redbook today’s burning questions. some familiar quotes…
Post on 14-Dec-2015
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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
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