Attachment_G_-_26-27_TDCJ-CJAD_Financial_Management_Manual.pdf

Financial Management Manual

For TDCJ-CJAD Funding

Published August 2025

FINANCIAL MANAGEMENT MANUAL

FOR

TDCJ-CJAD FUNDING

Effective September 1, 2025

TEXAS DEPARTMENT OF CRIMINAL JUSTICE

COMMUNITY JUSTICE ASSISTANCE DIVISION

Attachment G

For TDCJ-CJAD Funding

Published August 2025

THIS PAGE IS INTENTIONALLY LEFT BLANK

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Table of Contents Eligibility for Funding

Fiscal Officer

CSCD Fiscal Officer Documentation

Applicable Laws and Guidelines

Duties of the Fiscal Officer

Financial Records

Sources of Funding

Basic Supervision (BS) Funding

Community Corrections (CC) Funding

Diversion Program (DP) Funding

Treatment Alternative to Incarceration Program (TAIP) Funding

State Payments

Time for Making Deposits

Withholding of Funds by TDCJ-CJAD

Strategic Planning and Grant Process

Strategic Planning

Grant Application Process

Budgets

Initial Budget and Budget Adjustment Process

Fund Balances/Refund Policy

End of the First Year of the Biennium Balances

State Funds Returned at the End of the Biennium

Retention of Funds Required to Pay for Litigation

Retention of Funds Required to Pay Accumulated Leave for Retiring Employee(s)

Six Months’ Reserve

Deobligations

One-Time Funding

Financial Reports

Basis of Accounting

Negative Fund Balances (1st, 2nd and 3rd Quarters)

Negative Fund Balances at Fiscal Year End (4th Quarter)

Expenditure Reports Schedule

Expenditure Review

Quarterly Financial Reports (QFRs)

QFR Due Dates

TDCJ-CJAD Quarterly Financial Report Definitions and Reporting Instructions

Revenues

Expenditures

Statement of Financial Position

Assets

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Liabilities

Fund Balances

Additional Reporting Requirements

Grants, Donations, Fees and Other Revenue from Agencies Other Than TDCJ-CJAD

Grants from Other Agencies Requiring CSCD Matching Funds

Community Corrections Facilities

Disposal of Surplus Property

Multiple Positions and Dual Departments

Certification Process for CSCD Expansion

State Aid for Facilities, Utilities, and Equipment

Certification Process

Statutory Requirements

Purchasing

Insurance

Employees Retirement System

Conflicts of Interest

Internal Controls

Receipts

Separation of Duties

Disbursements

Petty Cash Fund

Change Fund

Credit Cards

Write Off of Bad Checks

Refunds to Offenders

Interfund Transfers and Fund Transfers To and From Programs

Employee Surety Bond Coverage

Audits

Sanctions

Waivers

Allowable and Unallowable Expenditures

Expenditures

Salaries

Fringe Benefits

Travel

Furnished Transportation

Contract Services for Offenders

Professional Fees

Supplies and Other Operating Expenditures

Facilities

Utilities

Equipment

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The Texas Department of Criminal Justice-Community Justice Assistance Division (TDCJ-CJAD) provides funds to Community Supervision and Corrections Departments (CSCDs) and other eligible entities. CSCDs or entities receiving funds from TDCJ-CJAD must comply with this manual.

This manual is prepared for and provided to the local CSCDs and their fiscal officers, as well as to other

TDCJ-CJAD funding recipients, to assist in the required financial operations of departments and programs and to assist in the correct recording of revenues and expenditures for TDCJ-CJAD funded community corrections programs, services, and sanctions.

As updated information occurs, TDCJ-CJAD will forward new or replacement pages to all funding recipients and fiscal officers. These new or replacement pages shall be added to the original manual so that current information is always available.

TDCJ-CJAD solicits input from all funding recipients. Suggestions or requests for modifications, revisions, and/or additions shall be submitted in writing to the Director of Financial Operations at TDCJ-

CJAD for review and possible inclusion in subsequent manual updates. Questions concerning the information contained in this manual may be addressed by contacting TDCJ-CJAD at (512) 305-9300 or by writing the Community Justice Assistance Division, Price Daniel, Sr. Building, 209 West 14th Street, Suite 400, Austin, Texas 78701.

CSCDs report required financial information via online submission including budgets and quarterly financial reports. To gain access to the TDCJ-CJAD Budget and Finance website, CSCD Directors, Fiscal

Officers, and approved CSCD and county staff may submit the User Access Change Form located at https://cjadweb.tdcj.texas.gov/cjadresources/. The same form may be used to remove access for individuals no longer requiring access.

Eligibility for Funding

Before a CSCD, state agency, county, municipality, or non-profit agency may receive funding, a Strategic

Plan must be submitted per Texas Government Code, §509.007 and §509.011 and accepted by TDCJ-

CJAD. The Strategic Plan must include the specific programs for which TDCJ-CJAD funding is or will be requested. The Strategic Plan must be reviewed by the judge(s) following TDCJ-CJAD approval as described by Texas Government Code, §76.002, and in accordance with TDCJ-CJAD Standards. Funding to eligible recipients is for specific fiscal years, September 1st through August 31st.

TDCJ-CJAD staff approves programs and budgets for Basic Supervision (BS), Community Corrections

(CC), Diversion Programs (DP) grants, and Treatment Alternative to Incarceration Program (TAIP) grants.

