PREPARATION OF PLAN OF FINANCIAL ADJUSTMENT - 8452.1
Listed below are the types of Plan of Financial Adjustment (PFA), the statutory authority, and preparation process:
Government Code (GC) section 11251 authorizes the use of a general PFA – supported either by a special fund or by a separate appropriation from the General Fund.
The following statutes authorize the use of a PFA for these specific funds:
- GC section 16365 – Federal Trust Fund
- Education Code section 12060 – Vocational Education Federal Fund
- Health and Safety Code section 100390 – Public Health Federal Fund
Combination (general and federal) PFA
Authorizing statutes are provided above
Each PFA request must follow one of the three illustration formats below; however, statute references, funds, and appropriations will vary.
- Illustration 1 – General PFA
- Illustration 2 – Federal Funds
- Illustration 3 – Combined (general and federal) PFA
The following required information must be included in a PFA:
- A request for approval of the PFA and a statement of the period of time for which PFA is to be effective. This period of time can be for a limited period (one, two, or three years) or it can be continuous from year-to-year. Agencies/departments should review their PFA each fiscal year and update as necessary. If the PFA is no longer needed, notify the State Controller’s Office (SCO) and Department of Finance, Fiscal Systems and Consulting Unit by agency/department memo.
Agencies/departments can seek approval to establish a new clearing program by adding language to the PFA.
- Identification of the funds and appropriations covered by the PFA. If the PFA is to be continuous and one of the appropriations covered by the plan is appropriated yearly, care should be taken to identify the yearly appropriation and not the specific appropriation of a particular year. For example, the 11-digit item code (e.g. 8860-001-0001) of a support appropriation should be used to identify an agency’s/department's yearly support appropriation and not the year and chapter number of the current budget act. If funds and appropriations covered by the PFA include a Continuing Appropriation as defined in SAM section 8326, the continuous PFA is effective until the appropriation availability end date or the date the agency/department amends or rescinds the existing approved PFA, whichever is earliest. If the appropriation covered is made by other than budget act legislation, the year and chapter must be stated.
- A declaration by the agency/department that a cost allocation plan will be used to allocate the costs covered by the PFA. A description of the cost allocation plan and the types of costs covered must be filed with the SCO. Agencies/departments that have more than one PFA only need to file one cost allocation plan description unless a different plan is utilized for each different PFA. The description should include the type of costs being allocated and the methodology used to allocate the costs. See SAM Chapter 9200 for guidelines on allocating costs. Although these sections refer to allocating line-item costs to programs, the same principles apply to allocating shared costs between funds and/or appropriations.
- The frequency of transfer requests between the funds and/or appropriations covered by the PFA must be included. Transfers should be on a monthly basis, but can be more frequent if needed. Transfers should be for a one-month period, specify if it is actual or estimated, and months should not be combined.
- The PFA must be certified by an authorized agency/department officer.
Note: If the proposed PFA contains any incorrect or missing information, it will be returned to the agency/department for correction.
A sample of a General PFA, is shown in 8452.1 Illustration 1.
A sample of a Federal Funds PFA, is shown in 8452.1 Illustration 2.
A sample of a Combined (general and federal) PFA, is shown in 8452.1 Illustration 3.
For additional inquiries related to the PFA, contact FSCU at PFArequests@dof.ca.gov.
See SAM section 8452.2 for Approval of Plan of Financial Adjustment