Archived Information

School Finance: Circuit Breaker

Circuit Breaker Accounting Update - December 2005

It has come to our attention that auditors while completing annual audits of cities and towns are citing auditees for not complying with DOR Bulletin 2004-06B. Some districts were cited for charging eligible special education expenses directly to the Special Education Reimbursement fund, while others were cited for having fund balances in the Special Education Reimbursement fund at the end of the fiscal year.

With respect to the first issue, we have had discussions with DOR staff and we are in agreement that eligible special education expenses can be charged directly to the Special Education Reimbursement fund and are not required to be charged to the general fund first. Amounts directly charged cannot exceed the fund balance in the Special Education Reimbursement fund.

The second issue, regarding permissible carryover of year-end balances, is still under discussion. It should be noted that the original DOR Bulletin was issued in the first year of implementation of the Circuit Breaker program. Subsequent to the Bulletin being issued, the law (MGL chapter 71B, section 5A) was amended, changing the program from one that reimbursed expenses in the same year they occur to one that reimburses prior year expenses. This change has allowed us to provide more reliable estimates of revenue to local officials.

We are continuing to work with DOR to resolve these issues and expect that revisions to Bulletin 2004-06B will be published later this year.