RedbookFrequently Asked Questions

Presenter

Susan BarkleyDivision of District Supportsusan.barkley@education.ky.gov502-564-3930 extension 4437

FAQs

• KDE website – same page as the Redbook• http://

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

• Will continue to be updated periodically • New information is in red type• Publishing date on website and document

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”

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”

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

Potential Student Activity Funds

• Funds raised by students• Expended by student

groups

• Chorus Club• Debate Team• Class of 2016• Beta Club• Cheerleading Club• Band• FFA

Potential District Activity Funds

• Support co-curricular and extra-curricular activities• Not raised and

expended by student groups

• Gate receipts• Book fair• Locker fees• Parking fees• School plays• Field trips• Picture sales• Other commission

sales

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 Bank Account

• 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• Guidance forthcoming regarding Fund 21

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.

How Can School Activity Funds be Spent?

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

• Must benefit student clubs or organizations• Cannot be used to support the district’s own

programs (GAAP)• Go back to the purpose of the Redbook

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

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

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

Is the cost incurred solely because of the student group and does the purchase benefit

only that group?

Operating Expenditures

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

Operating Costs

Example

s:

•Renovation or maintenance of school facilities or buses•Additions or improvements to buildings or grounds•Furniture for offices•Professional development•Textbooks for general use•Salaries for district-created positions•Substitutes incurred in normal course of business

Transporting Student Groups

• If paid with school activity funds, driver salary/benefits and fuel only

• Cannot pay for maintenance or depreciation of school bus unless used only by the student group• Example: a charter bus rental

Student Fees and Charges

“All student fees and charges shall be adopted by the board. The fee shall remain in place until modified or removed by board resolution. All student fees adopted by the board shall be used for the purposes set forth in the motion and shall not be spent for any other purpose.”

What is a Fee?

Fee• Adopted by the board

• Tracked by individual student

• May be refunded• May be subject to fee

waiver requirements

Donation• A “fee” that is not

adopted by the board• Cannot be tracked by

individual student• Cannot be refunded• Not subject to fee waiver

because it is not a fee

Fee Waiver

• 702 KAR 3:220• Activities meeting that definition require a fee waiver process• Trips intersecting with any part of the school day• Fees to participate in school-sponsored courses, activities, or

programs• Use of school property• Intramural sports, music, or fine arts• Others

• Fee waiver for students qualifying for free or reduced meals

Donating to Specific Students

• Cannot be done through the school accounts• “Donations” can be made directly to parents/students• Will not be tax-deductible to donor• Donations may be made for fee waivers in general

Additional Questions