Fiscal Officer

The judge(s) as described by Texas Government Code, §76.002, may appoint for the department a fiscal officer, other than the county auditor. If the designated fiscal officer is a county employee, the county may receive a fiscal service fee to be determined by the CSCD but cannot exceed 0.75% of total TDCJ-CJAD funding received on state aid and grant funding for this service. Payment to the fiscal officer shall be after delivery of services. Adjustments to state aid during the fiscal year may result in adjustments to the fiscal service fee payable to the county. However, grant recipients other than CSCDs may not pay a fiscal service fee to the county for performance of required financial duties.

https://cjadweb.tdcj.texas.gov/cjadresources/

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If the individual is a CSCD employee, in accordance with Texas Government Code, §76.004, the cost associated with the function of the fiscal officer is paid out of the CSCD’s Basic Supervision funds (see

Sources of Funding section). These costs include salaries, fringe benefits, travel, supplies, facilities, utilities, and equipment. If the appointed fiscal officer is an employee of the department, regardless of other duties assigned, the individual will report to the administrative judge and maintain independence from the director in the day-to-day operations of the department.

If the individual is a third-party contractor (i.e., an employee, partner, or other representative of a contracted certified public accountant (CPA)/bookkeeping firm), the cost is subject to the contract between the judge(s) as described by Texas Government Code, §76.002, and the individual who is representing the CPA/bookkeeping firm both in their individual capacity and as an officer, partner, or principal of such business entity or firm. All negotiated costs are paid from CSCD funds from the

Professional Fees line item.

The CSCD shall notify the TDCJ-CJAD of the appointment by the judge(s) as described by Texas

Government Code, §76.002, of a fiscal officer other than the county auditor within 10 days of appointment.

The appointment notice format and samples of other required documents may be obtained from TDCJ-

CJAD.

The local CSCD may assign employees of the CSCD to assist the fiscal officer in fulfilling the responsibilities of the fiscal officer as outlined in Texas Government Code, §76.004; however, those assigned employees shall not assume the responsibilities of the fiscal officer.

CSCD Fiscal Officer Documentation

Texas Government Code, §76.004, allows the judge(s) as described by Texas Government Code, §76.002, the option to appoint a fiscal officer, other than the county auditor, to be responsible for the following:

• Managing and protecting funds, fees, state aid, and receipts to the same extent that a county auditor manages county funds and funds of other local entities;

• Ensuring that financial transactions of the department are lawful and allowable; and

• Prescribing accounting procedures for the department.

Only the judge(s) as described by Texas Government Code, §76.002, may appoint, set the annual compensation, or dismiss the CSCD fiscal officer. The judge(s) as described by Texas Government Code, §76.002, shall establish policies to assure the independence of the fiscal officer from the CSCD to which they have been appointed oversight of in accordance with Texas Government Code, §76.004. These policies shall establish a clear independent line of communication between the fiscal officer and the judge(s) as described by Texas Government Code, §76.002.

The CSCD fiscal officer shall keep on file the following fully executed documents for audit purposes:

• Appointment of CSCD Fiscal Officer;

• Statement of Appointed CSCD Fiscal Officer;

• CSCD Fiscal Officer Oath of Office;

• A current bond in the amount of $5,000 or more per occurrence;

• Notification to TDCJ-CJAD of the appointment of a CSCD Fiscal Officer other than the county auditor; and

• Any other documents deemed necessary by the district judge(s) relative to the CSCD Fiscal

Officer’s appointment and/or position (i.e., minutes of any open meeting relative to the appointment, contract with CPA/booking firm).

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Applicable Laws and Guidelines

An appointed fiscal officer, at a minimum, should be knowledgeable of the following:

• Local Government Code, Chapter 112, County Financial Accounting;

• Local Government Code, Chapter 113, Management of County Money;

• Local Government Code, Chapter 114, County Financial Reports;

• Local Government Code, Chapter 115, Audit of County Finances;

• Local Government Code, Chapter 116, Depositories for County Public Funds;

• Local Government Code, Chapter 130, Miscellaneous Financial Provisions Affecting Counties;

• Local Government Code, Chapter 140, Miscellaneous Financial Provisions Affecting

Municipalities, Counties and Other Local Governments;

• Local Government Code, Chapter 155, Deductions from Compensation of County Employees;

• Local Government Code, Chapter 157, Assistance, Benefits, and Working Conditions of County

Officers and Employees;

• Local Government Code, Chapter 171, Regulation of Conflicts of Interest of Officers of

Municipalities, Counties, and Certain Other Local Governments;

• Local Government Code, Chapter 172, Texas Political Subdivisions Uniform Group Benefits

Program;

• Local Government Code, Chapter 175, Right of Employees of Certain Political Subdivisions to

Purchase Continued Health Coverage at Retirement;

• Texas Employees Group Benefits Act of the Insurance Code, Chapter 1551;

• Local Government Code, Title 6, Records, Subtitle B. and C.;

• Local Government Code, Chapter 262, Purchasing and Contracting Authority of Counties;

• Government Code, §76.004, Department Director, Fiscal Officer;

• Government Code, Chapter 509, Community Justice Assistance Division;

• Standard Financial Management System for Texas Cities and Counties, Texas State Comptroller of Public Accounts;

• TDCJ-CJAD Independent Audit Guidelines; and

• TDCJ-CJAD Initial Budget Instructions.

Copies of the above-listed statutes may be obtained at: https://statutes.capitol.texas.gov, while publications from the State Comptroller’s Office may be obtained at: Comptroller.Texas.Gov.

