRs and what they may mean to your organization or tenants, you can count on RBT CPAs to focus on your accounting, audit, tax, and advisory needs. Give us a call to find out how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your organization’s confidential financial data.

Government Procurement Challenges, Priorities & Trends

Procurement is in the spotlight on global, federal, state, and local stages. Driven by rising costs, supply chain fragility, the beyond-fast evolution of technology, social and environmental concerns, ever-changing legislation, staffing challenges, and more, all levels of government are being challenged like never before to modernize procurement with a keen eye toward cost savings, sustainability, and compliance.

One survey identifies the complexity of systems and processes as the top procurement challenge across industries, with rising costs and preparing for unexpected challenges being the next two biggest challenges for government.

The National Association of State Procurement Officers (NASPO) defined top priorities for state procurement in 2024 as modernizing the procurement process (moving up from the fifth priority in 2023), continuous process improvement, talent management and succession planning, and more.

Cybersecurity, sourcing requirements, climate/sustainability, supplier diversity, and more are converging to put more demands on procurement. Agility to promote repeatable quality processes that offer flexibility, deliver results faster, incorporate user feedback, and respond to changing needs while addressing talent challenges and upholding the myriad of regulations appears to be central to addressing today’s procurement challenges.

E-procurement is taking the lead as a prominent trend, with municipalities increasingly adopting digital solutions for tendering, bidding, and contract management in an effort to shorten the procurement cycle, enhance transparency, reduce paperwork, and improve efficiency. At the same time, it promotes equal opportunities among suppliers to bid by providing greater access to information.

Sustainability is increasingly being embedded into procurement practices, with a focus on acquiring services and goods in a manner that protects and supports the environment, while promoting ethical practices and supporting social welfare. (New York’s Green Purchasing Community provides a framework for local governments to ensure purchasing has a lower environmental impact while earning points toward Climate Smart Communities Certification.)

Data analytics and artificial intelligence point to increased opportunities for municipalities to use data for insights on spending, performance, and market trends. AI can help detect fraud, improve decision-making, and automate processes, while predictive analytics improves forecasting and increases cost savings. According to NASPO, there may be ways for AI to help vet suppliers, track supplier performance, identify problem suppliers, and detect fraud.

Beyond technology, municipalities are looking to create job opportunities and drive economic growth with a greater focus on supporting small and medium-sized businesses (SMBs) via their procurement processes. Some are adopting policies to award a percentage of contracts to SMBs while making bidding easier and providing assistance to help SMBs navigate the process.

As your municipality explores opportunities to modernize procurement while operating within New York State laws, you can count on RBT CPAs to focus on your accounting, audit, tax, and advisory needs. Give us a call to find out how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your organization’s confidential financial data.

What Municipalities Can Do to Prepare for the 2025 Budget Season

With budget season around the corner, the following are some strategies and changes you may want to consider.

Rethinking How You Budget

While line-item budgets for municipalities served their purpose for a long time, in 2022 the International City/County Management Association (ICMA), the Government Finance Officers Association (GFOA), and the National League of Cities (NLC) came together to explore modernizing local government budgeting to be more responsive to community needs, reflect today’s technological capabilities, and better align with the way the world works via their Rethinking Budgeting Initiative.

At the heart of the initiative is the transition from line-item budgets to priority- and program-based budgeting.

Priority-based budgeting puts community needs and requirements at the forefront of the municipality budget planning process. This approach offers the added benefits of having a budget that serves as a strategic plan and decision-making tool to ensure a community’s top priorities – for example, having a safe community where residents, workers, and businesses can thrive – are resourced appropriately.

Program-based budgeting defines the programs and services a municipality provides in a manner that’s more understandable and useful to residents. For example, showing the budget for police patrols is a lot more meaningful to residents than embedding those costs into line items for salaries, benefits, contractual services, etc.

At a time when inflation is stretching residents’ and municipality budgets, while demands for services and mandates increase, taking a new approach to budgeting may help promote community understanding, trust, and support when you need it most.

Minimum Wage and Exempt Threshold Changes

Pivoting from the strategic to tactical, we just want to provide a friendly reminder that 2025 wage and pay-related-benefit budgets will need to reflect January 1, 2025:

Minimum wage increase (of $.50/hour);
Higher NYS DOL thresholds for administrative and executive employees exempt from overtime (increasing from $58,458.40 to $60,405.80 in upper New York and from $62,400 to $64,350 in NYC, Westchester, and Long Island); and
Higher FLSA threshold (jumping from $43,888/year to $58,656/year) for professional employees exempt from overtime.

