[Federal_reporting_contacts] Feedback Requested: Proposed Change to the Capitalization Threshold

[WILLIAMS Karen A * DAS]

Hello everyone!

As you may have heard, the maximum capitalization threshold for equipment purchases subject to Uniform Guidance increased from $5,000 to $10,000 beginning with FY 2026. The State of Oregon's capitalization threshold for all capital assets has previously been tied to this number. However, this change has allowed OSC to consider other options for the capitalization threshold for future years. This change would affect many sections of the Oregon Accounting Manual (OAM 15.60.10 Classification Capitalization, OAM 15.55.00 Non-Capital Assets, OAM 15.60.30 Leases, OAM 15.42.00 Federal Grants, etc.), the titles of several Comptroller Objects, and other resources.

Over the past several months, OSC has conducted research regarding this change in many ways. We began by reviewing the capital asset policies, thresholds, and methodologies for every other state in the country. We noted there was minimal uniformity among states. We believe this allows us to utilize the freedom to question our processes and potentially find a new method for capitalization that fits Oregon best.

Additionally, we performed surveys with a group of 17 "pilot agencies" based on their capital asset value. Surveys included questions regarding the potential use of multiple thresholds depending on the type of asset, decoupling from the Uniform Guidance, current and ongoing bond requests, and the acquisition of assets with both federal and non-federal dollars. As expected, their responses provided many helpful answers, but also spurred additional questions and concerns that OSC had not considered since each agency is different in nature.

Subsequently, OSC is proposing a single capital asset threshold of $10,000, effective July 1, 2025 (FY 2026). The proposal was made based on the following key elements:

1.      Agency responses made it clear that multiple thresholds were unnecessary and potentially cumbersome causing errors among decentralized agencies. The majority of agencies indicated they would prefer the simplicity of using one threshold for all capitalizable assets.

2.      Decoupling from the Uniform Guidance seemed to be very burdensome since:

a.      This would require agencies to retain two separate capital asset listings (R*STARS and another outside of R*STARS for federal purposes).

b.      The acquisition of assets with both federal and non-federal dollars would require agencies to bifurcate the asset for tracking purposes, and can cause significant confusion and extensive manual labor.

3.      Some agencies rely heavily on bond funds to finance their significant capital asset acquisitions. $10,000 seemed to be the safest option since this amount would not impact their bondable requests.

The next step for this process is to seek feedback from all agencies over the next two weeks about this proposal to finalize a recommendation for CFO Kate Nass. Any additional input you have would be extremely helpful. Please submit any thoughts/feedback/concerns you have on this issue to Brady.Stutzman at das.oregon.gov<mailto:Brady.Stutzman at das.oregon.gov> by Tuesday, 5/20/2025.

Thank you so much for your feedback,

Rob

[A picture containing logo  Description automatically generated]Robert W. Hamilton, CPA
State Controller
Chief Financial Office
971-719-3031
http://www.oregon.gov/DAS/financial/acctng
Pronouns: he, him, his

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