Duties of the Fiscal Officer

The receipt of the fiscal service fee by a county employee, or the receipt of a salary or contracted amount by a fiscal officer other than the county auditor, assumes that the fiscal officer is adequately performing the responsibilities and duties as delineated in this manual. Some of the duties and responsibilities of the fiscal officer are:

• Managing and protecting funds, fees, state aid, and other receipts of money. Each program is to be maintained utilizing a separate self-balancing set of financial books and accounting records in accordance with proper fund accounting,

• Ensuring that financial transactions are lawful and allowable,

• Ensuring that the CSCD operates from an approved budget, https://statutes.capitol.texas.gov/ https://comptroller.texas.gov/

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• Auditing,

• Bookkeeping,

• Developing and documenting written fiscal policies,

• Investing of idle funds as the CSCD directs,

• Timely and accurate preparing of quarterly financial reports (QFRs) and other financial reports, as required,

• Preparing of financial statements, including notes to the financial statements, at the close of each fiscal year or designated funding period,

• Ensuring a minimum of two countersignatures for CSCD’s checks or disbursements; appointed fiscal officers who are employees of a CSCD and act as a purchasing agent shall not sign checks on behalf of the CSCD,

• Following instructions for negative fund balances (see Negative Fund Balances section),

• Following instructions for 15% budget variance rule (see Budget section),

• Reviewing the draft Independent Audit Report for compliance with Independent Audit Guidelines, Compliance Requirements, and Standard Reporting Formats, before issuance of the final

Independent Audit to TDCJ-CJAD,

• Performing services set forth in the statutes and in this manual, and

• Performing other services deemed necessary by the judicial district.

The fiscal officer shall consult with the CSCD director to determine the appropriate amount of idle funds to be invested. Idle funds herein refer to state aid and locally generated funds. The investment shall provide for a reasonable interest rate, necessary protection of principal, and flexibility. Interest received from all investments shall be considered locally generated monies and shall be budgeted and reported in Basic

Supervision.

The fiscal officer shall ensure that financial transactions by the CSCD or other funding recipients comply with the guidelines in this manual. The fiscal officer shall not approve expenditures if the proposed expenditure item exceeds the threshold for which approval is required by TDCJ-CJAD (see criteria under the Budget section of this manual).

Financial Records

Texas Government Code, §509.004(a)(1), requires each department to keep financial and statistical records determined necessary by TDCJ-CJAD. Financial records that each department or fiscal officer must keep (in electronic and/or paper format) shall include:

• Journals, ledgers, receipt books, and other normally accepted records and documentation to support all financial activities of the department. Each program shall be maintained utilizing a separate self-balancing set of financial books in accordance with proper fund accounting;

• Individual offender records indicating fees paid and balances due;

• Canceled and voided checks and receipts or other records of payments;

• Bank statements and monthly reconciliations;

• Personnel records and payroll determinations, including attendance and leave records;

• Vouchers and invoices documenting disbursements;

• Records to document number of cases supervised and counted for state aid (electronic file or paper copy of each month's list of direct cases corresponding to each Monthly Community Supervision and Correction Reports (MCSCR) in support of the Intermediate System (ISYS);

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• Lists of offender names and other case file documentation to support state aid reimbursements;

• Copies of budgets, QFRs, independent audit reports, and annual financial statements, including notes to the financial statements;

• Documentation of procurement practices;

• Copies of contracts and leases;

• Records indicating payments by certain sex offenders, as well as other specifically ordered fees collected by the CSCD outside of the TDCJ-CJAD budget and reporting process, and the remittance of those fees by the department to the State Comptroller;

• Records supporting restitution collections from offenders and paid to victims, including the tracking of unclaimed restitution payments; and

• Written department policies and procedures covering all financially related activities.

Specific guidelines for required records are issued periodically by TDCJ-CJAD to the departments. All financial records must be kept on file for audit purposes in compliance with the records retention guidelines outlined in Local Government Retention Schedules, issued by the Texas State Library and

Archives Commission and in compliance with TDCJ-CJAD policy.

Sources of Funding

TDCJ-CJAD receives from the Texas Legislature appropriations from specific strategy line items and distributes state aid funding to eligible recipients. Sources of funding to CSCDs and other recipients include:

Basic Supervision (BS) Funding

This state funding is a per capita allocation based on average felony direct cases and misdemeanor placements. Funding is first allocated to misdemeanor placements for 182 days. The remaining funding is allocated to the direct felony cases based on the CSCD's share of the state’s total felony population. The judicial district providing direct supervision shall receive the state aid designated for basic supervision funding. Basic Supervision is only distributed to CSCDs.

Community Corrections (CC) Funding

This appropriation line item is allocated based on two equally assigned factors: (1) the percentage of the state's population residing in the counties served by the department, and (2) the percentage of all felony defendants in the state under direct community supervision by the department. CSCDs are the only entities eligible for CC funds. The Texas Board of Criminal Justice rule, pursuant to Texas Government Code, §509.011(f), creates a fixed 5% decrease limit between fiscal years. An upper limit is determined mathematically by available funding and the size and number of departments that reach the decrease limit.

If appropriations are inadequate to maintain all departments at the decrease limit, all allocations will be reduced proportionally relative to the previous fiscal year.

Diversion Program (DP) Funding

This discretionary appropriation line item funding is awarded on a competitive basis. (See Grant

Application Process). The priorities for distribution are determined biennially. All requests are reviewed by TDCJ-CJAD staff, approved by management, and then presented to the Judicial Advisory Council. DP funds shall not be used for Basic Supervision or Community Corrections funded services.

