PASBO’s Student Activity Funds Guide

1. PASBO’s Student Activity Funds Guide PASBO Conference March 2003 Marie S. Guidry East Stroudsburg Area School District

2. The Law Legislative Mandate Section 511(a) of Public School Code of 1949 (24P.S. §5-511) states: The board of school directors in every school district shall prescribe, adopt and enforce such reasonable rules and regulations as it may deem proper, regarding 1) Management, supervision, control or prohibition of…..activities related to the school program……including fundraising and disbursing of funds… 2) Organization, management, supervision, control, financing or prohibition of organizations, clubs, societies and groups of the members of any class or school…….

3. Board Policy • Reasonable Rules and Regulations for student activities • Proceduresfor organization, management, supervision, control and financing of student activities School Code clearly indicates that every school district should have a policy for student activity funds, which provides:

4. Board Policy • Purpose – Promote general welfare, education, and morale of all students and to finance normal, legitimate co-curricular activities of various individual student groups • Definition –Activities approved by the School Board but conducted outside the regular classroom • Authority – 24 PS 5-511 PA Public School Code

5. Board Policy • Policy may be general – limited to a statement of general principals and assign responsibility for student activity funds to the superintendent with a requirement to establish rules, regulations and procedures. Conversely • Policy may be detailed –discussion of each element mentioned in the school code.

6. Management • Must be done within the framework of state laws and regulations, board policy and administrative rules and regulations • Organized to serve the best interests of the pupils

7. Management…. General Principals • Written Policy and Procedures • Non-General Fund Use • Student Use • Shared Decision-Making • Sound Business Practice

8. Categories of Student Funds • General Student Activities – impact all students i.e. Student Council, Student Store, Yearbook, etc. • Classes – Class of 2003, Junior Class, etc. • Clubs – Science Club, Key Club, Band Club, etc. • Athletics and Intramurals – Football Club, Tennis Club, etc.

9. Other Types of Student Funds • Student Body Activities Account – “The Principal’s Account” has come under close scrutiny in past years and should be managed with extreme caution. • Petty Cash Account – Should only be used for support of student activities and operated according to proper fiscal procedures.

10. Other Related Funds Athletic Fund • Many districts separate athletic programs from the Student Activity Fund and treat as a Special Revenue Fund (recommended) or operate through General Fund • By establishing a Special Revenue Fund for athletics, administration can more readily determine the extent to which the athletic fund is self-supporting

11. Non-School Funds Do Not include the following accounts in the Student Activities Fund: • Faculty Accounts • Sunshine Funds • Booster Club Accounts • PTO or PTA Accounts

12. Control Systems • Centralized – Bookkeeping functions performed at a central location for all school buildings (business office) • Decentralized – Bookkeeping functions performed at building level Centralized vs. Decentralized Decision should be based on availability of personnel and information systems.

13. Audits of Student Activity Funds Internal Audits • Performed by district personnel • Business office personnel should make periodic checks of building level accounting practices • In-depth examination of system of internal controls and financial procedures to determine if in accordance with board policy, established procedures and laws and regulations • practices

14. Audits of Student Activity Funds External Audits • School districts should employ independent auditors, preferably Certified Public Accountants, to perform audits of school district funds, including student activity funds • Periodically, the Bureau of School Audits, Department of the Auditor General, conducts audits of school district funds, including student activity accounts, for each year

15. General Operating Procedures • Educational opportunities and additional monies for students • Often create accounting and control “nightmares” for school business officials • Fiscal procedures may vary widely depending upon the size of the District and the needs of the programs

16. Student Activities Risk vs. Exposure • Liquidity – Cash or Consumable Inventory • Large Number of Individuals Handling Transactions • Controlled by Individuals w/o Formal Financial Background • Student Learning Experience

17. Use of Activity Funds • Earned by the students and used only for student activities • Monies designated for student purposes and restricted for those students currently in school • Monies should be used to finance a program of activities not part of the regular curriculum Proper Use of Activity Funds:

18. Use of Activity Funds Improper Use of Activity Funds: • Small cash and check needs of other funds or organizations • School district charges – library book fines, student examinations, parking fees • Donations from student or parent groups for scholarships • Expenditures for refreshments served as school district sponsored parent events or receptions for community members not made to benefit the students • Circumvent management or purchasing decisions made by the board or administration

19. Student Activities Initiating Accounts • All new student activity clubs or accounts must be approved by the Board of School Directors • All faculty club advisors and student club officers should be approved by the Board of School Directors on an annual basis Terminating Accounts • Termination as well as disposition of all inactive student activity accounts should be approved by the Board of School Directors All requests for initiating/terminating accounts must be made in writing from the Principal to the Business Office.

