EXPENDITURE LIMITATIONS 

1. How is the expenditure limitation determined for a community college district?
    
2. Where can I obtain a community college district’s constitutional expenditure limitation?
    
3. What is a Modified Expenditure Limitation?

EXPENDITURES SUBJECT TO THE LIMITATION 

1. Are all expenditures subject to the limitation?
    
2. What are “Carryforwards”?
    
3. What is the penalty for exceeding the expenditure limitation?

FILING REQUIREMENTS 

1. When must a notice of chief fiscal officer (CFO) be filed with the Auditor General?
    
2. What reports must be sent to the Auditor General's Office?
    
3. When are reports due?
    
4. Can a community college district receive an extension to file reports?
    
5. What is the penalty for late reports?
   


6. What information is required to be included in the Notes to the ABELR, besides Note 1 describing significant accounting policies?
   
   

EXPENDITURE LIMITATIONS 

1.      How is the expenditure limitation determined for a community college district?

The Economic Estimates Commission calculates the constitutional expenditure limitation for all community college districts by adjusting the college’s base year (generally fiscal year 1979-80) actual expenditures of local revenues for changes in student population and inflation since the base year. 

2.     Where can I obtain a community college district’s constitutional expenditure limitation?

Constitutional expenditure limitations can be obtained by contacting Diane Sosinski of the Arizona Department of Revenue, Office of Economic Research and Analysis at (602) 716-6797. The Economic Estimates Commission should notify districts of their actual expenditure limitations by April 1, for the following fiscal year.

3.      What is a Modified Expenditure Limitation?

Arizona Revised Statutes (A.R.S.) §15-1471 allows a community college district to adopt a modified expenditure limitation with voter approval at a regularly scheduled election on the first Tuesday after the first Monday in November. The excess expenditures must be a specified percentage of the constitutional expenditure limitation. The modified expenditure limitation becomes effective beginning in the fiscal year immediately following approval and applies for a period of not less than 2 years, but no more than 7 years. After that time, the constitutional expenditure limitation becomes effective unless a new modified expenditure limitation is approved. The district board may not authorize expenditures in excess of the modified expenditure limitation without voter approval.

EXPENDITURES SUBJECT TO THE LIMITATION

1.      Are all expenditures subject to the limitation?

No. The expenditure limitation only applies to expenditures of local revenues as defined by Arizona Constitution, Article IX, §21(4)(c). Generally, local revenues include all monies received by or for the account of the community college district; however, some monies such as grants and aid from the federal government, certain revenues received from the State, and tuition and fees are excluded from the definition of local revenues. For a detailed explanation of expenditures not subject to the limitation, see the Uniform Expenditure Reporting System manual §VIII.

2.      What are “Carryforwards”?

Carryforwards are nonlocal (excludable) revenues as defined by the Arizona Constitution, Article IX, §21 that remain unspent at the end of a fiscal year. Such amounts may be carried forward to subsequent fiscal years and exclusions claimed when the carried forward revenues are spent. Carryforwards should be specifically identified in the entity’s accounting records by fund as to the nature of the exclusion, the amount of the carryforward, and the fiscal year in which the carryforward was generated. 

3.      What is the penalty for exceeding the expenditure limitation?

A community college district that exceeds its expenditure limitation without authorization will have the following amount of its state aid withheld based on the percentage of the excess expenditures:

·        If the excess expenditures are less than 5 percent of the limitation, the amount withheld is equal to the excess expenditures.

·        If the excess expenditures are between 5 percent and 10 percent of the limitation, or are less than five percent of the limitation but it is at least the second consecutive instance of excess expenditures, the amount withheld is equal to three times the excess expenditures.

·        If the excess expenditures are equal to 10 percent or more of the limitation, the amount withheld is equal to five times the excess expenditures or one-third of its allocation of state aid, whichever is less.  

The penalty is withheld in the fiscal year following a hearing by the Auditor General. 

FILING REQUIREMENTS 

1.      When must a notice of chief fiscal officer (CFO) be filed with the Auditor General?

A.R.S. §41-1279.07(E) requires entities to provide to the Auditor General by July 31 the name of the CFO designated by the governing board to submit the current year’s expenditure limitation report. However, we do not require a new notice be filed if the previously designated CFO has not changed. A notice should be filed with our Office whenever a new CFO is appointed. Click here to access the CFO Designation Form.

2.      What reports must be sent to the Auditor General's Office?

In accordance with A.R.S. §41-1279.07(C), community college districts must submit financial statements and the Annual Budgeted Expenditure Limitation Report (ABELR) to our Office.

3.      When are reports due?

Reports are due 4 months after fiscal year-end (October 31). [A.R.S. §41-1279.07(C)].

4.  Can a community college district receive an extension to file reports?

Yes, A.R.S. §41-1279.07(C) allows our Office to grant an extension of up to 120 days (4 months), for filing reports. To receive an extension to file reports, an extension request should be e-mailed to the Accounting Services Division at asd@azauditor.gov. By law we are not able to grant requests for extensions beyond the 120 days. Therefore, if a longer extension is requested, only the 120-day extension will be granted. For more information on extension requests, see our August 9, 2002, memorandum.    

5.  What is the penalty for late reports?

A.R.S. §41-1279.07(G) states that a chief fiscal officer who refuses to file the required reports with the Auditor General within the prescribed time period is guilty of a Class 1 misdemeanor.

6. What information is required to be included in the Notes to the ABELR, besides Note 1 describing significant accounting policies?

A note to the ABELR should be presented for each exclusion amount reported in the total column of Part II that cannot be agreed directly to an amount recorded in the annual financial statements. Each note must be in sufficient detail to enable identification of the exclusion in the financial statements and verification of the amount excluded.