The Education Code (EC) regarding ASB does not include provisions for school closures, so many ASB processes may need to be treated much as they would during a holiday or summer break. Absent sufficient approvals in accordance with EC provisions (such as section 48933), ASB expenditures cannot occur, despite the extraordinary circumstances.

However, we recognize that, because the current school closures have happened in the middle of a school year, certain critical processes, such as payments and approvals, may need to continue. It is possible to hold virtual ASB meetings as this is not prohibited by any statutory provision.

If a district chooses this option, it needs to follow the same meeting requirements for virtual meetings that it would during in-person meetings. This includes the virtual presence of the certificated ASB advisor.

As outlined in the FCMAT ASB Accounting Manual, Fraud Prevention Guide and Desk Reference (https://www.fcmat.org/2015-asb-accounting-manual-fraud-prevention-guide-and-desk-reference), the meeting requirements should be included in the ASB constitution and bylaws. This includes the definition of a quorum, who shall conduct the meetings, and so on. The meetings should continue to follow Roberts’ Rules of Order or a similar code. Minutes of the meetings must be kept and read for approval at succeeding meetings. Also, any actions taken by the executive committee shall then be reported to the membership at large.

In other words, to the extent that the same meeting protocol is applied in a virtual environment, this format gives the ASB with a viable alternative during our current circumstances.

With regard to the need for signature approvals, an electronic signature or email would suffice for both the ASB representative and the ASB advisor (who must be present at any ASB meeting).

The same is true for approvals from other ASB staff, such as the ASB bookkeepers. Electronic approvals, such as those via email, may be a viable alternative during school closures. However, we recommend that the district memorialize the reason for the mid-year process change, either within the email approvals themselves or in modified district policy. This will ensure the district’s auditors understand the sudden need for an alternative authorization method. The district may also want to confirm such a practice with its auditors to ensure continued compliance with ASB procedures.

In all instances, thorough documentation and transparency must remain a priority during these difficult times. Where additional assistance is needed, we recommend seeking help from the district’s external auditors and/or governing board.

In some instances, refunds may be allowable, but it can depend on the circumstances. Typically, refunds are more likely allowable when fees have been charged for specific events than when tied to donations raised by a group of students. Refunds are more likely prohibited when associated with student fundraising for a specific activity, because the funds in these instances are considered donations. 

Chapter 9 of the FCMAT Associated Student Body Accounting Manual, Fraud Prevention Guide and Desk Reference discusses fees and refunds and explains the limited options when charging fees. The Manual states the following: 

Based on a footnote in the Hartzell case, it is permissible to charge fees for school- or district-sponsored activities that are purely recreational rather than educational and at which attendance is optional, such as an after-school dance or a weekend athletic event . . .

Schools can always ask for voluntary donations of funds or property, and voluntary participation in fundraising activities, as long as a student’s ability to participate in a school activity, either curricular or extracurricular, is in no way determined based on whether a donation was made [EC Section 49011(c)]. 

When asking for donations or fees, schools and districts should consider working with their own attorneys to ensure compliance with these important laws. Many schools send out donation requests with wording that indicates the donation is required rather than voluntary; this is in essence the same as a fee.

Chapter 9 further describes allowable fees for field trips:

• Fees for field trips and excursions in connection with courses of instruction or school-related social, educational, cultural, athletic or school band activities, so long as no pupil is prevented from making the field trip or excursion because of a lack of sufficient funds [Education Code section 35330(b)].

• Fees should be collected on a voluntary basis only.
  
• A school must not require that a student pay an admission charge to an exhibit, fair, theater or similar activity for instruction or extracurricular purposes when a visit to such places is part of the district’s educational program [Ops. Cal. Atty. Gen. No. NS-2469 (1940)].
  
• No student may be left behind due to insufficient funds, nor may a student be left behind for failing or refusing to participate in fundraiser…
  
• Fees for outdoor science camp programs, as long as no pupil is denied the opportunity to participate because of nonpayment of the fee (Education Code section 35335).

Because fees are allowed to be collected for field trips, the fees may be refundable if the field trip is canceled. In these instances, amounts paid by students and/or parents for the event should be tracked by individual payee. Unless refunds were expressly prohibited when funds were collected, if a parent or guardian paid for their child to attend an event, such as a field trip, they should receive a refund if the event or trip is canceled. That is, any allowable fee, such as those for field trips, should be refunded as long as there are no specific provisions prohibiting refunds included in board policy or the ASB constitution or bylaws.

We suggest reviewing existing board policy, as well as the ASB constitution and bylaws, to determine what guidance is provided on issuing refunds. Generally speaking, whether refunds should be issued is a local determination, subject to governing board policy, the ASB constitution and bylaws, and any previously communicated policy on the subject. The criteria for determining when refunds are allowed, and the process to be followed, is something best outlined in local board policy and/or the ASB club's constitution and bylaws. The process for issuing refunds may need occasional modification to accommodate certain circumstances.

Keep in mind that fundraising for individual students is not a function of ASB. When students are fundraising, they are raising money for all students to participate as a group. Funds raised in this manner are considered donations and are not refundable. Although parents may be asked to pay certain expenses, no student can be prevented from attending an ASB club event because he or she did not pay or fundraise. If there are not sufficient funds for an activity, the activity cannot occur until and unless enough funds are raised or found from other sources. However, if a fee is charged for an activity, a parent pays for their student to attend, and that activity does not occur, the fee paid may be refunded.

