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Working with Booster and Parent Support Organizations

Disclaimer: The opinions expressed in this presentation are those of David Smith and are not meant to be a legal interpretation of the law. The material included in this presentation is dated as of April 2013 and is subject to change. Official interpretation of particular questions or situations should be obtained through the board’s legal counsel, the Alabama Attorney General’s office or the Examiners of Public Accounts.

Parent support organizations provide an invaluable service to our school districts. Many of the student programs and activities could not exist without these organizations.

These parent volunteers unselfishly give money and time to their local schools with the intent to make things better for their children.

With any volunteer organization though there should be established guidelines and policies at the board level for the organization to follow.

It is the Board’s responsibility to insure these guidelines are being communicated and followed.

Policies /Procedures/Guidelines Financial Issues Construction Issues Other Issues

Policies, Procedures and Guidelines for Booster and Support Organizations Federal

o Non-Profit Status o Wage and Hour Issues

State o SDE o Ethics Commission o AG

Local Board o Operational and Financial Policies

At a minimum should address:

o Formation of support organization o Organizational Structure o Relationship with school district o Annual filing requirements o Local, state and federal law compliance o Financial Guidelines o Fundraising Activities o Capital self-work projects o Restrictions

Formation of organization

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o Includes an approval process at board or school level o Complete and file an application to form an organization o Should have bylaws/policies for organization o Officers should be elected according to the structure and process defined in the

by‐laws o Ensure the organization’s sole function is to support the educational activities of

the school o If superintendent/board considers it necessary, he or she may revoke the booster

club’s authorization to conduct activities in the district.

Organization Guidelines o All officers should go through annual orientation with CSFO/ Superintendents

designee o School principal or designee should sit in on all meetings o Minutes should be maintained for all meetings o A budget should be submitted annually o It is suggested that school district personnel not hold any official position within a

booster club organization.

o Fund‐raising at any school site is directly under the control of school authorities, such as the site administrator, and must be approved by at least the site administrator prior to any activity.

o Parent Organization/Booster Club must adhere to various district policies and guidelines as well as federal and state laws and regulatory guidelines.

o Any rules and regulations developed for the organization must conform to the law, the board of education’s policies and regulations, and the school site’s rules and procedures.

o All booster club members must be made aware that no individual should personally benefit from the activities conducted by the organization. Making this concept a part of the bylaws is recommended.

o Any profits from fund‐raising activities that are not spent for a booster club’s nonprofit exempt purpose cannot be returned directly to members or their families.

o In case the booster club dissolves or terminates, the booster club’s constitution should provide for the distribution of any excess funds to another nonprofit organization or the district.

Financial Risks Related to Booster and Parent Support Organizations o Lack of centralized operations o Large numbers of transactions o Numerous parties handling money o Lack of internal controls o Lack of procedures o Complicated rules & regulations

Noncompliance Issues

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Fundraising Activities o Violation of state gambling laws o Public vs Non Public Activities

Ethics Law o Supplemental payments to coaches and sponsors o Use of position for personal gain

The Department of Examiners of Public Accounts audit position concerning various issues related to boosters and parent support organizations utilizing school facilities to raise revenues for the organization is in agreement with the State of Alabama Department of Educations’ positions stated in the Financial Procedures for Local Schools Manual as follows:

Parking for athletic events – these funds are considered public funds if the parking is on property owned by the Board of Education (Section 1 page 1 of the Manual).

Concession proceeds – these funds are considered public funds if held during a school sponsored activity (Section 1 page 1 of the Manual).

Sponsor signs around ball fields these funds are considered public funds if on public property. (advertising commissions – Section 1 page 1 of the Manual)

If a school wishes to contract with a booster and/or parent support organization to provide labor to collect parking, handle concessions, etc., the organization may receive a reasonable percentage (to be determined by the appropriate school official) of the collections for providing the labor services. However, all funds collected should be deposited into the school’s bank account and a check should be written to the organization for the agreed-upon amount. Financial Guidelines It is recommended that all support organizations finances are maintained in the local schools books

