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Illinois School Board Journal
July/August 2004

Student activity funds need good policies

by Hank Boer

Hank Boer is a member of the faculty in school administration at Aurora University. He is a retired district superintendent.

Managing the money raised for student activities can be one of the biggest headaches facing a school administrator. It can also be the ruination of a promising career.

Why should that concern school boards? Because school boards are responsible for the policies governing all aspects of school finance and business management - including student activity accounts. While it usually is not fair to blame the school board when an activity account stirs up a hornets' nest, the fact remains that good board policy can go a long way toward ensuring proper management of such accounts.

The consequences of no policy or ineffectual policy can be devastating to a variety of people, including students, parents and teachers, as well as administrators and the board itself.

Activity accounts defined

To begin with, student activity accounts are intended for funds belonging to student organizations and clubs under the guidance of faculty or staff. Some examples are a junior class prom committee, the home economics club or the student council. The Illinois School Code, Section 10-20.19(3), requires the school board to see that the funds raised by these organizations are properly managed and accounted for. Rules established by the State Board of Education for managing these accounts are set forth in Appendix J of the Illinois Program Accounting Manual.

Student activity accounts should be clearly distinguished from so-called "convenience accounts," which are typically set up to accommodate funds raised by parent and faculty groups. The school board is not legally obligated to care for these funds, but most boards do so and those boards should have relevant policies in place. (Boards that do not provide oversight of parent and faculty group funds will likely take the blame if something goes wrong, even though they have no control over the accounts.)

Activity funds also should not be confused with such regular district-budgeted accounts as lunch programs, locker fees, student insurance, athletic programs, and employee salaries and benefits.

Responsibility for safeguarding student activity funds resides in the board of education or someone designated by the board, usually the building principal. The principal or other responsible individual appoints a treasurer to be the custodian of one or several activity accounts and designates the people who are authorized to spend money from the account (typically faculty sponsors of a student activity).

The responsible individual also ensures, among other things, that:

1. The treasurer and all employees associated with an activity fund are properly bonded;

2. Proper procedures are in place to ensure the safeguarding of all monies collected for the activity account;

3. Adequate records are kept showing revenue, expenditures and balances on hand.

What can go wrong?

Given that the oversight of activity accounts is regulated by the state, what can go wrong? Actually, things that can go wrong fall into two categories:

• theft
• miscommunication

Although most people are honest, sooner or later someone will succumb to the temptation presented by activity funds. One reason is that much activity fund revenue starts out as cash collected by students, parents, staff and others, and has to find its way to the treasurer and the designated bank account. Vending machines, ticket sales, candy sales and donations all produce cash that needs to be safeguarded.

Even when a thief is caught in the act and prosecuted, the damage may already have been done to the school's credibility and the activity fund's treasury.

Miscommunication typically does not involve criminal actions or intent but the impact can be almost as powerful as a theft. Example: parents and students believe their math club has accumulated enough money to send its entire membership to an international mathematics festival with all expenses paid. Unfortunately, at the request of club leaders, the sponsor has approved the use of some activity fund assets to purchase calculators for all club members. As a result, a shortfall of funds is discovered when it is time to order plane tickets. Talk about disappointment!

Who gets the blame? It is hard to ensure that club leaders and sponsors have realistic spending plans. After all, financing a club is similar in many ways to financing a business. But principals must assure themselves that sponsors know how to plan and budget for a student club and know what is going on with income and expenses.

Probably no board policy can be 100 percent effective against events like these. But a good policy can certainly reduce the chances for theft or serious miscommunication.

Good policy

Good board policies probably would include the following:

1. Clearly delineate who is responsible for activity fund accounts. Usually this should be the school's principal.

2. Require that the district or school administration adopt prudent procedures that:

• provide for different employees to oversee different aspects of money handling and record keeping;
• require monthly reconciliation of accounts between treasurer and club leaders and sponsors;
• encourage tracking of trends in revenue and expenses in each account;
• encourage first-hand observation of how money is being handled to ensure compliance with required procedures;
• ensure that activity leaders and sponsors are working from realistic financial plans or budgets.

3. Require the superintendent to present assurances at least once a year that activity fund procedures are in compliance with the law and board policies.

Knowledge that the school board and superintendent care about the safety of student activity funds also can be a positive motivator for care and prudence at the staff and student levels.