Ten Keys to Controlling Activity Funds

How many times have you seen a headline such as “Cheerleader mom pilfers trip funds”? It’s a nightmare scenario for an administrator, discovering that large sums of student money are unaccounted for— even if the problem was poor management rather than intentional fraud. That’s why student and campus activity funds deserve a little extra attention from both campus-level administrators and central business offices.

Activity funds can be generated in several ways, but the most common are donations and fundraisers. These fundraisers may have 20 or 100 students taking orders for goods or selling t-shirts and collecting money, with a teacher or parent volunteer accepting the collected funds and managing inventory. How confident can you be that the money that’s supposed to be coming in has come in and was handled appropriately?

Fortunately, there are steps you can take to help those funds be managed properly, even when the money handlers are faculty sponsors and parent volunteers.

The 10 keys to managing campus activity funds:

• First and always, make sure both campus and central administrators know what’s going on. Be informed about any fundraisers that are occurring and who is managing them.
• Set up basic processes and make sure that teachers, parents and students follow them.
• Train those responsible. Many people don’t understand concepts such as “segregation of duties.” Make it easy for them to follow the requirements by creating template documents, then teaching people how to fill those out.
• Segregate each fund by purpose and activity. Do not comingle band funds with cheerleader funds, for example.
• Develop simple procedures appropriate to each activity — for example, issuing receipts for sales and limiting the amount of cash that can be kept on hand.
• Require that cash always remain under dual control, meaning that two people (one of them the sponsor, ideally) must accept, safeguard, count and deposit cash together. The total amount of money received and deposited must be reconciled with the amount of product sold and delivered; the faculty sponsor should provide this reconciliation.
• Establish requirements for the timely deposit of funds received by the sponsor, including providing a secure location to hold pending deposits, such as a drop safe, if funds are not directly deposited at the bank.
• Use a check request and review process to ensure that money in these accounts is being spent on the designated activity. If money was raised for a trip, can you prove that it was spent on the trip?
• Follow best practices for segregation of duties with these funds, just as you would for district accounts payable. The person collecting money should not be the one signing checks.
• Reconcile accounts every month, sending reports to the faculty sponsors so they know the account status. (In addition to keeping them informed of their account balance, reconciliations remind the sponsor and volunteers that accounts are being monitored.)

Remember, good control always starts with knowing what’s going on. If the business office develops sound, easy-to-follow processes and always performs monthly reconciliations, then your district can make sure your students are only in the news for their accomplishments.