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a. Substance Abuse Felony Punishment Facility (SAFPF) Funding: Aftercare caseloads are funded on a per case basis and must meet specific supervision requirements. Funding for SAFPF aftercare caseloads is allocated by TDCJ-CJAD and is budgeted and reported by CSCDs as state aid under Basic Supervision.

b. Dedicated Salaries (Formerly Riders 64 and 80 Salary Funds) Funding: Dedicated Salaries are funded based on specific criteria per position (not employee). Funding for Dedicated Salaries is allocated by TDCJ-CJAD and budgeted and reported by CSCDs as state aid under Basic

Supervision.

c. High/Medium Reduction Caseload Funding: Funding for High/Medium Reduction Caseloads is allocated by TDCJ-CJAD and is budgeted and reported by CSCDs as state aid under Basic

Supervision.

Treatment Alternative to Incarceration Program (TAIP) Funding

This discretionary appropriation substance abuse funding is awarded on a competitive basis. The priorities for distribution are determined biennially. All requests are reviewed by TDCJ-CJAD staff, approved by management and then presented to the Judicial Advisory Council. TAIP funds shall not be used for Basic

Supervision services. In accordance with Chapter 76 of the Texas Government Code, TDCJ-CJAD establishes standards of operation for funding the CSCDs with the TAIP funds.

State Payments

TDCJ-CJAD submits requests to the TDCJ-Business and Finance Division at the end of each quarter for the release of the next quarterly payments for Basic Supervision, CC, DP, and TAIP funds to all funding recipients. Other extraordinary payments are provided as frequently as deemed necessary by the TDCJ-

CJAD Director to all eligible entities in accordance with respective statutory requirements for TDCJ-

CJAD line-item appropriations. The warrants and electronic transfers are issued by the State Comptroller's

Office.

Texas Government Code, §509.011(c) states that, "Each department, county, or municipality shall deposit all state aid received from the division in a special fund of the county treasury or municipal treasury, as appropriate, to be used solely for the provision of services, programs, and facilities under this chapter or

Subchapter H, Chapter 351, Local Government Code" (for County Correctional Centers). State aid received by CSCDs from TDCJ-CJAD must be deposited, accounted for, and used in relation to services for adult offenders only.

Texas Local Government Code, §140.003(f), requires CSCDs to deposit funds with the county treasurer for deposit in the county treasury for the benefit of the CSCD. The county treasurer is to disburse those funds as the CSCD directs. As indicated by Attorney General’s Opinion DM-257 dated September 15, 1993:

“Section 140.003 of the Local Government Code, in directing an adult probation office, as a ‘specialized local entity,’ to deposit the funds it receives ‘in the county treasury of the county in which the entity has jurisdiction,’ means that such funds must be deposited with the county treasurer for placement in the county depository. The phrase ‘the funds the entity receives,’ as used in section 140.003, subsection (f), means all funds from any source

(except for any specific fund regarding which there may be a provision of law to the contrary).”

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Therefore, except for occasions where there is a provision of law to the contrary, the CSCD shall deposit all funds with the county treasurer for deposit into a special fiduciary fund in the county treasury designated for the CSCD. The county treasurer acts as the custodian of the CSCD’s funds; however, the decision-making authority over how and when to disburse and/or invest those funds remains with the

CSCD. The CSCD's funds in the custody of the county treasurer must be covered by the county’s collateral security pledge from the financial institution to cover the estimated highest balance of funds.

Idle funds to be invested, if any, shall only be within the depository of the county in a manner that protects the integrity of the principal and guarantees no loss of principal to the CSCD.

Time for Making Deposits

Texas Local Government Code, §113.022, requires that funds collected shall be deposited with the county treasurer on or before the next regular business day after the date on which the funds are received. If this deadline cannot be met, the funds must be deposited, without exception, on or before the fifth business day after the day on which the funds are received. However, if a county has fewer than 50,000 inhabitants, the commissioners’ court may extend the period during which funds must be deposited with the county treasurer, but the period may not exceed 15 days after the date the funds are received. For multi-county

CSCD jurisdictions, deposit under these guidelines must be with the treasurer of the county designated by the district judges, pursuant to Texas Local Government Code, §140.003(f), to care for the CSCD’s funds.

Collection or clearing accounts must be covered by pledge collateral to cover the estimated highest balance of funds for any daily balances operated in conjunction with or through the county depository by the

CSCD. The CSCD should enter into an agreement with the county for those funds to be included, along with the judicial district funds, in the security pledge from the financial institution. It is recommended that the CSCD consult with the county auditor regarding proper procedures at the local level for compliance with Texas Local Government Code, §113.022. However, the fund balance in all collection or clearing accounts shall be transferred to the Judicial District Account or to the designated recipient of the funds within the time frames outlined in Texas Local Government Code, §113.022.

Funds deposited into collection and clearing accounts are trust funds, and these accounts shall be operated only to distribute collections from offenders to the appropriate recipient or to the county treasurer for deposit. These accounts are subject to audit by the county auditor. These funds, while in the collection or clearing accounts, shall not be used for operation expenditures of the CSCD.

Withholding of Funds by TDCJ-CJAD

A rider in the General Appropriations Act authorizes TDCJ-CJAD to withhold the distribution of funds allocated to CSCDs for community supervision operations and programs for “CSCDs that fail to comply with TDCJ data reporting requirements that include data required for the Community Supervision

Tracking System, Quarterly Financial Reports (QFRs), MCSCR, Program Output Reports, and other data required by TDCJ for accountability purposes.”

