Arkansas Code
Subchapter 22 - Arkansas Educational Financial Accounting and Reporting Act of 2004
§ 6-20-2203. Uniform budget and accounting system required

(a)
(1) The State Board of Education shall adopt by rule a uniform budget and accounting system that shall be known as the “Arkansas Educational Financial Accounting and Reporting System”.
(2) This system shall establish and implement the process and procedures for financial reporting as required by this subchapter for school districts, education service cooperatives, and open-enrollment public charter schools.
(3)
(A) Pursuant to § 6-20-2207, the Division of Elementary and Secondary Education shall establish and implement a uniform chart of accounts known as the “Arkansas Financial Accounting Handbook” or the “Arkansas Handbook”.
(B) The Arkansas Handbook shall be incorporated by reference into the rules governing the system.
(C) However, the Arkansas Handbook shall be exempt from the rulemaking process and procedures required pursuant to the Arkansas Administrative Procedure Act, § 25-15-201 et seq.

(4) The rules shall be developed by the state board in cooperation with the division, representatives from the Arkansas Association of Educational Administrators, the Arkansas Association of School Business Officials, the Arkansas Education Association, the education service cooperatives, and the Legislative Joint Auditing Committee.

(b) To the extent necessary to comply with federal law, the terms and definitions contained in the Arkansas Handbook shall initially comply with Financial Accounting for Local and State School Systems, 2003 Edition (NCES 2004-318), and may thereafter be revised by the division as necessary to remain consistent and shall be used for valid comparisons of expenditures of schools, school districts, open-enrollment public charter schools, and education service cooperatives.
(c) In addition, the rules or the Arkansas Handbook shall include, but not be limited to:
(1) Categories to allow for the gathering of data on separate functions and programs;
(2)
(A) Categories and descriptions of expenditures that each public school or school district shall report on its annual school performance report authorized by the School Performance Report Act, § 6-15-1401 et seq.
(B) The reported expenditures shall include, but not be limited to, the following categories:
(i) Total expenditures;
(ii) Instructional expenditures;
(iii) Administrative expenditures;
(iv) Extracurricular expenditures;
(v) Capital expenditures;
(vi) Debt service expenditures; and
(vii) Expenditures of court-ordered desegregation funding;

(3) Categories and descriptions of public school and school district expenditures that allow for the gathering of data on separate functions and programs provided by law, including without limitation the following expenditures:
(A) Athletic expenditures;
(B) Student transportation expenditures;
(C) School district level administrative costs;
(D) School level administrative costs;
(E) Instructional facilitators;
(F) Supervisory aides;
(G) Substitutes;
(H) Property insurance; and
(I) Expenditures of court-ordered desegregation funding;

(4) Categories and descriptions of public school and school district expenditures that allow for the tracking of expenditures from the following sources of revenue:
(A) Student growth;
(B) Declining enrollment;
(C) Special education high-cost occurrences;
(D) Special education services;
(E) Technology grants;
(F) Debt service funding supplement;
(G) General facilities funding;
(H) Distance learning;
(I) Gifted and talented; and
(J) Court-ordered desegregation funding;

(5) Categories and descriptions of student management coding, including without limitation:
(A) Number of students transported; and
(B) Daily route mileage;

(6) Categories and descriptions of restricted fund balances that provide documentation of the purpose for the restriction;
(7) Categories and descriptions of expenditures that each education service cooperative shall report on its annual report authorized by law; and
(8) Rules relating to computing error rates in coding and reporting financial information under the system and penalties to focus on areas needing improvement.

(d) The Arkansas Handbook shall contain appropriate format and codes for expenditures for education service cooperatives.
(e) The division shall have the authority to analyze and inspect the financial records of any school, open-enrollment public charter school, school district, or education service cooperative in order to verify that a school, school district, or education service cooperative is correctly and accurately reporting expenditures.
(f) By February 15 of each year, the division shall submit a report to the state board, the Governor, the Senate Committee on Education, and the House Committee on Education concerning public school and public school district expenditures required by law.