If during your budget or strategy development you need assistance, please know, RBT CPAs professionals are available to provide advisory, accounting, audit, and tax services, while our Visions Human Resources Services affiliate can help with all things people-related.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

What Is Audit Readiness and Why Is It Important?

Audit readiness is crucial for all organizations, particularly for Public Housing Authorities (PHAs).

Essentially, it refers to the level of preparedness of an organization to engage in an audit process. This involves having all necessary documents and records organized, up-to-date, and easily accessible for auditors.

Owing to their responsibility of managing public funds and ensuring safe, decent, and affordable housing, PHAs are subject to stringent audits. Adequate audit readiness ensures that PHAs have accurate financial statements, comply with program requirements, and can demonstrate accountability and transparency in their operations.

The process of achieving audit readiness includes maintaining accurate financial records, implementing effective internal controls, and ensuring compliance with housing regulations and laws. Additionally, it involves regular internal audits, identifying potential areas of risk, and taking corrective actions. It also requires training staff on audit procedures and expectations to foster an audit-ready culture within the organization.

For a more detailed discussion on audit preparation, see Preparing for a Financial Audit: A Guide for PHAs.

However, if a PHA is not audit-ready, numerous problems can arise, which can significantly impact a PHA’s effectiveness and reputation. Below are some potential implications:

Financial Discrepancies: Without proper record-keeping and internal controls, financial discrepancies may arise. This includes misallocation of funds, inaccurate financial reporting, and potential fraud. These discrepancies can result in financial loss, legal implications, and loss of public trust.
Non-compliance: Audits for PHAs not only assess financial statements but also compliance with housing laws and regulations. Lack of audit readiness may reveal non-compliance with these laws, leading to penalties and possible loss of funding.
Operational Inefficiencies: Poor audit readiness often reflects internal operational inefficiencies. This can lead to mismanagement, poor decision-making, and the inability to achieve organizational objectives.
Damaged Reputation: A poor audit report can significantly damage a PHA’s reputation. This can result in a loss of public confidence and trust, making it harder for the authority to fulfill its mission.
Increased Audit Costs: Not being prepared for an audit can lead to delays and prolonged audit engagements. This increases the cost of the audit and can strain a PHA’s resources.

Audit readiness is not an option but a necessity. It is a continuous process that requires commitment and diligence to help promote financial accuracy, operational efficiency, and organizational integrity. More importantly, it enables PHAs to retain public trust and continue serving communities by providing safe and affordable housing to those who need it the most.

Whether your PHA is looking for help becoming audit-ready or for an audit or accounting, tax, and advisory services, you can count on RBT CPAs. Let us know if you need more information, so we can show you how we can be Remarkably Better Together.

RBT CPAs never offshores work outside of the U.S. so you always know who is handling your financial information.

Managing an Unassigned Fund Balance: An Overview

As part of a school district’s financial management, maintaining a reasonable unassigned fund balance provides a safety buffer for unforeseen expenses or revenue shortfalls. This is vital as it helps ensure adequate cash flow to cover the ongoing cost of operations. Managing these funds entails a strong understanding of their purpose, limits, and use.

To start, an unassigned fund balance is what remains after expenditures are paid. Unlike reserve funds that have specific purposes and requirements as set forth in law, an unassigned fund balance is not committed, assigned, or restricted in any way. This flexibility allows school administrators to use the funds where they are most needed, especially during periods of financial uncertainty.

The Governmental Accounting Standards Board (GASB) has set specific guidelines for maintaining and reporting fund balances into five classifications under GASB #54. It’s crucial for school districts to be aware of these guidelines and implement them effectively as they aim to ensure transparency, accountability, and fiscal responsibility in managing public funds.

One of the most important things to understand about unassigned fund balances is their purpose. They are not meant to be a source of ongoing funding for regular expenses. Instead, they are designed to meet unexpected or emergency costs, such as unforeseen repairs, unexpected increases in student enrollment, or sudden reductions in revenue.

Strategic planning and forecasting are vital tools in managing unassigned fund balances. School districts should have a clear understanding of their financial stability, including potential risks and opportunities, to ensure they maintain an appropriate fund balance level. This includes regular reviews of financial performance and adjusting the fund balance accordingly.

