FY 2018

Summary: State of Kansas Encumbrance Policy Amendments expanding transactions not required to be encumbered.

This Informational Circular (IC) is issued to announce the following changes to the statewide encumbrance policy:

Amendments to the encumbrance policy:

Additional obligations that are generally not required to be encumbered but are optional for agency budget management include:

For guidance on fiscal year closing and determination for all obligations, please see PM Filing 14,002 Fiscal Year Closing Including Fiscal Year Determination.

The provisions of PM Filing 10,300 should be followed in conjunction with all requisition and purchase order requirements issued through the Office of Procurement and Contracts. 

Please note:  The following payments remain under review pending a determination of any encumbrance requirement:

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Attachments:

PM Filing 10,300 Statewide Encumbrance Policy can be found at: Policy Manual

Best Practices – Statewide Encumbrance Policy: https://webadmin.ks.gov.production.premier.siteviz.com/media/cms/d56f9875-9fb8-443f-ab34-97c44fe9758a.docx

PM Filing 14,002 Fiscal Year Closing Including Fiscal Year Determination can be found at: http://www.admin.ks.gov/offices/chief-financial-officer/policy-manual

• Policy Manual (PM) Filing 10,300 Statewide Encumbrance Policy now incorporates the supplemental exemptions found in IC 17-A-014.
• The exemption for program payments has been further defined.
• Certain payments under $500 will now be exempted.
• Program payments are further defined as payments where the disbursing agency receives no direct service or tangible asset.
• Transactions less than $500 which are paid within 10 business days of the actual invoice date (unless required by Office of Procurement and Contracts policies).
• The paid date is defined as the SMART Accounting Date found at the following SMART screen:
  • SMART: Main Menu > Accounts Payable > Vouchers> Add/Update > Regular Entry, Payments tab, Accounting Date.
  • Agencies shall not split any invoice by generating multiple vouchers in order to avoid the $500 threshold.
• Payroll expenditures and remittance of payroll taxes, deductions and garnishments
• Single Pay voucher payments

As authorized by K.S.A. 75-3207a, the Secretary of Administration has fixed subsistence rates for FY 2018.  The U.S. General Services (GSA) has announced a change in the CONUS standard rate for lodging effective October 1, 2017.  The GSA standard lodging rate has been increased to $93.  The standard M&IE rate of $51 remains unchanged.

For State of Kansas travel, federal subsistence rates are being followed.  Subsistence rates are based on travel location and travel dates with seasonal rates listed for many locations.  If a specific travel location isn’t listed (or within the location definition), the standard rate, or “other” location rate is used.  The following standard rates apply to many locations across the contiguous United States (CONUS).    

For CONUS locations, the following standard subsistence rates apply for travel occurring on and after October 1, 2017:

M&IE - $51

Lodging - $93

The Employee Travel Expense Reimbursement Handbook is updated to include this information regarding subsistence for travel occurring on and after October 1, 2017.

SMART contains the official subsistence rates for CONUS and OCONUS travel locations and will be updated semi-annually each October 1 and April 1 for any interim rate changes which have occurred.  International subsistence rates are not loaded into SMART.  For international travel locations, employees will obtain M&IE rates directly from the U.S. Department of State (DOS) website listed below.  For international travel, payment for actual lodging expense is allowed.

Source of Subsistence Rates -

Contiguous United States (CONUS) -

The U.S. General Services Administration (GSA) maintains the M&IE rates and lodging rates for travel locations in the contiguous United States -
U.S. General Services Administration website: http://www.gsa.gov/portal/content/104877
Outside Contiguous United States (OCONUS):

(Alaska, Hawaii, and U.S. Territories/Possessions) -

The U.S. Department of Defense (DOD) maintains the M&IE rates and lodging rates for travel locations within Alaska, Hawaii and U.S. Territories/Possessions -
U.S. Department of Defense website: http://www.defensetravel.dod.mil/site/perdiemCalc.cfm

International Locations -

The U.S. Department of State (DOS) is the source for M&IE rates only for international travel locations-
U.S. Department of State website: https://aoprals.state.gov/web920/per_diem.asp
For international travel, payment for actual lodging expense is allowed.
Note for using federal websites:

For CONUS and OCONUS travel, if SMART is not accessible, employees may access subsistence rates through the federal websites. However interim federal website updates may occur subsequent to the semi-annual SMART updates each October 1 and April 1. CONUS rates are published on an annual basis but the annual file is updated periodically throughout the year with no interim files published. OCONUS and international rates are updated and published on a monthly basis. Be aware that any interim updates for CONUS or OCONUS locations are not valid until reflected in SMART. For international travel, only the October 1 and April 1 subsistence files should be used to locate the M&IE rates.

