GORENZ DISTRICT NEWSLINE A newsletter of audit significance from Gorenz and Associates, Ltd., Peoria, IL      November 2004  Don’t miss an opportunity to improve your operating funds financial health! HB 765 was signed into law July 28, 2003 by the Governor, allows relaxed rules for inter-fund transfers for the two year period from July 1, 2003 through June 30, 2005.  The limitation on the amount of the transfer between operating funds has been eliminated.  The requirement that it must be to meet a one time non-recurring expense and be to the fund in most need has also been eliminated.  In other words, for the next few months you have the opportunity make any transfer you like between the Education, Operations and Maintenance, and Transportation Funds.  This is the perfect time to redistribute those excess funds without worrying about being in violation of one of the usual limitations.  Are you appropriately restricting the use of restricted funds?  As finances get tighter is much easier to get into trouble with the management of restricted moneys.  When you levy for tort (or lease) and know that you are receiving more than you will spend or have large restricted balances already, you must be certain that you have at least an amount equal to the restriction in your bank account at all times.  If your bank balance falls below the amount of the restriction then you have effectively spent those restricted funds for unrestricted purposes.  This is a very serious violation of Illinois law.  Make sure that you pay attention to the restricted money you receive and how much you spend.  We are seeing this type of violation too often these days.   Are your Tort Immunity Expenditures defendable?  The Tort Immunity Act provides for Local Governments to levy a tax which when collected will pay for the costs of judgments, insurance, and “risk care management”.  This nebulous term has long been discussed and is being more frequently challenged.  We believe that it is important for districts to protect themselves from taxpayer scrutiny by adopting a program identifying what the district believes to be “risk care management” expenditures.  Once a “Risk Management Program” is adopted, it should be documented with annual reviews and be part of personnel performance evaluations (for individuals performing risk management activities).  Any utilization of non-administrative staff for “risk management duties should be particularly well documented.  If those individuals are covered under a negotiated agreement then those duties should be outlined and agreed to in the negotiated agreement.  The bottom-line is the more documentation the better.  New Minimum Wage – January 1, 2005  On August 21, 2003 the governor signed Senate Bill 600 raising the state’s minimum wage to $6.50 per hour (up from the current federal minimum of $5.50) effective January 1, 2005.   New 403b Limit for 2005  Effective for calendar year 2005, the maximum dollar amount for elective deferrals has been raised to $14,000 ($18,000 for taxpayers 50 and over).  2004 Federal Mileage Rate  On October 15th the IRS release IR 2004-139 which officially notified taxpayers of an increase in the standard mileage rate for 2005 to 40 ˝ cents per mile for business miles driven on, or after, January 1, 2005.  Gorenz and Associates, Ltd. Certified Public Accountants 3010 N. Sterling Ave.  Peoria, IL 61604    (309) 685-7621 This publication is distributed for general information. It is not intended to address specific matters or render legal opinion.