REDBOOK TODAY’S BURNING QUESTIONS. SOME FAMILIAR QUOTES…

REDBOOKTODAY’S

BURNING

QUESTIONS

SOME FAMILIAR QUOTES…

“THE PRINCIPAL SAID IT WAS OK”

“BUT IT BENEFITS THE STUDENTS”

“THAT’S THE WAY I’VE ALWAYS DONE

IT”

I’VE LEARNED…

IT’S NOT “CAN I?”

IT’S “HOW CAN I?”

Susan Barkley

Division of District Support

susan.barkley@education.ky.gov

502-564-3930 extension 4437

RESOURCES

• KDE website – Redbook page

http://education.ky.gov/districts/FinRept/Pages/Accounting-Procedures-for-School-Activity-Funds.aspx

• FAQs

WHAT ARE OPERATIONAL

COSTS?

HOW CAN SCHOOL ACTIVITY FUNDS BE SPENT?

School activity funds shall not be expended for operating costs (in old Redbook, too)

Must exclusively benefit student clubs or organizations

Cannot be used to support the district’s own programs (GAAP)

OPERATING EXPENDITURES

Operating transactions are incurred in the course of the operating activities of the institution

“It’s what we’re here to do”

Anything supporting regular operations

Operating Expenditures

Instructional Expenditures

Expenditures for instruction are likely to be operational because that’s what the school is in the business to do: instruction

OPERATIONAL VS. DIRECT STUDENT BENEFIT

Even if there is direct student benefit, you cannot use school activity funds to pay for expenditures which are operational in nature

DISTRICT OR STUDENT ACTIVITY?

PURPOSE OF THE REDBOOK

Protect funds raised by students

Protect students against funding responsibility

KEY PROVISIONS

Item #1 on page 7 – “contributions and collections derived from school-sponsored fundraising activities shall be deposited in the school’s activity fund bank account”

Item #5 on page 7 – “fundraising activities are to benefit students, so fundraisers to cover staff payroll and other operating costs are not permitted”

REQUIRED AT SCHOOL LEVEL

Student Activity Funds - Contributions and collections derived from school-sponsored fundraising activities

• Fundraising by student clubs and student organizations

• To support student clubs and organizations• Expended with input from student clubs and organizations

REQUIRED AT DISTRICT LEVEL

Grants

Day care fees

Adult education fees

Tuition fees

Donations (unless board policy allows donations at the school level)

Any funding source restricted to an expenditure disallowed by Redbook (except student fundraising)

Aside from those requirements….

…there are OPTIONS

SCHOOL ACTIVITY FUNDS

Student Activity Funds

District Activity Funds

School Activity Funds =

School Bank Account

STUDENT ACTIVITY

Must be deposited at the school level

Raised by student fundraising

Expended with input from student groups

DISTRICT ACTIVITY

Can be deposited at the school or the district

Raised by school/district or staff

Expended with input from staff

SCHOOL BANK ACCOUNT

School Activity Funds

Subject to Redbook

No operational expenditures

DISTRICT BANK ACCOUNT

District Funds

Not subject to Redbook

Any expenditure that meets “educational purpose”

Narrow Allowability

Increased Flexibility

SCHOOL FUNDS – ACCOUNTING RULES

Reported as Agency Fund on district financial statements

Cannot be used for district’s own programs

Not included in per pupil expenditures

DISTRICT ACTIVITY FUNDS DEPOSITED IN DISTRICT BANK ACCOUNT

Use special revenue fund if use is restricted, otherwise use general fund

Project codes 7XXX available to track funds separately

Can use fund 2, 21, or 22

TESTS

Redbook test: Is the expenditure operational in nature? If so, can’t use school funds

District test: Does the expenditure have an “educational purpose”? If so, you can use district funds

WHERE DO WE PUT THESE FUNDS?• Gate receipts

• Picture sales

• Basketball team

• FFA

• Bookfair

• Lab fees

• Cheerleaders

• Elementary school fall festival

• School store

BEST PRACTICE?

How are you handling district activity funds deposited in the district bank account?

Submit your best practice on KDE website at http://odss.education.ky.gov/bestpractices/BP_Submit_r1.aspx?view_id=0.

CAN WE CHARGE STUDENT

GROUPS FOR TRIPS?

ALLOWED

• Travel expense and meals for student members and sponsors

• Allowable expenditures that directly and solely benefit the student group

TEST

What is “operational” as it relates to trips?

DIRECTLY AND SOLELY

• Driver salary and benefits

• Fuel

• Maintenance items directly and solely attributable to the group trip, not simply a share of general maintenance

• Must pass auditor scrutiny

• No depreciation

• Don’t simply use the cost per mile (SEEK)

CAN I TRANSFER MONEY TO THE

DISTRICT?

SWEEPING

• FAQ #7 allows sweeping

• Intact

• Monthly

WHAT IF THEY CAN’T SPEND THE MONEY THEY ALREADY HAVE?

• Collected for operational purposes

• Funds raised without a specific purpose

• Auditors say I can’t transfer it

KEY PROVISIONS

Item #1 on page 20 – “school activity funds are raised for a specific function or purpose during a specific fiscal year and must be used for that specific function during that period”

Item #2 on page 20 – “due to timing…a school may have to carry forward funds from year to year”

Don’t raise funds simply

to have money

FRAUD PREVENTION

#1 THING YOU SHOULD DO THAT YOU AREN’T DOING

Bank Statement Review

ADDITIONAL QUESTIONS & DISCUSSION