If employees utilize the federal websites to find M&IE and lodging rates, those rates should be used as follows:

Rates published October 1 - for travel occurring between October 1 and March 31 of each year.
Rates published April 1 - for travel occurring between April 1 and September 30 of each year.

Lodging Expense Limitations:

K.S.A. 75-3207a(f) provides that the daily lodging expense limitations established may be exceeded, upon approval by the agency head or designee, by the lesser of either: (1) an additional 50% of the applicable lodging expense limitation, or (2) the actual lodging expense incurred.

These lodging limits continue to be applied to the lodging rate before taxes.  Thus, the amount reimbursed or paid for lodging expenses may exceed the established lodging limitation by as much as the amount of associated taxes.

Conference Lodging qualified under K.A.R. 1-16-18a(c):

Agencies may authorize payment or reimbursement for actual lodging expenses when an employee is required or authorized to attend a conference, and the lodging rate exceeds the applicable lodging expense limitation (including the additional 50%).  The agency head must be provided with conference materials and rates.  These should be maintained with travel documentation.

Reduced Meal Allowance:

If the cost of meals is included within the cost of registration fees or other fees and charges paid by the agency or provided at no cost to the employee, the daily M&IE rate for the travel location should be reduced based on the percentages listed below.  For partial days, the quarter amount is calculated first and then the reduction percentage is applied.  The M&IE reduction percentages are as follows:

Breakfast - 15%

Lunch - 35%

Dinner - 50%

Same Day Meal Allowance:

Reimbursement for a same day meal, in accordance with K.A.R. 1-16-18(c)(2), is calculated as a percentage of the daily M&IE rate for the travel location, based on the approved meal, as follows:

Breakfast - 15%

Lunch - 35%

Dinner - 50%

Queries in SMART to Obtain M&IE Rates and Lodging Rates:

A query “KS_EX_CONUS_RATES” is available in SMART to obtain all CONUS and OCONUS locations with the M&IE daily rates, meal reductions and lodging rates.  SMART will be updated semi-annually with the October and April 1 CONUS and OCONUS subsistence rates.  Historical locations and rates from each semi-annual update will be maintained in SMART.

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Summary: Changes to Taxability of Moving Expense Reimbursement

This Informational Circular (IC) is issued to announce the following changes to the process for the reimbursement of qualified moving expenses to state employees:

The federal Tax Cuts and Job Act (H.R.1) enacted into law on December 22, 2017 amends Internal Revenue Code – Title 26, § 132(g) suspending the existing exclusion for qualified moving expense reimbursements from gross income.

Effective January 1, 2018 all qualified moving expense reimbursements are subject to taxes and are to be reimbursed directly to the employee through payroll (SHARP) using the Moving Expense Taxable (MVT) earnings code.

As authorized by KSA 75-3225(d), the Secretary of Administration intends to amend KAR 1-16-2b to require that moving expenses be reimbursed directly to the employee and to no longer allow payments to a commercial carrier. Therefore, moving related direct billed (commercial carrier, lodging, or airfare) payments are no longer authorized to be paid via the SMART Accounts Payable module or agency procurement card. Nor should any moving related reimbursements be paid to the employee through the SMART Travel & Expense module due to the taxable fringe benefit reporting requirements.

All moving expenses are to be paid after the move has occurred and all the necessary documents and receipts have been submitted by the employee for reimbursement. As authorized by KSA 75-3225, per KAR 1-16-2b(b)(1), the amount to be paid for moving household and personal effects may not in any case exceed the amount of the actual reimbursable moving expenses verified by receipts and bill of lading or the amount of moving expenses for moving twelve thousand (12,000) pounds of household goods by commercial carrier, whichever is the lesser amount. The agency is required to determine the actual amount of the moving expense to be reimbursed to the employee and notify the appropriate agency HR/Payroll staff of the employee and the amount to be added to the employee’s timesheet as MVT earnings. Agency HR/Payroll staff should include the reimbursement on the employee’s timesheet in the pay period following submission of the documentation.

As specified in KSA 76-727(b)(2), applicable to state educational institutions, the amount of the reimbursement cannot exceed the amount of the actual moving expenses verified by receipts or the amount of moving expenses for moving 12,000 pounds of household goods, whichever is the lesser amount.

Documentation for all moving expense reimbursements paid through SHARP with the MVT code should be maintained at the agency.

Approval to Reimburse Qualified Moving Expenses

The approval process for both in-state and out-of-state authorizations are not impacted by the taxability of the moving expense reimbursements.

As required by KSA 75-3225(a), an agreement must be signed by the agency head prior to authorizing the reimbursement of moving expenses to an employee using Form DA-22, Agreement for Reimbursement of Moving Expenses. 