Strategic Planning and Grant Process

Strategic Planning

Texas Government Code, §509.007, requires all community supervision and corrections departments to submit a strategic plan (Plan) to TDCJ-CJAD not later than March 1st each even-numbered year.

CSCDs upload their Plans to the division’s FTP / BlueZone server by March 1st or the first business day thereafter. CSCDs are responsible for ensuring that the information in the Plan is accurate. CSCDs are required to update the Plans with the most current data each biennium during the even-numbered year.

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However, TDCJ-CJAD strongly recommends CSCDs update the Plans annually with the most current data; the recommended time frame is the end of each fiscal year.

In addition to the submission to CJAD no later than March 1st of each even-number year, strategic plans must be revised when the following updates occur:

• New program(s) are added to the Programs and Services Overview;

• Existing program(s) are significantly altered and/or removed from the Programs and Services

Overview;

• CSCD Goal(s) added and/or removed;

• CSCD provides an annual update to the Plan; and,

• CSCD changes the mission and/or vision statement(s).

Following TDCJ-CJAD approval of the strategic plan or submitted revisions noted above, the administrative judge and CSCD Director shall review.

Strategic Plan adjustments that do not require revision and resubmission to CJAD:

• Minor adjustments, such as a correction to a singular data element that was misrepresented;

• Re-formatting charts and/or narratives; and

• Introduction of non-essential elements having no impact to the Programs and Services Overview or Goals.

Grant Application Process

TDCJ-CJAD administers grants to the CSCDs in accordance with Texas Government Code, §509.013.

This is a competitive process requiring CSCDs to submit an online application that includes but is not limited to the components of the program, projected number of offenders to be served, the requested grant amount, and a justification for the need of the program in the CSCD’s jurisdiction. Grant applications are due to CJAD by March 1st of odd-numbered years. The division reviews and scores all applications and determines funding based on legislative appropriations for the following biennium. Once CSCDs are notified of grant funding decisions, the CSCD will be required to sign Grant Award Statements that outline the requirements for utilization of the funding. The division has established criteria under which CSCDs can appeal grant funding decisions. The division monitors how CSCDs utilize the grant funds during the biennium for which they are awarded.

Budgets

TDCJ-CJAD funding allocated to any entity, organization, or CSCD shall require separate budgets for each program. All state aid received for specific programs must be budgeted and reported in the appropriate program’s budget. All CSCD generated revenue, regardless of program, shall be reported in

Basic Supervision including interest, payments by program participants, community supervision fees, and other revenue. TDCJ-CJAD requires that the CSCDs and other funding recipients submit budgets biennially. Budgets shall be submitted and approved for the two-year period by August 31st prior to the new biennium. Funding recipients shall submit budgets via the TDCJ-CJAD Budget and Finance website, https://cjadweb.tdcj.texas.gov/Index/.

https://cjadweb.tdcj.texas.gov/Index/

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Initial Budget and Budget Adjustment Process

Texas Government Code, §509.007, requires all community supervision and corrections departments to submit a department budget to the division for the state fiscal biennium, The judge(s), as described by

Texas Government Code, §76.002, reviews the CSCDs’ biennium budgets following approval from

TDCJ-CJAD.

Budgets are authorized expenditures and program operations of a CSCD, or other funding recipient, based on reasonable revenue expectations and appropriations of the Texas Legislature. Governmental entities are required to operate from an approved budget. Initial budgets must be submitted on a biennial basis and are due August 31st every odd year. CSCDs may submit budget adjustments for approval to TDCJ-CJAD at any time during a fiscal year.

Budget adjustment requests for the preceding fiscal year will be reviewed and processed by TDCJ-CJAD if finalized on the Budget and Finance website by November 30th.

Any budget transaction approved during the first year of the biennium that will not be initiated until the second year of the biennium shall retain its approved status but must be reflected in the second year’s budget. CSCDs seeking to reallocate any or all of the ending fund balance from the first year of the biennium must receive TDCJ-CJAD approval of the budget adjustment if the adjustment or individual item(s) meet any of the conditions below:

CSCDs and other funding recipients must submit to TDCJ-CJAD a budget adjustment request for the following situations:

• Expenditure line-item changes that exceed 15% of the last approved line-item amount (including interfund transfers to other programs or for cash-matching grants from other agencies);

• New equipment purchases from DP and TAIP funds exceeding $5,000 (cumulatively);

• Vehicles purchased with DP or TAIP funds (requires justification in the budget adjustment);

• Salary increases or a change in the number of positions last approved in DP and TAIP funded programs;

• Expenditures for leases of office/building space, for lease-purchase of a Community Corrections

Facility (CCF), and for construction/renovation;

• Basic Supervision expenditures for facilities, utilities, or equipment which require TDCJ-CJAD approval of the county's certification of inability to provide funds for such items for expansion purposes and for increases in lease payments during an approved five-year period of certification;

• Matching funds for grants from agencies other than TDCJ-CJAD; or

• Departure from any TDCJ-CJAD standard or Grant Award Statement and Conditions.

Independent auditors will be instructed that only TDCJ-CJAD approved budgets should be used to perform the financial audit. Budget total line-item differences over 15% that resulted in unauthorized expenditures (expenditures that did not receive budget approval from TDCJ-CJAD) for the fiscal year under audit in the CSCD’s independent audit report will result in an audit finding. An example of a 15% budget variance is illustrated in Figure 2.

