ENROLLED HOUSE
BILL NO. 2499	By:	Casey of the House

				and

		Ford of the Senate

An Act relating to schools; amending 70 O.S. 2011, Section 5-135, which relates to the system of accounting for school districts; deleting certain limitation on information required to be on warrants or checks; providing an effective date; and declaring an emergency.

SUBJECT:  System of accounting for school districts

BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:

SECTION 1.     AMENDATORY     70 O.S. 2011, Section 5-135, is amended to read as follows:

Section 5-135.  A.  The board of education of each school district shall use the following system of initiating, recording and paying for all purchases, salaries, wages or contractual obligations due from any of the funds under the control of such board of education.  However, a school district board of education may use the procedures outlined in Section 304.1 of Title 62 of the Oklahoma Statutes for the payment of salaries and wages only if the board so votes.  The provisions contained herein shall not apply to the sinking fund and school activity fund.

B.  The encumbrance clerk and treasurer of the school district shall each enter the authorized amounts in the various appropriation accounts of the funds to which this system is applied.  The authorized amounts of appropriations shall be the general fund and building fund appropriations approved by the county excise board and such additional amounts as may be applied in the manner provided by law, the amount received for deposit in a special cash fund where such special cash fund is authorized by law or required by the person or agency providing such funds, or the amount of the net proceeds realized from the sale of bonds of the school district and any other income due such fund.

C.  It shall be the duty and responsibility of the board of education of the school district to prescribe and administer adequate business procedures and controls governing the purchase or confirmation of purchase and delivery of goods or services.  The procedures shall include delivery of an acceptable invoice by document, facsimile, electronic or other standard form that includes the information required by the district.  Such procedures shall include the designation of authorized persons to purchase goods or services for the district and the method of determining the school employee receiving delivery of each purchase.

D.  Prior to the issuance of a purchase order, the encumbrance clerk must first determine that the encumbrance will not exceed the balance of the appropriation to be charged.  The encumbrance clerk shall charge the appropriate appropriation accounts and credit the affected encumbrances outstanding accounts with the encumbrances.  Encumbrances must be submitted to the board of education in the order of their issuance on a monthly basis, subject to a monthly business cycle cut-off date determined by the board of education.  Approved encumbrances shall be listed in the minutes by the minute clerk.

E.  Before any purchase is completed, a purchase order or encumbrance must be issued.  No bill shall be paid unless it is supported by an itemized invoice clearly describing the items purchased, the quantity of each item, its unit price, its total cost and proof of receipt of such goods or services.  The bill and/or invoice shall be filed in the encumbrance clerk's official records.  If a district has the ability to electronically utilize evaluated receipt settlement (ERS), the district may remit to vendors on that basis if the requirements of this subsection are fulfilled.  In the event a district is establishing electronic data interchange, electronic entries will suffice in lieu of paper documents.  In order for a district to be authorized to utilize an evaluated receipt settlement system:

1.  The ERS must result in payment by the district from vendor receipts that have been matched to the purchase order date;

2.  The ERS may only be used when there is an agreement between the district and the vendor for use of an ERS; and

3.  The ERS must be included in the district's journal ledger/accounts payable/purchase order software.

F.  The encumbrance clerk shall debit the encumbrances outstanding account and credit the accounts payable account for the amount of the approved bill.  The board of education shall determine the extent such costs may fluctuate without additional board action.  Minor adjustments not requiring additional board approval shall be referenced to the original encumbrance.

G.  An approved bill may be paid by issuing a warrant or check against the designated fund only after ascertaining that proper accounting of the purchase has been made and that the files contain the required information to justify the expenditure of public funds, except as otherwise provided in subsection I of this section.  The warrants or checks so issued shall be recorded in an orderly numerical system established by the district.  The encumbrance clerk shall charge the warrant or checks against the accounts payable account and credit it to the warrants or checks issued account.  Provided, if payment is to be made immediately and the board of education deems it advisable, the postings to the accounts payable account may be omitted and the payment of the approved bill may be credited directly to the warrants or checks issued account.  The warrant or check shall show on its face the name of the school district, the date of issue, the payee, the amount, the expenditure classification code, and such other information as may be necessary or desirable.  The president and clerk of the board of education shall each sign the warrant or check, or approved facsimile thereby denoting to the public that the warrant or check is for the purpose and within the amount of the appropriation charged.

H.  The treasurer shall register the warrant or check in the warrant or check register, charging the appropriation account and crediting the warrants or checks outstanding account of the designated fund.  Provided, no warrant or check shall be registered in excess of the appropriation account's balance.  All warrants or checks shall be registered in the order of their issuance.  Voided warrants or checks shall be registered and filed with the treasurer.  The treasurer shall sign each warrant or check through individual signature or approved facsimile showing its registration date and, if issuing a warrant, shall state whether it is payable or nonpayable.  When a warrant or check is paid, the treasurer shall maintain evidence the warrant or check has been processed and paid.  Nothing in this subsection shall prohibit any governing board from using automated recordkeeping procedures, provided the information required in this subsection can be accessed.

I.  Any board of education of a school district of this state may make a payment which would otherwise be made by warrant or check, by disbursement through an Automated Clearing House, bank account debit system, wire transfer through the Federal Reserve System, or any other automated payment system operated by a financial institution insured by the Federal Deposit Insurance Corporation.  The internal controls over such payment system shall be reviewed and approved by the independent auditor of the district during the annual audit.  The provisions of Sections 601 through 606 of Title 62 of the Oklahoma Statutes shall apply to instruments or payment authorized by this subsection.

J.  School districts complying with the provisions of this act shall use only those forms and accounting systems approved by the State Board of Education.  Such forms and systems shall be considered in substantial compliance with this act if they are sufficient to convey the meaning and sequence of transactions contained herein.  Provided, nothing contained herein shall be construed to limit or prevent the use of additional or subsidiary accounts, forms, or files which may be deemed necessary or advisable by the board of education of the district or the State Board of Education.

K.  Any school district desiring to utilize the services of a data processing center to furnish any or all of the records herein required may do so if the center and its system complies with this act and the rules and regulations of the State Board of Education.  Such center shall furnish an honesty bond in an amount to be set by the board of education but not less than Ten Thousand Dollars ($10,000.00).

L.  The State Board of Education shall notify the board of education of the school district of the tentative amount the district is to receive from state and federal aid funds or allocations, and the board of education of the school district may include such tentative estimate as an item of probable income in the preparation of the school district's Estimate of Needs and Financial Statement; provided, no such federal aid estimate shall be used in any way to reduce the State Foundation Aid or Incentive Aid for such school district or sustain a protest for the reduction of a tax levy.

SECTION 2.  This act shall become effective July 1, 2014.

SECTION 3.  It being immediately necessary for the preservation of the public peace, health and safety, an emergency is hereby declared to exist, by reason whereof this act shall take effect and be in full force from and after its passage and approval.

Passed the House of Representatives the 17th day of February, 2014.

	
	Presiding Officer of the House
	of Representatives

Passed the Senate the 15th day of April, 2014.

	
	Presiding Officer of the Senate

OFFICE OF THE GOVERNOR
Received by the Office of the Governor this ____________________ day of ___________________, 20_______, at _______ o'clock _______ M.
By: _________________________________
Approved by the Governor of the State of Oklahoma this _________ day of ___________________, 20_______, at _______ o'clock _______ M.

	_________________________________
	Governor of the State of Oklahoma

OFFICE OF THE SECRETARY OF STATE
Received by the Office of the Secretary of State this __________ day of __________________, 20 _______, at _______ o'clock _______ M.
By: _________________________________