If an applicant is from out-of-state; prior approval of the Secretary of Administration and the Governor should be obtained using Form DA-29, Request to Pay Expense of Out-of-State Applicants, to reimburse moving expenses. (KSA 76-727 (3c) exempts state educational institutions and the Board of Regents from obtaining prior approval of the governor).

Policy Manual 3,607 - Employee Moving Expense Reimbursement has been updated and will be available on or before March 30th on the Department of Administration website.

Policy Manual

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Summary: Capital Asset Reporting

In accordance with KSA 75-3729 and the Department of Administration’s Policy Manual Filing 13,001 - Capital Asset Records, agencies must enter capital assets into the SMART Asset Management (AM) module when the asset is received and/or the asset is functional to accurately reflect the correct transactions for reporting on the Comprehensive Annual Financial Report (CAFR). To ensure compliance with state policies, the DA-87 Annual Capital Asset Reporting Log will be required to record all capital asset transactions over the capitalization thresholds noted below. This includes the acquisition, disposal, and transfer of capital assets and any changes to existing capital assets reported in the SMART AM module.

NOTE: KDOT & Regent Institutions are exempt from the reporting requirements of the DA-87.

Assets with a cost meeting the established threshold and a useful life exceeding one year are reported as capital assets in the CAFR. It is the agency’s responsibility to ensure all capital assets are properly recorded in the SMART AM module.

The statewide capitalization thresholds for assets are as follows:

Please note, two SMART queries are available to assist agencies in reviewing and reconciling capital asset transactions:

• Capital Asset Inventory List Query - KS_AM_ASSET_CAPITAL_INV_LIST – The query provides a complete agency inventory of capital assets recorded in the SMART AM module (use data filters to select CAFR asset book).
• Capital Outlay Purchase Query - KS_AM_VCHRS_WITH_54XXXX_ACCT – The query provides a list of vouchers using the capital outlay account codes for the specified dates.

DA-87 Annual Capital Asset Reporting Log due dates:

• FY18 Initial submission is due May 15^th (For the reporting period of July 1^st, 2017 through March 31^st, 2018).

• FY18 End-of-Year log will be due July 31^st and will be a cumulative record of all FY18 capital asset transactions.

In FY2019 and subsequent years, agencies are required to submit a DA-87 cumulative report for each quarter of the FY due no later than the 15th calendar day following the end of each quarter to include all current FY capital asset transactions. The due dates are as follows:

Please submit the completed DA-87 log to the Financial Integrity Team (FIT) email: OCFO-FIT@ks.gov

For detailed instructions on completing the DA-87, please see the “Instructions” tab on the workbook.

If the agency does not have any capital assets to report for the period, please send an email to the FIT team noting that no assets were purchased within the reporting period.

Assets are entered in the SMART AM module in one of two ways.

1. Directly in AM via Express Add.SMART Job Aid:Adding An Asset Using Express Add
2. Via asset integration on the requisition, the purchase order or the voucher

Each agency must determine which method will be used and ensure all parties involved are aware of how assets will be entered.

SMART Asset Integration Tools:  Asset integration is a process by which asset information included on the requisition, purchase order and voucher can flow to the Asset Management Loader Tables. This allows assets to be loaded to the Asset Management module directly, eliminating the need to hand-key asset details such as profile ID, tag number, custodian, location and chartfield values in the AM module. It also links the asset to its originating voucher.

In SMART asset integration can begin on either the requisition or the purchase order for the purchase of new assets or on the voucher for new or existing assets. Agencies have the option of deciding where to begin asset integration in SMART. Detailed job aids are available for entering assets at each level of integration: http://www.smartweb.ks.gov/training/integration-materials/am-po-and-ap.

• Linking Vouchers with Asset Module
  • AM Tool 5 - Beginning Asset Integration on Voucher
  • Reviewing the Transaction Loader Tables Job Aid
  • Agency Asset Processor's Role in Integration

• Construction-In-Progress (CIP) is recommended to be entered in SMART AM at the beginning of the project.
  • It is essential that all costs associated with a CIP asset are captured in AM. Agency staff must determine if integration will be used or if asset costs will be manually adjusted in AM. The agency must determine the best process to communicate CIP costs between the Accounts Payable and Asset Management modules. SMART Job Aid: CIP Assets

Capital Asset Reporting Reminders:  Agencies should keep SMART AM up-to-date to ensure all assets are entered before FY closing. If an error or omission is found after year-end closing, in addition to entering the correction in SMART AM, a detailed explanation should be included on the Form DA-82 Capital Asset Supplemental Information.