In New York, the maximum amount of unassigned fund balance at the end of the school year cannot be more than 4% of the following year’s budget. However, a 2019 report from the Office of the State Comptroller (OSC) indicated 60% of districts had unassigned fund balances higher than 4%.

While bills have been crafted to increase the 4% limit to 6% and to require greater transparency around unassigned fund balance, they haven’t made it past the initial stages.

For now, it’s important to be aware of the facts that having a healthy unassigned fund balance can be beneficial, but excessively large balances can draw public criticism for over-taxation or poor fiscal management and is against the law (Section 1318 of the Real Property Tax Law). It’s important to strike a balance by maintaining a fund balance size that is sufficient to handle unexpected costs but not excessively large to invite unnecessary scrutiny and undermine public trust.

In the presentation, “School District Fund Practices: The Law and the Reality,” these best practices were shared for school district officials:

Develop policies and procedures for fund balance and reserve funds.
Develop multiyear financial and capital plans.
Adopt budgets that reasonably reflect the district’s operating needs based on historical trends and other analyses.
If over 4%, develop a plan to reduce the unexpended surplus fund balance.

If you’d like to discuss or analyze your district’s unassigned fund balance, we’d be glad to help. You can always count on RBT CPAs for accounting, audit, tax, and advisory services. Give us a call to see how we can be Remarkably Better Together.

RBT CPAs never offshores work outside of the U.S., so you always know who is handling your financial information.

An Overview of Recertification Reviews

In April, HUD issued the 2024 income limits for HUD programs and Low-Income Housing Tax Credit Property, as well as an individual Fair Market Rent annual increase and income limit cap of 10%. As you become acquainted with the new limits, it’s also a good idea to review recertification requirements to ensure compliance.

Recertification helps protect the interests of property owners, tenants, and public housing programs by promoting fairness, transparency, and sustainability. To ensure an eligible household receives the appropriate level of assistance, a recertification takes place every 12 months. It involves a review of income, assets, expenses, and family composition.

For multi-family housing programs, owners are responsible for facilitating annual recertification; reviewing and verifying tenant information, and adjusting assistance payments or rent as required. For the Section 8 Housing Choice Voucher Program, overall responsibility for recertification rests with the local Public Housing Authority (PHA). Owners and tenants are responsible for providing timely information as required.

In addition to annual recertifications, there are interim recertifications. These occur to help adjust rent and subsidy amounts quickly if there’s a sudden change in income or household composition. So, if a tenant loses or gets a job, work hours are reduced, a tenant is injured and their ability to work is impacted, or a household member is added or removed, an interim recertification can occur.

Per the Housing Opportunity Through Modernization Act (HOTMA), owners must have policies detailing when a household must report a family income or compensation change. Any resulting interim recertification should occur within 30 days of an income decrease.

PHAs may consider establishing a checklist for Tenant Relations Assistants to ensure all recertification compliance requirements are met. The checklist should be signed or initialed by the representative and kept in the tenant’s file, serving as documentation that all compliance requirements were verified for the tenant.

Other ways to help promote compliance include conducting regular training on HUD requirements; conducting internal audits to review recertification processes and fix issues before they escalate; and considering whether compliance software can help manage recertifications by issuing alerts for upcoming recertifications, tracking key dates, automating calculations, and more.

Should you need assistance or have questions about conducting an internal audit of the recertification process, RBT CPAs can help. We can also support your accounting, tax, audit, and advisory needs. To learn how we can be better together, give us a call today.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Please Note: RBT CPAs is an accounting, audit, tax, and advisory services firm. Should you need legal advice on the recertification process, it is in your best interest to contact legal counsel.

Update on Safeguarding Tomorrow Revolving Loan Fund to Help Communities Adapt to Climate Change

Since 2021, we’ve been hearing about Safeguarding Tomorrow Revolving Loan Fund (RLF), a program designed to help communities address vulnerabilities to natural hazards and disasters attributed to climate change. Eligible communities in New York may benefit from the program starting later this year.

From February to April of 2023, states, eligible federally recognized tribes, territories, and the District of Columbia were invited to apply for the program. In September 2023, FEMA announced eight states will receive grants in the amount of $50 million combined to help communities address vulnerabilities to natural hazards and disasters. New York is slated to receive just over $6.2 million (it had requested just over $15 million).

