PASBO’s PASBO’s Student Activity Funds Student Activity Funds

GuideGuide

PASBO ConferenceMarch 2003

Marie S. GuidryEast Stroudsburg Area School District

The LawThe LawLegislative 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…….

Board PolicyBoard Policy

Reasonable Rules and Regulations for student activities

Procedures for 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:

Board PolicyBoard 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

Board PolicyBoard 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.

ManagementManagementMust 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

Management….Management….General Principals

Written Policy and Procedures Non-General Fund Use Student Use Shared Decision-Making Sound Business Practice

Categories of Student Categories of Student FundsFunds

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.

Other Types of Student Other Types of Student FundsFunds

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.

Other Related FundsOther Related Funds

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

Athletic Fund

Non-School FundsNon-School Funds

Faculty Accounts

Sunshine Funds

Booster Club Accounts

PTO or PTA Accounts

Do Not include the following accounts in the Student Activities Fund:

Control SystemsControl 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.

Audits of Student Activity Audits of Student Activity FundsFunds

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

Audits of Student Activity Audits of Student Activity FundsFundsExternal 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

General Operating General Operating ProceduresProcedures

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

Student ActivitiesStudent Activities

Liquidity – Cash or Consumable Inventory

Large Number of Individuals Handling Transactions

Controlled by Individuals w/o Formal Financial Background

Student Learning Experience

Risk vs. Exposure

Use of Activity Use of Activity FundsFunds

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:

Use of Activity Use of Activity FundsFunds

Improper Use of Activity Funds:

Small cash and check needs of other funds or organizationsSchool district charges – library book fines, student

examinations, parking feesDonations from student or parent groups for scholarshipsExpenditures 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

Student ActivitiesStudent Activities

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

Initiating Accounts

Terminating AccountsTermination 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.

Student ActivitiesStudent Activities

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

Interest Income

Student ActivitiesStudent Activities

All Payments should be made by checkNo 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

Cash Payments

Check SignaturesBoard should designate 2 or more persons to sign checksPrincipal should be 1 of those persons designated by the BoardTwo signatures should be required on all properly completed

checks

Guidelines-Revenue Guidelines-Revenue ControlsControls

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

Admission Charges and Ticket Admission Charges and Ticket SalesSales

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

Fund RaisingFund 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

Fund Raising - CommissionsFund Raising - Commissions

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

Key points when dealing with commission-type fundraisers:

These fundraisers often allow students to raise funds without the risk of inventory loss.

Purchase OrdersPurchase OrdersPurchases 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

BiddingBiddingAct 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

Sales TaxSales TaxPurchase 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

Disposition of Unused Disposition of Unused FundsFunds

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

Student ActivitiesStudent Activities

Loans and purchases

Contracts

Petty Cash

Other Issues

Accounting ProceduresAccounting Procedures

Comply with State Laws

Comply with Generally Accepted Accounting Principles (GAAP)

LECS Manual of Accounting and Financial Reporting

Accounting PrinciplesAccounting Principles

Student Activity Funds – Agency Funds (Fiduciary Fund-Type) in PA

General Fund – Accounted for in function 3210 “School Sponsored Student Activities”

Fund Accounting

Accounting PrinciplesAccounting Principles

Financial StatementsState 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

Accounting PrinciplesAccounting Principles

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

Example Reports

Accounting PrinciplesAccounting Principles

Example FormsBoard PoliciesBy-LawsRequest to Establish a Student ActivityRequest to Close a Student ActivityPlan of Fundraising ActivitiesCash Settlement/Deposit SheetPurchase Order/Check RequestStudent Activity Fund Record CardRequest for QuotationSummary of Request for QuotationsExpense Reimbursement FormCash Advance Form & Receipt Reconciliation