The following guidance is provided to assist in completing capital asset reporting:

• Capital asset physical inventories are to be completed annually. Inventories are recommended to be  conducted prior to June 15th to allow for corrections/additions to be recorded in the SMART AM module prior to SMART Year-End deadlines.
• Verify correct Profile ID and Category Code are used for assets. Asset Profiles drive the depreciation and accounting entry creation for CAFR purposes, it is crucial that the correct Asset Profile is used. SMART Job Aid: Incorrect Asset Profiles and Corrections / Profile ID Section Job Aid
• Agencies should review Construction-In-Progress (CIP) before year-end closing to ensure all costs are included in the asset module. CIP costs can be entered directly into AM as an addition/adjustment on the Cost Adjust/Transfer page to add costs as expenditures are incurred. SMART Job Aid: CIP Assets
• Completed CIP assets need to be recategorized, the profile ID updated to a non-CIP profile, and other requirements completed as further defined in the job aid. SMART Job Aid: CIP Assets (See Section: Steps to Perform After CIP Asset is Complete)
• All assets that have been sent to state surplus, sold, or otherwise no longer in the agency’s possession should be disposed of in the SMART AM module accordingly. SMART Job Aid: SMART
• Verify reported asset cost allocations, and update asset costs, if necessary. SMART Job Aid Adjustments and Additions to Cost and/or Quantity
• For agencies utilizing integration, all outstanding Asset Integration Interface ID’s must be processed. SMART Job Aid: Reviewing Transaction Loader Tables

For assistance with entering/updating assets in SMART, please submit a SMART Service Desk ticket. For policy/recording questions please email the Statewide Agency Audit Services team at ARpreaudit@ks.gov.         

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Resources:
Policy Manual 13,001 Capital Asset Records
Form DA-87 Annual Capital Asset Reporting Log
SMART Module of the Month Training – Safeguarding Assets

Additional SMART Asset Management job aids are available online via SMART Web.

Summary: Establishing Policy for Fiscal Year-End Negative Cash Balances for Federal Funds

This informational circular is being issued to announce Policy Manual 8,004 Federal Funds – Fiscal Year-End Negative Cash Balances.

Historically, the Department of Administration required all funds to have a cash balance of zero or positive at fiscal year-end. Upon written request to the Office of the Chief Financial Officer certain federal funds have been permitted to carry a negative cash balance during the fiscal year, on the condition that the fund be restored to a zero or positive cash balance at fiscal year-end.

Effective immediately, when a negative cash balance is anticipated in a federal fund at fiscal year-end and reimbursement from the federal agency has not been received and posted, agencies are required to record an accounts receivable in SMART for the amounts expended but not yet reimbursed by the federal agency. 

Agencies are no longer required to maintain a zero or positive cash balance at fiscal year-end in federal funds.  Recording an accounts receivable will eliminate the need for agencies to process journal adjustments that temporarily record federal fund expenditures elsewhere.

Agencies currently using SMART Project Costing in conjunction with Customer Contracts for reimbursement processing may continue to use the modules to track grant expenditures. Reimbursable transactions from the billing worksheet must be approved and have generated pending items in the Accounts Receivable module to meet the requirements of this circular.

Note:  A review of the statewide financial reporting impact of PM 8,004 will be conducted prior to May 2019 and periodically thereafter.

For Policy Questions: Email Statewide Agency Audit Services Team at ARpreaudit@ks.gov

For SMART Processing Questions: Submit a ManageEngine Service Desk ticket.

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RESOURCES:
Policy Manual 8,004 Federal Funds – Fiscal Year-End Negative Cash Balances

Related SMART Accounts Receivable job aids are available online via SMART Web.

 

Summary:  Confirming existing policy - board member and state employee mileage reimbursement for use of privately owned vehicles.  

This Informational Circular addresses several recent agency inquiries regarding the reimbursement to board members for the cost of using privately-owned vehicles for official state business.

Under statutory provisions, board members are paid mileage under the same reimbursement policies established for state employees. As an exception, board members who are also active legislators, are reimbursed under the provisions of KSA 75-3212(d).

Per KAR 1-18-1a(d) if a mode of transportation is available and is less costly than transportation by privately-owned conveyance, mileage payments for use of a privately-owned conveyance shall be limited to the cost of that other mode of transportation.

Form DA-127 Private Mileage / Rental Comparison should be used to determine the least costly mode of transportation for in-state travel. The lesser amount of the cost comparison will be the maximum allowable reimbursement amount.

Board members and state employees are not required to use a state-owned or state-leased vehicle to conduct official business. The use of a privately-owned vehicle does not disallow reimbursement.  However, if a privately-owned vehicle is used, reimbursement is limited to the sum of fuel costs, and the cost of a compact car under the current statewide mandatory Vehicle Rental Service contract. 

Additionally, an employee that has a disability requiring the use of a privately-owned vehicle that is specially equipped, is exempt from the limitation of the cost of a compact car under the Vehicle Rental Service contract.

For additional information regarding travel reimbursements and state agency vehicle usage please reference the Travel Information for State Employees website.