As explained on the FEMA website, “Local governments may use capitalization grant funding through low-interest loans to make structures more resilient to natural hazards.” The website also notes funds can be applied to satisfy cost-share requirements for FEMA hazard mitigation (HM) assistance grants and will serve as a sustainable financing source because, as loans are paid back, funding can finance additional projects. The program promotes funding to disadvantaged communities, which should be slated to receive at least 40% of revolving fund loans.

New York’s Intended Use Plan, developed as part of its application for the Safeguarding Tomorrow RLF, provides more details and insights into how the program may work in our state. Here are a few highlights:

…“The state will use these capitalization grants to establish a revolving loan fund from which direct loans will be provided to local governments for projects and activities that mitigate the impacts of drought, intense heat, severe storms (including hurricanes, tornadoes, windstorms, cyclones, and severe winter storms), wildfires, floods, earthquakes, and other natural hazards.”

…“DHSES (a.k.a. NY Department of Homeland Security and Emergency Services) will administer the HM RLF to support various hazard mitigation activities that address natural hazards such as severe storms and wind events, and flooding. Flooding includes highwater levels, inland flooding, and storm surges. Loan applications will also be evaluated against the NY State Hazard Mitigation Plan.”

….“Standard loans will be issued with an interest rate of 1.0 percent. Loan term will be 20 year or less following completion of the funded project. Loans for low-income geographic areas or underserved communities will be issued with an interest rate of 1.0 percent. Loan term will be 30 year or less following completion of the funded project.”

…“The loan application and instructions will be posted to the DHSES website and will follow a similar process to an existing revolving loan program that DHSES currently administers.”

…“DHSES anticipates disbursing funds within 9 months of receiving funding from FEMA by working closely with all applicants.” So, we’ll likely be hearing something by mid-year.

There’s more. At year-end 2023, the 2024 Notice of Funding Opportunity for Safeguarding Tomorrow through Ongoing Risk Mitigation Revolving Loan Fund (RLF) was announced, tripling the total amount of grants available to $150 million. The application period is open and will close on April 30, and New York is eligible to apply, which is likely according to the 2023 IUP.

For now, your municipality may want to keep all of this in mind as it develops local plans to address infrastructure vulnerabilities due to severe weather events and climate change. We will keep an eye out for more information for you.

In the meantime, if you need any accounting, tax, audit, or advisory support, please know RBT CPAs is here for you. We’ve been proudly serving municipalities, businesses, non-profits, and individuals in the Hudson Valley for over 50 years. Please don’t hesitate to give us a call and find out how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

2024-2025 NYS Regents State Aid Proposal: The Top 10 Line Items for New Funding

In December, the New York State Board of Regents unveiled its proposed budget and legislative priorities for 2024-2025. Priorities focus on supporting lifelong learning, academic success, and improved outcomes; advancing equity, excellence, and access; and rebuilding the Department’s ability to support districts, teachers, students, and all New Yorkers. When it comes to new funding, here are the ten largest line items noted in the 2024-2025 Regents State Aid Proposal: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.regents.nysed.gov/sites/regents/files/1223bra4revised12.11.pdf

#10. $4.3 million for agency-wide infrastructure

With a goal of rebuilding the Department’s capacity to provide world-class customer service and improve supports for all stakeholders, proposed funding is for new staff (primarily in IT, but also HR and Finance) and the purchase of external technology and services to update basic technical infrastructure, support system security, replace outdated systems, support licensing, and more.

#9. $4.5 million to support English language learner assessments

This involves updating translations of all required assessments, parent materials, and public information; providing computer-based delivery of NYS English as a Second Language Achievement Tests and interim assessments; and better supporting students with disabilities who are also English Language Learners.

#8. $11.1 million for higher education opportunity programs

This allows more students to benefit from opportunity programs like the Higher Education Opportunity Program (HEOP), Science and Technology Entry Program (STEP), Collegiate Science and Technology Entry Program (CSTEP), and Liberty Partnerships Programs (LPP). These programs make higher education possible for students who would otherwise not be able to attend due to economic and education circumstances; they also help prevent dropouts.

#7. $15.5 million for a Special Education Data System

Funding is for a project team and capital construction for an Office of Special Education new real-time data system to help the Department, local school districts, counties, and parents identify New York programs that can support the needs of students with disabilities. Over the long-term, a comprehensive and fully integrated system will help support and evaluate administrative and programmatic goals for New York’s special education system.

#6. $17 million for cultural education revenue stabilization

The purpose is to stabilize operational funding for the State Museum, State Library, State Archives, and Office of Public Broadcasting and Educational Television. Funding varies greatly year-to-year due to its dependence on macroeconomic conditions (including inflation) and a revenue stream based on a fee that has not changed in more than 20 years.