Figure 2

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Example of 15% Budget Variance

Category Actual

Expenses

Approved

Budget Difference

Utilities $1,500 $1,000 $500 50%

15% Variance $150

Amount Exceeding 15% $350

Fund Balances/Refund Policy

End of the First Year of the Biennium Balances

Fund balances for Basic Supervision, CC, DP and TAIP are carried forward from the first year of the biennium to the second year of the biennium.

State Funds Returned at the End of the Biennium

A rider in the General Appropriations Act, also referred to as the refund rider, requires TDCJ-CJAD to establish policies that ensure unexpended and unencumbered state funds are returned to the state at the end of the biennium. All refunds received by TDCJ shall be redistributed to the CSCDs for the benefit of the community supervision and corrections system, normally in the first year of the biennium.

a. Basic Supervision Funds - Upon submission of the final closeout financial report for the biennium by all CSCDs, the Basic Supervision refund, commonly known as the refund formula shall be calculated by TDCJ-CJAD. The Basic Supervision refund shall be determined by dividing the biennial state aid provided to a CSCD by the total revenue (biennial state aid plus local revenue received by the CSCD). This percentage shall be multiplied by the CSCD’s total unexpended revenue at the end of the biennium to determine the refund amount. All revenues and expenditures, including prior period adjustments and interfund transfers during the biennium

(excluding the beginning fund balance) in the Basic Supervision program, shall be considered in determining the amount of any unexpended monies available as part of the refund calculation.

The fourth quarter financial report at the end of the biennium for Basic Supervision will have a

Carry Over Total amount on Line “Y,” with Line “X,” Refund to CJAD reflecting a zero. TDCJ-

CJAD will calculate the refund amount during the first year of the new biennium.

b. CC, DP and TAIP Funds - At the end of each biennium CSCDs shall refund to TDCJ-CJAD the fund balances from all CC, DP and TAIP programs as of August 31st, at the same time that the fourth quarter financial reports are submitted by November 30th of odd numbered years. These funds are to be reported on the 4th quarter financial report. The Fund Balance is on Line “W” of the report format on the Budget and Finance website, and the same amount, entered as a negative number, is on line “X,” Refund to CJAD. This leaves line “Y,” Carryover Total, as zero.

Category Actual

Expenses

Approved

Budget Difference

Utilities $1,150 $1,000 $150 15%

15% Variance $150

Amount Exceeding 15% $0

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Retention of Funds Required to Pay for Litigation

CSCDs may set aside Basic Supervision funds prior to the calculation of the end-of-biennium refund to pay for pending litigation settlements. To set aside funds, the CSCD must demonstrate the following:

• That litigation does exist and is pending in a court of jurisdiction;

• That there is a reasonable chance that the CSCD will be required to pay a settlement amount; and

• That the estimated settlement amount is equal to or less than the statutory indemnification of the

State of Texas.

CSCDs must notify the Director of TDCJ-CJAD by September 30th after the end of a biennium that funds will be set aside, along with documentation from current counsel that the above circumstances do exist.

Procedures:

1. Funds shall be encumbered and reported as expenditures in the Professional Fees expenditure line on the 4th quarter financial report in the year in which the funds were set aside (the last year of the biennium).

2. Any funds set aside will remain in the account of the CSCD until a settlement is reached.

3. Once a settlement is reached, the CSCD will provide a copy of the settlement to the TDCJ-CJAD

Director.

4. TDCJ-CJAD is not a party to the lawsuit; therefore, TDCJ-CJAD is not in a position to approve or disapprove the settlement.

5. When a settlement is reached, any funds remaining will be reported as a prior period adjustment on the QFR in the year that the settlement was reached.

6. Any portion of funds remaining from the encumbered funds at the end of the previous biennium will be returned to TDCJ-CJAD using the most recent Basic Supervision Refund of State Aid percentage.

Retention of Funds Required to Pay Accumulated Leave for Retiring Employee(s)

CSCDs are allowed, with prior written approval of TDCJ-CJAD on a case-by-case basis, to set aside Basic

Supervision funds prior to the calculation of the end-of-biennium refund, to pay for accumulated leave

(based on the CSCD’s written personnel policies) payments to an employee(s) who will retire within three months after the end of the biennium. To set aside funds, the CSCD must demonstrate the following:

• That an employee(s) intends to retire within three months of the end of the biennium by providing a letter of such intent to the CSCD director,

• That the CSCD’s written personnel policies allow for payment of certain accumulated leave at retirement, and

• That the CSCD’s basic operations would be jeopardized by paying the accumulated leave from the new biennium’s funds; the CSCD director must submit an analysis of the anticipated revenue and expenditures, including the total anticipated payment to the CSCD employee(s) planning to retire based on then-current leave balances.

CSCDs must submit to the Director of TDCJ-CJAD by September 30th after the end of the biennium a request to set aside these funds, along with documentation, as listed above, that these circumstances do exist. Procedures:

For TDCJ-CJAD Funding 12 Published August 2025

1. Funds shall be encumbered and reported as expenditures in the Salaries/Fringe Benefits expenditure line on the 4th quarter financial report in the year in which the funds were set aside

(the last year of the biennium).

2. Provided that the employee(s) retire within the first three months of the succeeding fiscal year, any funds set aside from the previous fiscal year will remain in the account of the CSCD until the latter of (a) November 30th of the succeeding fiscal year, or (b) the date on which the accumulated leave balances have been fully paid to the retiree.

