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Business and Policy Areas
Business and Policy Areas

Proposed IPEDS Changes Impact Discount and Expense Reporting

March 4, 2016

The Department of Education is currently accepting comments on proposed additions to the Integrated Postsecondary Education Data System (IPEDS) Finance Survey.

A Technical Review Panel (TRP) convened by ED in 2015 was asked to focus on increasing the accuracy and utility of financial information collected through the annual IPEDS Finance Survey. Panelists were asked to explore methods to streamline expense reporting, due to the complexity of the requirement to cross tabulate natural with functional expenses and allocate operation and maintenance of plant, depreciation, and interest expense categories within the cross tabulation.

Panelists were also asked to address ways to better compare sources of student financial aid across all institutions, especially given different accounting and recognition criteria for Pell Grants between the Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB). 

The results of the finance-specific TRP have been released as part of a comprehensive Office of Management and Budget package that is available for public comment. Of greatest interest to business officers likely will be proposed new survey questions that change functional and natural expense reporting and seek to clarify the funding sources of scholarships and discounts.

Functional and Natural Expenses

The draft requirements are explained in Tables 9 and 10 in the summary of proposed changes under "Supporting Statement Part A." A full exhibit of how the expense information will be collected is available on the fourth and eleventh pages, for GASB and FASB reporting, respectively, of a 268 PDF, "IPEDS 2016 F Finance."

The proposal would simplify natural and functional expense reporting by requiring:

  1. All expenses by functional expense category.
  2. A total of all functional expenses.
  3. Salaries and wages by each function.
  4. Separate reporting of natural expense totals for benefits, depreciation, and interest.

The Finance Survey uses functional expense definitions as defined in Chapter 700 of NACUBO's Financial Accounting and Reporting Manual, a web-based tool for NACUBO members.  

Scholarships and Discounts

The new questions are addressed in Tables 37 and 38 in the summary of proposed changes under "Supporting Statement Part A." A full illustration is available on the second and tenth pages, for GASB and FASB reporting, respectively, of a 268 PDF, "IPEDS 2016 F Finance."

The objective of the new questions is to highlight the magnitude of differences between how public and independent institutions apply support funds to discounts and scholarships. The disparities are rooted in differing accounting requirements by GASB and FASB.

To mitigate the disparities, the survey will ask every institution to provide its Pell Grant totals. However, under the proposal, every institution will also have to report its tuition discount funding sources—Pell Grants, other governmental grants, contributions, and true (and quasi) annual endowment spending amounts.

For Pell Grants, only public institutions should report an amount as a discount source (because, according to GASB, Pell Grants are recognized as revenue and also a discount—or scholarship expense—when the grant is applied as payment on the student's account or disbursed to the student). Alternatively, independent not-for-profit institutions should not have Pell Grants as a discount or scholarship-funding source because such grants are recorded as "agency" transactions and pass directly to the student (usually as a form of payment for tuition or fees).

The requirements of the proposal are effective in the 2016-17 Finance Survey data collection period. Comments on the proposal are due by April 19. Institutions should consider providing feedback to NACUBO for inclusion in the industry comment letter, or responding directly to ED.


Sue Menditto
Director, Accounting Policy