#5. $19 million to support special education provider residential programs

Funding will be used to help special education providers appropriately fund operations and improve the availability of residential placements for school-aged students. Funding would also make providers whole when tuition cannot be billed due to an adult (up to age 22) occupying a student placement because no suitable alternative is available.

#4. $20 million for juvenile justice hybrid programming

Funding is for the design and implementation of a statewide hybrid high school in collaboration with the Office of Children and Family Services for students in juvenile justice settings. Funding would cover the cost of staff (including certified teachers) and the costs of providing coursework online.

#3. $45 million for public library construction assistance

The State Aid for Library Construction program stretches local investment and helps ensure libraries serving economically disadvantaged communities can access capital funding for critical improvements.

#2. $70.5 million to provide a Free and Appropriate Education (FAPE) to Students with Disabilities until age 22

Funding will help meet legal requirements to provide special education and related services to resident students with disabilities until the day before a student’s 22nd birthday, unless they have already obtained a high school diploma. (Currently, state law only provides funding through the school year that a student turns 21.)

#1. $174 million for maintenance and/or construction of education buildings

Funds will be used to maintain and update buildings where staff work, like the State Education Building, and for maintenance or construction at five state-owned schools (the NYS School for the Blind, the NYS School for the Deaf, the Onondaga Nation School, the Tuscarora Nation School, and the St. Regis Mohawk Nation School). Specifically, $90 million will go to a new building at the St. Regis Mohawk School; however, this may be partially offset by funding provided for extensive maintenance work last year.

As for state aid, the proposal calls for an additional $1.6 billion for the 2024-25 school year to ensure an increase in funding for the state’s neediest districts ($926.8 million in Foundation Aid); to review and modernize the Foundation Aid formula ($343.4 Million); and to reimburse districts for other aid programs as per current law ($359.4 million), while providing relief for districts with sudden enrollment increases; aid for students with disabilities between ages 21 and 22; enhanced BOCES Aid and Special Services Aid for ninth grade; and streamlining of prekindergarten funding.

This discussion wouldn’t be complete if we didn’t take a moment to mention Governor Hochul’s proposed budget for 2024-2025. While the proposed budget would increase school funding by record amounts, proposed Foundation Aid falls short of what the Regents proposed and certain changes could have a significant impact on district budgets across the state.

As reported on Westchester News 12, “One-third of school districts in the Lower Hudson Valley region will see less state funding for education if the current 2025 fiscal year state budget proposal remains as is. Beacon, Greenwood Lake, Garrison, Pearl River, and Mount Vernon are among the 30 school districts in Dutchess, Orange, Putnam, Rockland, and Westchester counties projected to get less from the state next year compared to this year.”

As we await finalization (the NYS budget is supposed to be approved April 1), please know that if you have any accounting, tax, audit, or advisory needs, RBT CPAs is here to support you. We’ve been serving school districts and higher education institutions in the Hudson Valley and beyond for over 50 years. Known for delivering an exceptional customer experience, as well as the upholding the highest levels of professionalism and ethics, the RBT team believes we succeed when we help you succeed. If you’re interested in learning more, give us a call.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

REMINDER! GASB Statement 101 on Compensated Absences Effective After December 15, 2023

It has been almost a year and a half since GASB 101 on compensated absences was issued to standardize how compensated absences are recognized, measured and disclosed. It takes effect for fiscal years beginning after December 15, 2023, although earlier application was encouraged. As a result of the Statement, governments will provide more consistent and comparable information about compensated absences. Here are the highlights….

Who does this impact?

All units of state and local government.

What is required?

A compensated absence liability is recognized for an unused leave attributable to services rendered if it accumulates; carries forward to a future reporting period; and is more likely than not to be used for time-off or paid for via cash or other means based on relevant factors like policies and historical information.

A liability is also recognized for a used leave that has not been paid for in cash or other means; in this case, the liability equals the amount of the cash or noncash settlement.

Measurement is based on an employee’s pay rate in effect on the financial reporting date, unless a compensated absence arrangement calls for a different rate at the time of payment (i.e., sick pay based on 50% of the employee’s pay rate). Salary-related payments – including the employer’s share of payroll related taxes, defined pension contributions and other post-employment benefit plans – are to be included as part of the compensated absence liability calculation.

