GASB Statement 65 and Classification of State Foundation Funding Overpayments

Word version

 

This letter explains how to account for an overpayment of Foundation School Program (FSP) funding, also called state funding, in accordance with Statement 65 of the Governmental Accounting Standards Board (GASB).

How Does the TEA Determine That a District Was Overpaid?

After each fiscal year, when final financial and attendance data are available, the Texas Education Agency (TEA) goes through a process called settle-up to reconcile the difference between the FSP payments made to districts and the actual earnings of districts. If a district was overpaid for the year, the TEA recovers the overpaid state funding, usually by reducing the district’s scheduled FSP payments over the remainder of the current state fiscal year.

How Should My District Account for FSP Overpayments in Light of GASB Statement 65?

Historically, districts have recorded overpayments of FSP funding as deferred revenue. However, under GASB Statement 65, overpayments to districts do not meet the requirements of deferred inflow or deferred outflow. Instead, an overpayment is considered an amount owed to the state that was not earned by the district. Since the revenue from the overpayment was not earned, the district should account for it as a liability. 

Who Should I Contact If I Have Questions?

Please contact Yolanda Walker in the Financial Accountability Division by phone at
(512) 463-0947 or by email at
yolanda.walker@tea.texas.gov if you have questions.

Sincerely,

Belinda Dyer
Director, Financial Accoutnability
Office of School Finance