Kansas Department of Administration

04-a-017 - Expenditure and revenue sub-object codes for transactions used to fund principal and interest accounts to cover debt service (April 21, 2004) (Supersedes 03-a-023)

Posted on 10/21/2021 at 12:49 PM by Kansas Department of Administration

INFORMATIONAL CIRCULAR NO. 04-A-017 (Supersedes 03-a-023)
DATE: April 21, 2004
SUBJECT: Expenditure and revenue sub-object codes for transactions used to fund principal and interest accounts to cover debt service
EFFECTIVE DATE: July 1, 2004 (FY2005 business)
A & R CONTACT: Pam Karns
Mike Lovich
(785) 296-2660
(785) 296-2131
(pam.karns@da.state.ks.us)
(mike.lovich@da.state.ks.us)
APPROVAL: Approved by Dale Brunton
SUMMARY: Revision of existing expenditure sub-object code and establishment of new expenditure sub-object codes for the processing of the transactions used to fund principal and interest accounts to cover debt service payments on the related debt and to fund arbitrage rebate accounts


Informational Circular 03-A-023, dated June 2, 2003, was issued in an effort to attain consistency in coding related to transactions processed against budgetary funds for the purpose of funding principal and interest accounts to cover debt service payments. That informational circular advised that expenditure sub-object 6210 should be used for this purpose.

In an effort to align transactions processed through the central accounting system with the coding used in the budget system, we are modifying the description of expenditure sub-object 6210 to identify the principal portion only and establishing new expenditure sub-objects 6211 to identify the interest portion and 6212 to identify the arbitrage portion.

Effective with fiscal year 2005 business, the following expenditure sub-objects should be used when processing transactions against budgetary accounts for the purpose of funding principal and interest accounts to cover debt service payments:

*6201 Other Payments and Charges for Debt Service: For transactions used to fund principal and interest accounts for debt service payments and to fund arbitrage rebate accounts.

6210 Other Payments and Charges for Debt Service - Principal (revised)
6211 Other Payments and Charges for Debt Service - Interest (new)
6212 Other Payments and Charges for Debt Service - To fund arbitrage (new)

*Intermediate Classification - Do not use; A more detailed classification must be used.

The revenue sub-object will remain the same for the receipt into the debt service funds.

5913 Other Revenue - Agency Funds Authorized for Debt Service

There are three "sets" of transactions which normally occur related to the payment of bonds. Additional information relating to each of these transactions is included below.

1. Debt Service Payments from various agency accounts into agency bond principal and interest accounts.

The Division of Budget recognizes that the amounts paid from the budgetary funds into the debt service funds may not equal the amounts necessary to satisfy the principal and interest obligations of the debt service funds (due to interest earnings by the debt service funds, etc). Therefore, agencies should use the amount provided by the Kansas Development Finance Authority (KDFA) as "principal amount" to determine the amount to be coded to principal (expenditure sub-object 6210) and code the remaining balance of the amount paid in to the debt service fund as interest (expenditure sub-object 6211). The Division of Accounts and Reports will not be in a position to audit these transactions for appropriate expenditure sub-object coding. Questions concerning expenditure sub-object coding of these transactions should be addressed to your assigned budget analyst.

The following transactions should be processed in via SOKI3+ to record all debt service payments from various agency funding sources into agency bond principal and interest accounts:

Expenditure Portion (agency)
Principal Transaction Code 733, Expenditure Sub-Object 6210
Interest Transaction Code 733, Expenditure Sub-Object 6211
Arbitrage Transaction Code 733, Expenditure Sub-Object 6212

 

Revenue Portion (agency)
Principal Transaction Code 633, Revenue Sub-Object 5913
Interest Transaction Code 633, Revenue Sub-Object 5913
Arbitrage Transaction Code 633, Revenue Sub-Object 5913

2. Principal and Interest payments from agency bond principal and interest accounts to the State Treasurer's Office.

Principal and interest payments to the State Treasurer will continue to be processed using expenditure sub-object 6020 for revenue bond principal payments and expenditure sub-object 6120 for interest and service charges on the bond debt. The State Treasurer receipts the payments into their fiscal agency fund, 7754, using revenue sub-object 6400. The State Treasurer, in their role as the designated paying agent, then generates the warrants to bondholders/creditors.

The following transactions will be processed via the SOKI3+ Interfund System.

Expenditure Portion (agency)
Principal Transaction Code 733, Expenditure Sub-Object 6020
Interest / service charges Transaction Code 733, Expenditure Sub-Object 6120

 

Revenue Portion (State Treasurer)
Bond debt payments by agy Transaction code 632, Revenue Sub-object 6400

3. Arbitrage Rebate Payments from various agency accounts to the KDFA rebate account.

If the agency is required by the Internal Revenue Service (IRS) to make arbitrage rebate payments, the agency remits funds into the bond rebate account using expenditure sub-object 6212. The revenue is receipted into the rebate account using revenue sub-object 5913. The payment to the IRS is made at the direction of KDFA using expenditure sub-object code 6195.

The following transactions will be processed via the SOKI3+ Interfund System.

Expenditure Portion (agency)
Arbitrage Rebate Transaction code 733, Expenditure Sub-object 6212

 

Revenue Portion (KDFA)
Arbitrage Rebate Transaction code 633, Revenue Sub-object 5913

These revisions will be reflected in the Uniform Expenditure Classification of Expenditure Sub-Object Codes filing (PPM No. 7,002) on the Division of Accounts and Reports web site at http://www.da.ks.gov/ar/ppm/.

DB:pk

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