State Aid Advances Advance Guidelines - PowerPoint Presentation

Slide1

State Aid Advances

Advance Guidelines

M.S. 162.08,

Subd

5, 6 & 7 provides for counties to make advances from future year’s allocations to expedite construction

Threshold is determined by looking at

Current construction cash balance

Expenditure trends

Repayments

Threshold may be administratively adjusted by

MnDOT’s

Chief Financial Officer

Advance Code Levels

RED – SEVERE

Construction cash balance

too low

. NO MORE ADVANCES – NO EXCEPTIONS

YELLO

W - GUARDED

Construction cash balance

low

; balances reviewed monthly. Advancing money may not meet the anticipated needs. Resolution required. Reserve option is available only prior to bid advertisement.

GREEN - LOW

Construction cash balance

at

acceptable

level. Advances approved on 1

st

come, 1

st

serve basis while funds are available. Resolution required. High priority projects are reserved.

County requests advance

Submit an Advance Resolution

Earmarks the funding, but will NOT hold the funds

Advances paid out on a 1

st

come 1

st

serve basis

Requests are good for only the year requested (cannot summit for multiple years) – void 12/31

Not limited to the projects listed on the resolution

Payments are processed in the order received by SAF until the maximum advance amount is reached

Advances are repaid with next year’s allocation(s) until fully repaid.

Advance funding is not guaranteed

Request to reserve funds

Use if County needs a guarantee that the funds will be held for them

Once approved, a signed copy will be returned to the County

Requests are good for only the year requested (cannot summit for multiple years) – void 12/31

Forms & resolutions

Advance Resolution

Advance Resolution – Federal Project

Advance Resolution –

Townbridge

Advance Resolution – Turnback

Advance Resolution – Request to Reserve Funds

http://www.dot.state.mn.us/safinance/formsandresolutions.html

Priority system

Required if the construction cash balance drops below an acceptable level – Code Yellow

Process starts in early October

Each county is required to submit projects to their DSAE for prioritization within the district

DSAE submits the prioritized list to SALT for final prioritization

Requests should include a negative impact statement if project had to be delayed or advance funding not available plus the significance of the project

Priority projects include

(not limited to)

Projects where agreements have mandated the county’s participation

Projects with advanced federal aid

Small over-runs and funding shortfalls may be funded, but require State Aid approval.

Advance limitations

Counties last “construction” allotment

Advance amount is reduced by any similar outstanding obligations &/or bond principal due

Limit can be administratively adjusted by

MnDOT’s

Chief Financial Officer

When limit may be exceeded

For federal aid advance construction projects programmed by the ATP in the STIP where State Aid funds are used in lieu of federal funds.

Repayment is made when federal funds are converted

Should federal funds fail to be programmed, or the project (or a portion of it) be declared federally ineligible, the county is required to pay back the advance.

Accounting entries

95% Payment is received for the project

Accounting Entry

– for 95% of State Aid obligation only (up to approved advance amount)

Debit: Cash

Credit: State Aid Receivable

NOTE

: The “Encumbrance Balance” on the Status Report will not include any projects that have been paid to the county with a State Aid Advance.

Work Begins on the Project

The entries for recognizing expenses and earned revenues are the same as for a regular project.

NOTE

: Excess revenue from State Aid Advances will be backed out at year end.

Reduction to State Aid Advances

Transfers from Maintenance to Construction when final maintenance underruns.

Debit: State Aid Construction - Allotment

Credit: State Aid Construction – Deferred Revenue

Construction project underruns – unused encumbrance is put back into the Allotment

Debit: State Aid Construction – Allotment

Credit: State Aid Construction - Receivable

Year end entries

The negative “Available Balance” from your report is the net amount of all State Aid Advances that have occurred for that funding type.

Accounting Entry

– Recognize State Aid Advance

Debit: State Aid – Advance (revenue)

Credit: State Aid – Advance Payable (liability)

Year end Entries

(continued)

The current year revenues must be reduced by the amount of the Deferred Revenue debit balance.

Accounting Entry

– Reduce revenue for the amount of the State Aid Advances

Debit: State Aid Construction – Revenue

Credit: State Aid

Constr

– Deferred Revenue

NOTE

: If the debit amount of the Deferred Revenue is more than the Advance amount another entry needs to be made to Reduce Revenue based on Deferred Revenue Balance.

Begin New Year Entries

Reverse prior year State Aid Advances (repaid)

Accounting Entry

–

Debit: State Aid – Advance Payable

Credit: State Aid – Advance

Begin new year entries

(cont.)

Revenue not recognized in previous year due to State Aid Advance.

Accounting Entry

–

Debit: State Aid

Constr

– Deferred Revenue

Credit: State Aid

Constr

– Revenue

NOTE: An entry should be made for both of the reversing revenue entries that were made at year end.

Questions