3. Once the accumulated leave has been paid for a retiree, the CSCD will provide a letter to the

TDCJ-CJAD Director indicating how much was paid from the encumbered funds of the previous fiscal year.

4. Once a retiree has been paid for accumulated leave, any funds remaining from the encumbered funds at the end of the previous biennium will be reported as a prior period adjustment on the

Quarterly Financial Report in the year that the funds were paid and will be returned to TDCJ-

CJAD using the most recent Basic Supervision Refund of State Aid percentage.

5. Once the employee(s) retires, any portion of funds remaining from the encumbered funds at the end of the previous biennium will be returned to TDCJ-CJAD using the most recent Basic

Supervision Refund of State Aid percentage.

6. If the employee(s) does not retire within the three-month period, the total amount of encumbered funds will be returned to TDCJ-CJAD using the most recent Basic Supervision Refund of State

Aid percentage.

Six Months’ Reserve

Texas Government Code, §509.011(g), authorizes TDCJ-CJAD to withhold Basic Supervision and CC funds from CSCDs that have more than six months of operating costs in their fund balance at the end of a biennium. TDCJ-CJAD may adopt policies permitting a CSCD to maintain reserves in amounts greater than otherwise permitted to cover certain costs. If applicable, excess reserves shall reduce the Basic

Supervision funding to affected CSCDs; normally in year two of the biennium.

TDCJ-CJAD uses the following methodology to determine the six-month reserve:

A B C D E F

CSCD Name

Year Two Total

Expenditures

Year Two Net Transfers Out of Basic Supervision

Year Two Total Expenditures Plus Transfers

Six Months' Reserve (Includes Transfers)

Prior Biennium Carryover into Next Biennium

Excess Over Six Months'

Reserve

Formula: = A + B = C ∕ 2 = E - D

Example: $544,255.26 $ 17,158.68 $ 561,413.94 $ 280,706.97

$285,478.14 $ 4,771.17

A. Determine the total expenditures from Basic Supervision incurred in year two of the previous biennium;

B. Determine the total interfund transfers out of Basic Supervision of that year;

C. Add “A” + “B” to determine the combined total expenditures plus interfund transfers out of Basic

Supervision for that year;

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D. Divide “C” by two; this is six months’ operating expenditures in year two of the biennium, the maximum amount of the six months’ reserve;

E. Insert the TDCJ-CJAD calculated carryover amount from the end of the previous biennium to the new biennium;

F. Subtract “E”, Carryover from Previous Biennium, from “D”, Six Months’ Reserve. This is the

Excess Over the Six Months’ Reserve that will be withheld, normally from Basic Supervision in year two of the next biennium;

Deobligations

A deobligation is the reduction of State Aid for funds that are in excess of the amount needed to operate the programs for the remainder of the fiscal year. CSCDs shall periodically review their programs to determine if funds currently allocated represent actual needs of the program. Funding recipients shall address the excess funding with TDCJ-CJAD to determine what action should be taken. In addition, each quarter, TDCJ-CJAD shall evaluate the CSCD’s DP & TAIP fund utilization to determine if funds need to be deobligated.

Texas Government Code, §509.011(h), allows CSCDs to deobligate any unencumbered state funds held by the department during a fiscal year (Basic Supervision, CC, DP, and TAIP). It further authorizes TDCJ-

CJAD to distribute these funds to other CSCDs.

Note: Deobligations must be reported on line F (State Aid) in quarterly financial reports. Do not use line

X (Refund to CJAD) for reporting deobligated funds. Budget adjustments must reflect the reduction in the

TDCJ-CJAD Funding (State Aid) revenue line item.

One-Time Funding

One-time funding is awarded on a competitive basis and requests can be submitted at any time. The one-time funding request form is available on the division’s FTP / BlueZone server in the Budget / Forms folder. These requests remain active for the duration of the fiscal year in which the request was submitted and are reviewed by TDCJ-CJAD staff and approved by management as funds become available. The priorities for distribution are determined biennially.

Financial Reports

TDCJ-CJAD funding allocated or granted to any entity, organization, or CSCD shall require separate quarterly financial reports for each program. All revenue and expenditures reported must be related to the approved program budget. TDCJ-CJAD requires the fiscal officer for each funding recipient to prepare and submit a financial report every quarter for each TDCJ-CJAD funded program.

Basis of Accounting

Funding recipients are encouraged to use the modified accrual basis of accounting for each quarter, however, the first, second, and third quarter reports may be prepared on the cash basis method of accounting. The fourth quarter report shall be prepared on the modified accrual basis of accounting. The modified accrual basis of accounting requires that revenues are recognized when "measurable and

For TDCJ-CJAD Funding 14 Published August 2025 available" and expenditures are recognized in the "accounting period in which the fund liability is incurred.” For the funding recipient to report an accrual, as of August 31st, on the fourth quarter report, TDCJ-CJAD requires that the expenditures be paid and the items received by October 31st.

Note: CSCDs with 26 employee pay periods may have an overlap into the next fiscal year and should use the modified accrual basis of accounting in the 4th quarter to accurately reflect salary and fringe benefit expenditures.

