Guidelines For School SUPPORT Organizations LOWNDES COUNTY Board of Education Professional Development OCTOBER 19, 2017 Kim McPherson, CPA kmcpherson@CRITERIONK12.com

Welcome Support organizations allow parents, administrators, teachers and students to work together to achieve more than they could individually The Lowndes County Board of Education appreciates its parent’s time and efforts and is interested in each of your organizations achieving its full potential Your involvement is essential not only to a successful school program but also to a successful school system

From the Headlines: Ethics Commission says Decatur High coaches likely broke ethics law by accepting booster gifts Muscle Shoals Schools warned by state over questioned bonuses - someone filed a complaint with the state's ethics commission, accusing them of giving their high school football coaches illegal bonuses. Ex-PTA treasurer accused of stealing from 2 schools Band Treasurer Arrested For Stealing More Than 40K In Booster Funds Teacher, PTO officers sentenced for stealing from school funds The nature of activity funds makes them especially vulverable to error, misuse, and fraud. Can be LARGE amounts of cash.

TODAY show – June 3, 2014 http://www.today.com/news/parents- steal-thousands-dollars-school- booster-clubs-2D79736779 After numerous complaints to ALSDE from school support organizations who lost thousands of dollars each year due to theft from volunteers and officers over whom the school districts had no authority, control or legal remedy to prosecute, State Supt. Dr. Joe Morton issued Guidelines in 2007, with full compliance required by July 1, 2008.

Legislation and Authoritative Guidance The School Fiscal Accountability Act of 2006 Alabama State Department of Education Guidelines for Financial Operations of School-Related Organizations adopted in November 2007 Alabama State Department of Education Financial Procedures for Local Schools adopted in June 2010

Other Considerations Alabama Examiners of Public Accounts Southern Association of Colleges and Schools Council on Accreditation and School Improvement (SACS/CASI) Alabama Examiners of Public Accounts Alabama PTA/PTO Alabama Building Commission Alabama Ethics Commission Alabama DOR – Sales and Use Tax Division Internal Revenue Service Governmental Accounting Standards Board (GASB)

Operating Support Organizations Student and Parent Organizations – “OFF THE BOOKS” Separate EIN Separate Mailing Address Maintain their own records and accounts outside the control of the school A school employee must not lead fund-raising or maintain the accounting records for the organization An annual audit must be provided to principal Financial reports (including budget) must be provided timely and made available for audit upon request Treasurer must be bonded No payment or benefit to school employee

Operating Support Organizations Booster Organizations – “OFF THE BOOKS” Same as Student/Parent organizations, with the addition of: A school employee who is associated with the activity supported by the organization cannot serve/hold a leadership position in the organization

organization BOE approval of support organization Bylaws and Operating Procedures Officer Information Form Proposed Budget Meetings Records Rules

administration Relationship with Leaders Be familiar with law and policy Officer training each year No authority for loans in the name of school, or contracts related to use of board property or equipment Prior approval and final summary reports for fundraising Self-Work Projects – Alabama Building Commission

Relationship is key! Principals are responsible for the communication between the school and its support organizations. Principal or designee should be invited to all meetings and must approve any activity of the organization that affects the school or involve student participation. The use of school facilities must be requested through the principal. Principals should involve school related organizations with budget development to communicate needs, set goals within available resources and prevent duplication of efforts

FINANCIAL Bank Accounts and Checkbooks Financial Statements and bank reconciliations at each meeting. Comparison of Budget to Actual Receipts/Expenditures Fundraising Purchase Authorization for Goods/Services (card?) Inventory of Items for Resale Receipting Money Payments to Vendors Payments to Employees Payments to Volunteers

Public vs. Non-Public Funds Public - “ON THE SCHOOL BOOKS” More restrictive Examples: Public fundraisers, gate receipts, concessions, parking at athletic events, restricted donations from booster clubs, advertising commissions, game program sales. Separate accounts may be established for individual sports or events. Subject to control of school principal

Public vs. Non-Public Funds Non-Public – “ON THE SCHOOL BOOKS” Restricted only to intent and authorization of the appropriate sponsors and officers Not used for general operations of the school Clubs and classes (self-imposed fees, fund raising), Other School-Related Organizations Principal does not direct the use but does have authority to prohibit inappropriate expenditures

SPENDING IT WISELY What can you spend money on? Public “Public” property and items Professional development General operations of school Refreshments for open house Pre-game meals for coaches WITH athletes Academic incentives Uniforms Memberships-professional organizations School upkeep and improvements Non-Public Can spend on anything public funds can be spent on Food and prom entertainment T-shirts for faculty or clubs Donations Transport to club events Championship rings Faculty appreciation gifts Scholarships Flowers Faculty beverages (coffee, etc.)

