What The True-Up?

Recently, the Ohio Department of Education (ODE) determined they were making either overpayments or underpayments to community schools based on the schools’ annual full-time equivalent (FTE) counts. The information for these adjustments is based on data that community schools are entering into Ohio’s Education Management Information System (EMIS). EMIS subsequently populates the SOES reports that ODE uses for the basis of funding the community schools.

Typically, FTE adjustments are made in subsequent years after the close of the current fiscal year, and ODE usually makes anywhere from 1 to 5 final FTE adjustments each year for the prior year. In addition to these FTE adjustments, ODE also conducts on site FTE reviews, which are performed to verify the accuracy of the enrollment and attendance data reported by the community schools.

What Does This Mean For You?

These FTE final adjustments and FTE reviews can result in overpayments or underpayments from ODE to the community schools. In any event a true-up calculation should be performed covering all revenue-based (FTE) contracts that a community school is involved in (management/operator and/or sponsor agreements). To ensure that these true-up calculations are consistently performed, community schools need a documented true-up policy. Items this policy should include are as follows:

  1. The frequency at which the true-up is to be performed (i.e. as each FTE is calculated or at the time the final FTE is calculated for a given school year)
  2. The definition of how each contract is based on foundation or FTE to determine proper true-up
  3. The identification of the specific components of the foundation payment from which to calculate the true-up, which will be based on the specific sponsor and/or operator contracts

Beginning with FY16, FTE adjustments (received during the 2016-2017 school year), auditors will be reviewing these FTE adjustments to ensure that a true-up calculation has been performed and whether there is a need to record any receivables/payables or disclosures of any repayment plans. If you need help determining how to comply with these requirements, email Rea & Associates. Someone on our government team will be happy to help you find the answer to your questions.

By Morgan Helmick, supervisor (Medina office)