Wis. Admin. Code Department of Public Instruction § PI 35.15 - Lack of financial viability and going concern determinations
Current through November 29, 2021
(1) INDICATORS.
Any of the following shall be indicators that a school does not have the
ability to continue as a going concern or that the school does not meet the
financial viability requirements under s. 119.23(7) (am) 2m b. or (7m) (c),
Stats.:
(a) The budget and statement of cash
flows required under s. PI 35.13(2) or 35.14(3) show the school has
inadequate revenues and other financial resources to fund current operations,
has negative cash flows, has a negative net asset balance, or has a net
loss.
(b) The audit opinion
statement included in the financial audit, or in a financial audit submitted
under s. 115.7915, Stats., contains an emphasis of matter regarding the
school's ability to continue as a going concern.
(c) The school failed to make payments as
required under s. PI 35.13(3) or (4).
(d) The school failed to be current with
filings, payments, or withholdings payments required under s. PI 35.13(6).
(e) The audit reports required
under s. PI 35.13(6) (f) contain questioned costs or compliance findings that
may affect the school's ability to continue.
(f) The school has a negative net asset
balance in its financial audit or in a financial audit submitted under s.
115.7915, Stats.
(g) The school has
a negative net current obligation in its financial audit, in a financial audit
submitted under s. 115.7915, Stats., or in the budget and statement of cash
flows required under s. PI 35.13(2) or 35.14(3). The net current obligation
shall be calculated as the current assets less the current
liabilities.
(h) The school has a
net loss or negative change in net assets in its financial audit or in a
financial audit submitted under s. 115.7915, Stats.
(2) INFORMATION TO BE SUBMITTED. A school
shall submit to the department any information the department requires to
determine the ability of the school to continue financially, including an audit
of the school's legal operating organization prepared in accordance with
generally accepted accounting principles. The school shall provide the
department authority to speak directly to the U.S. internal revenue service,
the Wisconsin department of revenue, or the Wisconsin department of workforce
development to determine the school's compliance with the requirements under s.
PI 35.13(6).
(3) NOTIFICATION OF
FINANCIAL IMPAIRMENTS. The school shall promptly notify the department in
writing of impairments in the school's ability to finance its
operations.
(4) NOTIFICATION OF
CEASING OPERATIONS. A school participating in the choice program shall notify
the department immediately of a decision to cease educational program
operations.
(5) TRAINING. Upon the
request of the department, a school that has one or more of the indicators in
sub. (1) shall attend a fiscal management training approved by the
department.
(6) FINANCIAL VIABILITY
REVIEW AND SURETY BOND REQUIREMENT.
(a) The
state superintendent shall review information submitted under s. 119.23,
Stats., and this chapter and determine whether a school is financially
viable.
(b) If the state
superintendent determines that a school is not financially viable, the state
superintendent may require a school to immediately obtain a surety bond. The
surety bond shall be made payable to the state of Wisconsin. The purpose of the
bond shall be to protect the department and the taxpayers of Wisconsin against
loss in the event of any of the following:
1.
The school fails to timely file the reports required under s. PI 35.07(1) or
s. 119.23(7) (am) 2m a., Stats.
2. The school fails to timely refund any
amount certified due from the school under s. PI 35.07(4).
3. The school fails to timely repay the
reserve balance under s. PI 35.10.
(c) The amount of the bond required under
par. (b) shall be equal to 25 percent of the total current school year payment
amount as determined under s. 119.23(4) and (4m) , Stats.
(d) The bond shall remain in force until all
of the following occur:
1. The school has a
positive net asset balance for two consecutive school years, as indicated in
the school's financial audit. The net asset balance used for this determination
may only include pledge receivables or other receivables for which the school
receives cash payments within one year of the date pledged or within one year
of the date the amount is included as a receivable.
2. The school has a positive net current
obligation for two consecutive school years, as shown by the school's financial
audit. The net current obligation shall be calculated as the current assets
less the current liabilities. The asset balance used for this determination may
only include pledge receivables or other receivables for which the school
received cash payments within one year of the date pledged or within one year
of the date the amount is included as a receivable.
3. The school has net income for two
consecutive school years, as indicated in the school's financial audit. The net
income used for this determination may only include revenue for which the
school receives cash payments within one year of the date pledged or within one
year of the date the school includes the amount as revenue.
4. The school pays all amounts owed to the
U.S. internal revenue service, Wisconsin department of revenue, and Wisconsin
department of workforce development on a timely basis for two consecutive
school years, including full payment of any wage claims and past due amounts,
interest, and penalties. The school shall submit to the department a letter
from each of these entities indicating compliance with this requirement and
provide the department the authority necessary to speak directly to these
agencies to confirm compliance.
5.
The school has paid all vendors and employees as required by s. PI 35.13(3)
and (4) for two consecutive school years.
6. The school's financial audit does not
contain an emphasis of matter or an expression of the auditor's doubt as to the
school's ability to continue as a going concern for two consecutive school
years.
7. If the school's financial
audit does not include all revenues, expenditures, assets, and liabilities of
the legal operating organization of the school, the school shall submit to the
department financial statements for the school's legal operating organization
prepared in accordance with generally accepted accounting principles that meet
all of the following requirements:
a. The
financial statements do not contain a qualified audit opinion or an expression
of the auditor's doubt as to the organization's ability to continue as a going
concern.
b. The financial
statements are two-year comparative financial statements that include the audit
of the full-year financial information for the school years in which the
requirements in subds. 1. to 6. are satisfied.
c. The financial statements show that the
legal operating organization of the school also meets the requirements under
subds. 1. to 5.
(e) If the school is unable to complete the
requirements in par. (d) within 5 years from the date the department initially
requires a surety bond or if the school's financial position worsens, the
department may terminate the school from the choice program.
(f) Upon the request of the department, a
school that is required to provide a surety bond under par. (b) shall do all of
the following:
1. Attend fiscal management
trainings.
2. Submit to the
department budget and cash flow reports and turnaround plans as prescribed by
the department.
Notes
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