Trained board employee maintaining all financial records Produce monthly financial reports for officers and members Financial information is reported in board monthly financials Internal controls in place for compliance with local, state and federal laws, board

policies and guidelines Checks and balances over receipts and disbursements Audit of records included in district annual audit Financial records that are maintained outside the school by individual parent

support organizations o Not recommended o Opens door for fraud and embezzlement o Subject to poor financial management practices, theft and

misappropriation of funds o Adds additional cost and liability to organization

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o Adds additional filing requirements

Organizations that maintain their own financial records : o Booster clubs are not legal components of the school entity. Each booster

club should have its own tax identification number; booster clubs are not allowed to use the school entity’s tax identification number.

o Booster clubs are responsible for their own tax status, accounting and financial records and must make their own arrangements for audit if an audit is needed. The booster club is not audited as part of the district’s own annual financial audit.

May be external or internal audit

Organizations that maintain their own financial records must provide: o Financial records to the school’s auditors and authorized school employees

upon request o Proof of a fidelity bond for the treasurer o Any financial reports required under its bylaws o The booster club must have its own minimum amount of liability insurance as

determined by the school entity Additional Requirements

Assurance that it will not provide any payment or benefit to a school employee (or family member of a school employee) in violation of the State Ethics Law.

Payments to employees MUST go through the payroll department District or school site officials may require booster clubs to be officially

recognized as tax‐exempt organizations under internal revenue code section 501(c)(3) and may require them to provide a copy of their determination letter or certificate of nonprofit status.

Assurance that: o No employee of the school, who is associated with the activity supported

by the booster organization, serves/holds a leadership position in the organization.

o No employee of the school leads the organization’s fund-raising. o No employee of the school maintains the accounting records for the

organization. Recommended financial procedures

Money should never be kept at a treasurer’s home Two people should always count the money, and both should sign the receipt

verifying the amount Two signatures on all checks

o President and treasurer Have a member who does not have check signing authority review the bank

statement monthly before giving it to the treasurer. This person is looking for red flags including: checks showing up in non-sequential order, checks made out to

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cash, cash withdrawals, checks written out to non-approved vendors, checks written for non-approved expenses, and checks written out to individuals.

All invoices approved before payment. Never sign a blank check or a check made out to “cash.” The treasurer should arrange to deposit the money in the bank as soon after the

conclusion of the project as possible. Money should be deposited into the organization’s bank account daily, even if a

project is ongoing. All bills must be paid by check, never cash. Conduct an annual audit of the books. Make sure that you have a Bond Policy and make sure to follow the requirements

to guarantee coverage. Loans to Parent Support Organizations

A School Board cannot loan an organization money An organization cannot borrow money in the school or Board’s name Any loans obtained by support organization would be personal loans by

individuals signing notes Many local banks might not understand The only way a BOE can incur debt is through the issuance of its warrant(s); in

most instances under Alabama law, the issuance is subject to the prior approval of the State Superintendent and the warrant(s) must be issued in the form and executed and delivered in accordance with the applicable provisions of the Alabama Code.

Check-writing privileges granted to principals are not broad enough to cover signing notes (or warrants) evidencing a debt of the board. Being authorized to sign a check should not be construed as a delegation of the power to incur debt of the board.

Extracurricular Camps and Clinics on School Campus

Guidelines o Approval form application should be completed prior to event o Should be preapproved by Board or designee o Proper accounting records should be maintained o Any payment to school employees must be processed through district’s

payroll department Compensation reasonable and set prior to event

Booster Work Projects An organization cannot build a structure on Board property without Board approval

Self-Performed o District Employees o Parent Support Organization

Organization provides funding for project o In whole or partial

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Procedures for capital projects Any building, building/land improvement on a school district campus should be

approved by the board of education. Board employee should be in charge of project. Must follow federal, state and local laws, codes, procedures and guidelines. Should follow same process on all projects regardless of funding.

Self-Performed Work

Must comply with Building Commission requirements Full professional design team required Plan review and approval required Architect required to perform inspections Building Commission will conduct required inspections including Final Inspection Compliance with Public Works Law or Competitive Bid Law will be applicable in

most situations Summary

Parent support organizations provide an invaluable service to our school district. There should be established guidelines and policies at the board level for them to

follow. It is the Board’s responsibility to insure these guidelines are being communicated

and controls are in place to monitor compliance.

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