Negative Fund Balances (1st, 2nd and 3rd Quarters)

The fiscal officer has a duty to inform the funding recipient of the budget limits and cash balances. CSCDs and other grant recipients state funds should ensure that program budgets are continually monitored by comparing budgets to actual expenditures throughout the fiscal year. To avoid negative fund balances throughout the fiscal year, it is advised that transfers of funds from Basic Supervision or Community

Corrections be made to all programs that have a negative fund balance prior to the end of the quarter, and these transfers be reflected on the TDCJ-CJAD quarterly financial reports. If a negative fund balance will occur during the fiscal year, the CSCD Director or designee must notify the TDCJ-CJAD Fiscal

Management section prior to the end of the quarter and provide a written statement with a reasonable explanation for the negative balance for each program in which it occurs. Upon approval from TDCJ-

CJAD Fiscal Management Section, CSCDs may proceed with reporting a negative fund balance for the

1st, 2nd, and/or 3rd quarters.

Negative Fund Balances at Fiscal Year End (4th Quarter)

CSCDs and other grant recipients cannot absorb a negative fund balance in any program at the end of a fiscal year from funds allocated, awarded, or collected for and/or during the subsequent fiscal year. Any negative fund balance at year-end for CC, DP, or TAIP programs must be covered by an interfund transfer from Basic Supervision at the end of the fiscal year. Alternatively, for CC program budgets, a negative fund balance in a CC program may be covered from a positive fund balance in another CC program budget at year end by moving CC funds between the two CC programs on the state aid revenue line. If Basic

Supervision has a negative fund balance at year-end, the fourth quarter financial report must include either an adjustment to revenue or to the expenditures so that the fourth quarter report will contain a zero balance.

Along with the fourth quarter report, the CSCD shall submit an explanation as to how the shortfall was covered (i.e. reimbursement by the CSCD director, county funds, donation for that specific purpose etc.).

Expenditure Reports Schedule

The financial reports shall be prepared using dollars and cents, and the information on the financial reports shall be verified for accuracy by preparing reconciliations to the bank balances.

Expenditure Review

Expenditures by funding recipients are subject to review, and any expenditure not supported by the appropriate documentation may be deemed unallowable. If an expenditure is not listed in this manual as allowable under the funding source used for the program, the expenditure shall not be charged to the program without prior approval from TDCJ-CJAD. Any expenditure charged to a CC, DP or TAIP program that is deemed unallowable shall be reimbursed through the Basic Supervision fund, provided the expenditure is allowable for Basic Supervision Programs, or state funding may be reduced to reimburse for the unallowable expenditures. Therefore, the funding recipient is to carefully review all transactions, request authority from TDCJ-CJAD on questionable items, and amend the budget, as appropriate.

For TDCJ-CJAD Funding 15 Published August 2025

Quarterly Financial Reports (QFRs)

QFRs are due to TDCJ-CJAD within 30 days of the close of each quarter (due the end of December, March and June). If at any time during the fiscal year discrepancies are identified on the QFRs after the reports have been finalized, the fiscal officer may contact the TDCJ-CJAD Fiscal Management section for assistance with unlocking the report in which the discrepancy occurred to make corrections in that quarter.

Any quarter of the fiscal year during that fiscal year can be unlocked for corrections. The final report for the fourth quarter is due to TDCJ-CJAD no later than 90 days after the close of the fiscal year (due the end of November).

Revised fourth quarter financial reports will be considered in the succeeding year for adjustments to the fund balance if received by TDCJ-CJAD by December 31st. After that date, any adjustments that affect the fund balance shall be reported on the then-current quarterly report as a prior period adjustment but will not result in any adjustment to any previously calculated refund or for calculation of the six-month reserve.

QFR Due Dates

QFR Due Dates QFR Revisions

1st Quarter December 31st All Previous FY QFRs December 31st

2nd Quarter March 31st

3rd Quarter June 30th Statement of Financial Position

4th Quarter November 30th Annually November 30th

TDCJ-CJAD Quarterly Financial Report Definitions and Reporting Instructions

The following replicates the reporting format of the TDCJ-CJAD Quarterly Financial Report providing definitions of the individual line items:

• CJAD Program #: Number assigned to the TDCJ-CJAD Program Proposal/Budget when it is entered into the TDCJ-CJAD integrated database.

• Chief County: Administrative county of the jurisdiction.

• CSCD Fiscal Year: Current fiscal year (September through August).

• Quarter Ending Date: Last day of the reporting quarter of the current fiscal year (November 30, 20XX, February 28, 20XX, May 31, 20XX, or August 31, 20XX).

• CSCD Quarter: The numerical reporting quarter of the current fiscal year.

• Program Title: Title given for the program when submitted to TDCJ-CJAD.

• Funding Source: The funding source for the program (BS, CC, DP or TAIP).

For TDCJ-CJAD Funding 16 Published August 2025

A. Program Fund Balance: The date and the amount listed on line “W” of the previous quarter’s report.

NOTE: For the first quarter of a biennium, only Basic Supervision has a carryover fund balance that matches line “Y” of the previous quarter (and previous fiscal year). CC, DP, and TAIP have a zero ($0.00) fund balance (carryover) at the beginning of the biennium since the previous biennium’s end of year balance for these funds is listed as a “payable” on the Statement of

Financial Position as of August 31st and is refunded to TDCJ-CJAD by November 30th. Each subsequent quarter for the biennium has a Program Fund Balance (carryover) that matches line

“Y” of the previous quarter’s report.

B. Prior Period Adjustment: Adjustment to beginning fund balance as a result of corrections or audit findings of prior fiscal years actual revenue or expenditures, not prior quarters of the current fiscal year.