Certain compensated absences like parental, military, and jury duty leave should be recognized as a liability when the leave starts. For other types, like paid time off, liability is recognized when the leave is used.

Also, certain financial disclosure requirements are changing. The funds that governments use to liquidate the liability for compensated absences do not have to be disclosed. Governments will now be allowed to disclose only the net change in the liability instead of the gross increases and decreases (as long as they identify it as a net change). Plus, financial statements must note consideration of Statement 101 and the adoption date.

When does it take effect?

Fiscal years beginning after December 15, 2023. So, if your municipality’s fiscal year ends this December 31, Statement 101 begins to apply starting January 1, 2024.

Why was the statement issued?

Per GASB.org, Statement 101 was issued “to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures.”

How to promote compliance.

Each government entity should consider which benefits are affected; how its accounting system will gather necessary information and perform calculations; whether internal control processes need to change; how accounting entries for compensated absences will be documented; and the impact on its financial statement.

If you need advice or assistance with your GASB 101 implementation or any other accounting, tax, and audit needs, please remember RBT CPAs is here to help. Give us a call to learn what we can do for you.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Teacher Pay Penalty Is Getting Worse

In 2022, public school teachers made 26.4% less than professionals with similar educations, a rate that hasn’t been seen since 1960, according to a report by the Economic Policy Institute (EPI). (Allegretto, Sylvia. “Teacher pay penalty still looms large.” September 29, 2023. https://www.epi.org/publication/teacher-pay-in-2022/#epi-toc-9.)

According to the report, the “pay penalty” has been growing significantly since the mid 90’s, when it was 6.1% and teachers were earning 93.9 cents for every dollar earned by other professionals. To put the financial impact of the pay penalty into perspective, when you compare the average weekly wage of public school teachers and similarly educated professionals, in 2022 teachers earned an average of $1,329 as compared to $2,167 for other college graduates or 73.6 cents for every dollar similarly educated professionals made.

Here’s another way to look at it: teachers earned an average of 73.6 cents for every dollar similarly educated professionals made. New York teachers are better off than teachers in many other states; its pay penalty reached 14.6% in 2022.

Inflation is not helping, resulting in a loss of $128 a week between 2021 and 2022 for teachers (as compared to an estimated loss of $3 for non-teaching professionals).

While many assert the pay penalty is eliminated by teachers’ generous benefit packages, the EPI report shows that’s simply not true. When you look at total compensation – benefits plus pay – the pay penalty drops to 17% for 2022. That is better than 26.4%, but still represents a significant gap with what counterparts in other professions make and as compared to the 2.7% that existed in 1993.

Upon reading this report, I was reminded of discussions during the late 80s about teacher pay. The education sector was advocating to boost teacher pay for two reasons: to attract the best and brightest people into teaching and to ensure they wouldn’t be financially penalized for joining the education sector rather than the corporate world. The turnaround in the pay penalty achieved by the mid-90’s shows this line of thinking was working. Somewhere in the early 2000s it started losing momentum.

Fast forward. Sandy Hook and numerous other large-scale school shootings occurred, as did Covid. Technology and AI started changing at the speed of light. Politics, government mandates, and changing societal norms have taken on as much priority as teaching academics. All of this has dramatically increased the pressure on educational institutions and teachers. With the geopolitical unrest occurring in the world today, it’s only getting worse.

With a shrinking workforce, due largely to the mass retirement of Baby Boomers, the pay penalty exacerbates the challenge of building a pipeline of teacher talent for the future, while recruiting and retaining teachers today.

According to the report overview, there is a potential path to turn this around involving paying teachers more; providing more federal and state funding to schools; leveraging collective bargaining, and more. Personally, I wonder if there is an opportunity to educate the public about the pay, benefits, social, political, and other challenges teachers face so they are more informed going into budget voting season and discussions.

Undoubtedly, I’m preaching to the choir in writing this article and hope that some of the information garnered in the EPI report can prove useful as you chart the course for the years ahead.

In the words of the report’s author, Sylvia Allegretto, “One of our nation’s highest ideals is the promise to educate every child without regard to means. In many respects, we have always fallen short on that promise. And there are many issues to be addressed around public education and its funding. But one thing is for sure. A world-class public educational system cannot be accomplished without the best and the brightest heading our classrooms. And it cannot be done on the cheap.”

Please remember RBT CPAs is here to help with your accounting, tax, audit, or business advisory needs. Interested in learning more? Give us a call today.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.