Policy References:

GASB Statement No. 33 – Accounting and Financial Reporting for Nonexchange Transactions

GASB Statement No. 65 – Items Previously Reported as Assets and Liabilities

Process and Document Preparation:

BACKGROUND

Local assistance program transactions are generally described as government-mandated nonexchange transactions or voluntary nonexchange transactions.

Government-mandated nonexchange transactions occur when one government provides resources to another government, at a different level in the governmental system, and requires the recipient government to use the resources in accordance with specified purposes and/or time requirements. Government-mandated nonexchange transactions are characterized by the following traits:

• The provider government requires the recipient government to administer a particular program or promote its objectives.
• Eligibility requirements must be satisfied in order for a transaction to occur.

Voluntary nonexchange transactions occur when two or more parties willingly enter into a legislative or contractual agreement. Voluntary nonexchange transactions are characterized by:

• The fact that they are not imposed on the parties to the transaction (both parties agree to enter into the transaction); and
• Eligibility requirements must be satisfied in order for a transaction to occur.

For government-mandated and voluntary nonexchange transactions assets, liabilities, revenues and expenditures are not recognized until all eligibility requirements are satisfied. Resources transmitted in advance of satisfying requirements (excluding time requirements) would be reported as an advance (asset) by the provider government and unearned revenue (liability) by the recipient government. Resources transmitted in advance of time requirements only would be reported as a deferred outflow of resources by the provider government and a deferred inflow of resources by the recipient government.

Eligibility requirements for government-mandated and voluntary nonexchange transactions comprise one or more of the following:

• The provider specifies that the recipient must meet certain characteristics in order to be eligible.
• The provider or enabling legislation establishes time requirements that must be met.
• The recipient has incurred allowable costs that are reimbursed by the provider. This generally describes the State’s accounting policy for most Federal grants.
• The recipient has taken an action specified by the provider and is therefore eligible to receive the provider’s resources. This is referred to as a contingency requirement and applies only to voluntary nonexchange transactions.

Local assistance expenditures account for more than half of all General Fund expenditures. The local assistance policies presented in this section apply to the following programs:

AID TO EDUCATION - ELEMENTARY AND SECONDARY EDUCATION

Elementary and secondary education aid accruals are based on the concept that entitlement for a school district is a grant that is an allocation of education aid appropriated by the Legislature. Accruals reported on the State's financial statements represent the difference between the appropriated allocation and education aid payments at the reporting period end.

STATE UNIVERSITY/CITY UNIVERSITY COMMUNITY COLLEGES OPERATING AID 

Aid payments to State or City University of New York (SUNY, CUNY) Community Colleges underwrite a portion (one-third) of operating expenses incurred during the 12-month academic year (July 1 - June 30). These expenditures are incurred once all eligibility requirements have been satisfied. Since community college operating aid has been determined to be a grant program, an expenditure in the amount of the appropriation less any payments  is accrued at  the reporting period end.

DOB administers local assistance payments to New York City for both Community and Senior Colleges. CUNY Community College and CUNY Senior College payment dates are procedurally established on or before April 25, June 25, October 25, and February 25. The data necessary to compute the accrual for CUNY Community and Senior Colleges aid may be obtained from the local assistance appropriation bill, from payment documents processed by the Bureau of State Expenditures, and from the State’s financial system.

OTHER LOCAL ASSISTANCE PROGRAMS

Local assistance programs with appropriations of $50 million or more are analyzed to determine whether accruals are required at reporting period end. Criteria utilized in determining the need for an accrual will include eligibility requirements, determination of the mechanism triggering payment, program period and the amount of unexpended appropriations.

Guide to Financial Operations

REV. 12/26/2023