20. Student Activities Interest Income • Student Activity Fund Balances should be deposited in interest-bearing accounts or otherwise invested in interest-earning investments permitted by the School Code • Because §5-511(d) of the School Code provides that student activity funds “…remain the property of the respective school, class, organization, club, society or group,” procedures must be developed to deal with the prorating of interest earnings to the depositor organizations

21. Student Activities Cash Payments • All Payments should be made by check • No expense should be paid in cash directly from ticket sales, gate receipts, dues collections, etc. • The only cash payments permitted should be those from an imprest petty cash fund Check Signatures • Board should designate 2 or more persons to sign checks • Principal should be 1 of those persons designated by the Board • Two signatures should be required on all properly completed checks

22. Guidelines-Revenue Controls • Receipts should be written for the faculty advisor or student treasurer when money is received in the school office • Cash receipts should be deposited daily in a bank • Safes may be used for protecting money during the day until the deposit is made. Amounts kept in safes overnight should be minimal • Large receipts from night or weekend activities (i.e. plays) should be deposited into an overnight depository in locked bank bags

23. Admission Charges and Ticket Sales • Use of pre-numbered tickets for admission to certain activities is recommended • Use of pre-numbered tickets without a system for control is meaningless • A person independent of the ticket sellers must control ticket numbers and restrict access to the ticket stock

24. Fund Raising • Implications of fund raising projects are broad and require board policy • District and schools must decide the extent to which the community will be inundated with sales, if projects must be established in advance of approval for fund raisers and what limits, if any, should be set for the accumulation of funds, etc. • Faculty advisors of each fund raising activity should be held accountable for that fundraiser • Controls and procedures should be developed around the two most important features of fundraisers: cash and inventory

25. Fund Raising - Commissions Key points when dealing with commission-type fundraisers: • Approved contract with commission calculation, collection of funds, distribution of items and terms of payment • Establish a system to verify commissions • Responsibility for defective products of lost funds • Prizes and awards provided by the vendor should comply with school policies These fundraisers often allow students to raise funds without the risk of inventory loss.

26. Purchase Orders • Purchases usually should be initiated by a purchase order • A separate PO Form or purchasing agent/agents may be designated for student activities • The Student Treasurer (secondary schools only), faculty advisor and school principal should approve all purchase orders

27. Bidding • Act 88 of 2002 changed the provisions of Sec 511(e) requiring all purchases of materials or supplies by any organization, club, class or group be made in accordance with Sec 807.1. All materials and supplies costing $10,000 or more are subject to the competitive bidding and advertising requirements. Written or telephonic quotes from 3 or more vendors are required for purchases $4,000 - $9,999. • Any purchases of materials and supplies not for the purchase of fund raising that go through the Student Activity Fund are subject to the above bidding requirement

28. Sales Tax • Purchase of property or services for use by school organizations in connection with its activities are tax exempt under the school’s tax exemption number • When a student activity class or club purchases taxable property for resale to raise funds, then they must pay the applicable sales tax at the time of purchase or collect the sales tax from the customer when the item is resold • If the school organization sells property or services to the public (school store, pictures, class rings, etc.) this requires the collection and remission of sales tax directly to the PA Dept of Revenue

29. Disposition of Unused Funds • A policy should be established to address monies left unused or uncommitted for one year or more after graduation of the class. All such monies are deemed to have been committed and transferred to a general student body account (i.e. student council) or other designated student related activity account

30. Student Activities Other Issues • Loans and purchases • Contracts • Petty Cash

31. Accounting Procedures • Comply with State Laws • Comply with Generally Accepted Accounting Principles (GAAP) • LECS Manual of Accounting and Financial Reporting

32. Accounting Principles Fund Accounting • Student Activity Funds – Agency Funds (Fiduciary Fund-Type) in PA • General Fund – Accounted for in function 3210 “School Sponsored Student Activities”

33. Accounting Principles Financial Statements • State Reporting Requirements – Requires at least quarterly reporting to the Board of School Directors • Monthly Reporting is recommended when there is a significant amount of accounting transactions each month

34. Accounting Principles Example Reports • Trial balance • General Ledger • Transfers Journal • Adjustments Journal • Cash Receipts Register • Check Register • Monthly Report (Beg. Bal. To End. Bal. By Activity) • Bank Reconciliation

35. Accounting Principles Example Forms • Board Policies • By-Laws • Request to Establish a Student Activity • Request to Close a Student Activity • Plan of Fundraising Activities • Cash Settlement/Deposit Sheet • Purchase Order/Check Request • Student Activity Fund Record Card • Request for Quotation • Summary of Request for Quotations • Expense Reimbursement Form • Cash Advance Form & Receipt Reconciliation