STRUCTURE YOUR FUNDRAISERS! ON SCHOOL PROPERTY? INVOLVING SCHOOL CHILDREN? DURING SCHOOL HOURS? = PUBLIC (NOTE: Public resources used for Non-Public Fundraisers MUST be reimbursed!)

Controls Over School Income Report of Sales of Tickets All events where admission is charged Separate report for each ticket seller, witness signature All charges deposited in school bank account Deposit intact and timely by school employee Fundraising Principal approval prior to activity Deposit income intact and on timely basis No holding funds until fundraiser is complete All expenses should be paid by check

Controls Over School Income Concessions – Proper accounting for sale of products and income Cash register preferred; must have a report Inventory of items purchased, sold, and on hand should reconcile to cash collected Do not cash checks or make payments from cash Master Receipt should be issued after verifying the amt. of receipt at the time funds actually received Supporting documentation of items sold should accompany the funds collected

Public Contributions and Grants from City, Legislators, etc. Must be used for an educational purpose Competitive Bid Law does apply. Are considered PUBLIC funds. Must be deposited into School/System account and records of expenditures maintained at school/system.

Alabama’s Ethics Law It’s Your Responsibility! Ethics law applies to individuals Violations can result in criminal liability Not the board’s responsibility or the superintendent’s to monitor, interpret, or enforce

The Basics Can’t use position for personal gain Can’t use public resources for personal use Prohibits conflicts of interest Can’t solicit or receive a thing of value because of position Can’t be given anything to influence official action

The Rules Personal Use of Position Can’t use position for personal gain: “No…public employee shall use or cause to be used his or her official position or office to obtain personal gain for himself or herself, or family member of the public employee…or any business with which the person is associated…” Ala. Code §36-25-5(a)

The Rules Use of Public Resources Can’t use public resources for private benefit: “No…public employee shall use or cause to be used equipment, facilities, time, materials, human labor, or other public property under his or her discretion or control for the private benefit or business benefit of the…public employee, any other person, or principal campaign committee…” Ala. Code §36-25-5(c)

The Rules Solicitation of Thing of Value Can’t solicit a thing of value: “No…public employee shall, other than in the ordinary course of business, solicit a thing of value from a subordinate or person or business with whom he or she directly inspects, regulates, or supervises in his or her official capacity.” Ala. Code §36-25-5(e)

What is a Thing of Value? “Any gift, benefit, favor, service, gratuity, tickets or passes to an entertainment, social or sporting event, unsecured loan, other than those loans and forbearances made in the ordinary course of business, reward, promise of future employment, or honoraria or other item of monetary value.” Ala. Code §36-25-34(a)

The Rules De Minimus $25.00 or less per occasion and an aggregate of $50.00 per year from a single provider or as may be prescribed by the Ethics Commission.

Most common financial irregularities Failure to receipt and deposit all money collected Failure to remit all funds from fundraiser Unauthorized use of school property Expenditures for personal gain Checks made payable to cash Payments of personal expense from unauthorized acct. Sale of property purchased by support organization for personal gain. Reimbursement of travel expenses from two sources Use of unofficial receipt book Forgery of signature and alteration of checks Nonpayment of vendor invoices Failure to use tickets at athletic events Unauthorized salary payments

Ethics and Schools More practical examples School Equipment for personal use (computers, cameras, lawn mowers) Collecting Funds for Principal’s (or Coach’s or Band Director’s) Birthday Support Organizations soliciting gifts in excess of 25.00 for teachers Contracts (Pouring rights, prom, yearbooks, class rings, construction, etc.) T Shirts, clothing, goods, “rewards” programs, etc. Alabama, Auburn, UAB Tickets/Other Recreational Tickets