Table of Contents
Each year, school districts and charter schools in Minnesota must keep up with updates to UFARS — the standard accounting system used for state reporting. For FY 2026 (and the transitions leading into it), there are a number of notable changes that school finance officers, business managers, and auditors should be aware of. Here’s a breakdown of the most significant ones.
1. Revised UFARS Manual for FY 2026
- The FY 2026 UFARS Manual has been updated, with all its chapters newly released in August 2025.
- Key dimensions (Fund, Organization/Site, Program, Finance, etc.) have updated guidance, which may affect how schools classify and report their financial activity.
- Also, a revised chapter on Financial Accounting and Reporting (Chapter 13) is included.
2. Finance Code Changes
One of the biggest shifts in ufars this year involves finance codes — these are the codes schools use to categorize different types of revenues and expenditures.
- Several COVID-related finance codes have been deleted, because the associated funds are expiring.
- Specific deleted codes include
- Some other finance codes have been updated or repurposed:
- 305: State-Approved Alternative Learning Program.
- 311: Telecommunications Access Funds.
- 312: Literacy Incentive Aid.
- 314: Paraprofessional Training.
- 320: American Indian Education Aid.
- 335: Quality Compensation – Alternative Teacher Professional Pay System.
- 339: English Learner.
- 347: Physical Hazards.
- 348: Charter School Building Lease Aid (note: reference to school districts has been removed).
- 358: Asbestos Removal and Encapsulation.
3. Balance Sheet Updates
- New restricted/reserved balance sheet codes have been added:
- 437: Restricted/Reserved for Quality Compensation – Alternative Teacher Professional Pay.
- 456: Restricted/Reserved for Literacy Aid.
- 457: Restricted/Reserved for Teacher Compensation for READ Act Training.
- Existing codes have been adjusted/renamed:
- 420: Restricted/Reserved for American Indian Education Aid.
- 436: Restricted/Reserved for State-Approved Alternative Learning Program.
- 459: Restricted/Reserved for Basic Skills Extended Time.
4. Permitted Code Combinations
- There have been additions and changes to which object codes can be used with certain finance codes.
- For example, under Finance Code 314 (Paraprofessional Training), object codes 186 and 401 have been added.
- Under Finance Code 317 (in combination with Program Code 278), object codes 151, 360, and 365 have been added.
- For finance codes 317, 335, 740, 799, object code 151 is newly permitted.
- For Finance Code 356, object codes 406, 430, 460 have been added.
- For Finance Code 357, object code 195 has been added.
- For Finance Code 417 (Title III, Part A), object code 335 has been added.
- For special education finance codes 425 and 429 (IDEA, Part B CEIS), a number of new object codes (353–354, 359, 361) have been introduced, and some removed (166, 307).
- For ABE (Adult Basic Education) Finance Code 803/903, object code 820 has been added, and 370 removed.
- For Finance Code 835, object code 562 added, 563 removed.
5. New Reporting & Accounting Structure
- The UFARS file upload process is now integrated with EDIAM (Education Identity and Access Management). All users will need to use an EDIAM account.
- User access is re-certified annually by the district’s or charter school’s Identified Official with Authority (IOwA).
- This change may affect how finance teams manage permissions, access, and annual role reviews.
6. Legislative / Statutory Context
- UFARS is grounded in Minnesota law: the system’s use, reporting obligations, and standards link to statutes such as Minn. Stat. §§ 6.65, 123B.77.
- The Office of the State Auditor (OSA) publishes a legal compliance guide that references UFARS; auditors must ensure school districts are compliant with the latest UFARS updates.
- Because UFARS is updated regularly, parts of the manual may be superseded by newer guidance or legislative changes.
7. Practical Implications for Districts
- Financial reporting: Changes to finance and object codes mean districts must review their chart of accounts to ensure they are using the right codes under the new structure.
- Fund balances: With updated balance sheet codes, districts should reassess how they classify restricted or reserved funds.
- Audit readiness: Auditors will pay close attention to code compliance, especially given new permitted combinations and the deletion of expired codes.
- Training needs: District finance teams and business managers will likely need training or refreshers on the updated manual and how to navigate the code changes.
- System access: Transitioning to EDIAM for ufars file upload will require coordination, especially around annual access recertification.
Conclusion
The FY 2026 UFARS updates reflect both the winding down of pandemic-related accounting (with deletion of COVID finance codes) and new financial priorities (e.g., restricted funds for teacher pay systems or literacy aid). School districts and charter schools must stay agile — updating their internal accounting structures, ensuring correct code usage, and managing access via the new EDIAM system. Getting ahead of these changes will help ensure clean audits and smooth financial reporting.