Fundraising as a group for an activity and asking for a fee can appear similar; however, keep in mind that fundraising is more associated with donations. If it is disclosed that the fee is a donation, it may not be refundable. In contrast, even though a fee may be considered a donation, when that fee is tied to a specific activity such as a field trip, it is not considered a donation. When it is disclosed prior to the collection of funds that such a payment represents a fee per student, that fee may be refundable. This assumes that the payments were not specifically identified as donations when collected, and that there is not existing board policy or other district policy prohibiting refunds. 

Many parents may not understand that, although it may appear that they are paying for their child to participate in an activity, they are actually contributing to the entire club and event. If a district’s business office and board policy allow for refunds, the criteria for when a refund can occur should be described in detail. Without proper policies, procedures, notification, planning and approvals, refunding money to individuals may be considered a gift of public funds, which is illegal. Although it may seem justified, supported by past practices, or noble in times of financial need, it is nonetheless  impermissible to issue refunds for payments that were in fact donations.

When a policy exists for refunds, it’s important that refunds occur only for those parents or guardians who have paid for the specific trip or event expenses for their child. Refunds are not typically allowable for funds that have been raised or donated, because these funds usually become the property of the ASB. Even if parents incorrectly believe they are paying for their child to participate in an activity, all fundraisers are considered donations to ASB and are not subject to refund. Most districts have a refund policy that effectively states that refunds are prohibited, so we recommend reviewing board policies for further guidance. 

When fees are collected and the activity does not occur, there is no need for purchase orders to be approved for refunding fees. The students should still be notified of the refunds, but further action by the students is not necessary. Unless the district has other required internal control procedures, the bookkeeper may refund the fees and notify the students of the amount of the refunds. 

In all instances, thorough documentation and transparency must remain a priority. Student activity funds remain ASB trust funds that require a higher level of oversight. Administrators have a fiduciary duty to protect student funds at all times. When additional assistance or clarity is needed, we recommend seeking guidance from the district’s external auditors and/or governing board.

Finally, only ASB funds and activities belong in ASB trust accounts. Classroom supplies, and other teacher-led non-ASB trips or activities and their associated cash collections or revenues and expenditures, including any refunds, do not belong in ASB, should not be accounted for in ASB, and should not be part of ASB. Further, ASB should not be used as a clearing account or pass-through to accommodate these activities. If an activity or event is truly not supporting ASB, any funds or accounts it has within ASB should be closed and moved to another account approved by the district’s business office, such as a school site donation account.

Generally speaking, with regard to any unspent or remaining ASB funds at the end of the year, those funds should remain with that school’s ASB.

The Education Code provisions regarding ASB do not provide allowances for school closures and extraordinary circumstances. The FCMAT ASB Manual addresses the requirement that ASB funds must be spent on current students only. Chapter 6 states the following:

“Education Code section 48930 (K-12) indicates that the purpose of ASB is to conduct activities on behalf of the students, clearly indicating that the funds held in ASB can only be spent for current students. Also inferred from this is that the funds are held for current students at the same school at which the funds were raised. If cash balances exist for classes that have already graduated, those accounts need to be cleared. If there is no provision in the ASB constitution or board policy stating the fund or account to which the remaining funds should be transferred after a class graduates, it is suggested that the funds be transferred to the general ASB account at the same school. The ASB constitution or board policy should be revised to provide guidance for similar circumstances in the future.”

Also included in this chapter are sound business practices for the handling of any carryover funds. In the same way that any unspent or excess ASB funds carry over to the following year, the same is true for any funds remaining due to a cancelled event. This is especially true if the LEA has adopted the FCMAT manual as part of board policies and regulations and has not created any additional board policies or regulations establishing a different position to accommodate these unusual circumstances.

As described above, there are very few laws specific to ASB. This means the governing board, with guidance from the LEA’s business office, can enact through board policy what it decides are the rules or local regulations for each ASB. Board policy cannot alter or suspend Education Code provisions or other higher laws, but where statutory guidance is silent, the LEA’s governing board, through modifying or adding board policy and administrative regulations, has flexibility to implement ASB rules needed to meet each LEA’s unique circumstances.

To assist ASBs with unspent funds at the end of a school year, one potential option is to hold an event for the students following graduation and once physical distancing and shelter-in-place requirements are lifted. The governing board should take formal action to approve such an event. This could mean the pre-payment of an event while the students are still enrolled, or the approved payment of ASB funds to the district, where the district later uses the funds to pay for the event. In such a situation, accurate tracking and protection of the funds by the district is paramount, and a timeline should be adopted by the board for acceptable usage of the funds.

However, if the district has adopted the FCMAT ASB Manual as part of the district’s board policies, or has existing policies prohibiting the use of funds after the students have graduated, then once the students graduate, the funds can no longer be used for those students without amendment of those policies.

An additional option may be to establish or modify a district policy allowing for student recognition with unspent ASB funds. A governing board could elect to create a recognition policy whereby unused ASB funds are awarded to students based on certain criteria, such as the completion of the school year under very trying circumstances. Such a policy could outline that the intention of the student recognition is to acknowledge student achievement and perseverance during difficult and unprecedented circumstances, and offer “recognition”, or unspent ASB funds, as an alternative to the cancelled graduation events. The policy could stipulate that the intention of the recognition is to allow alternative events to occur in a more individualized setting in place of a graduating class event as a result of physical distancing and shelter-in-place measures.

Note that student recognition differs from using unspent funds for scholarship purposes, such as college textbooks or tuition, which some LEAs have considered. Using unspent ASB funds for this purpose is not recommended. The funds were not originally raised for scholarships and the practice could be considered a diversion from the intended purpose of the funds, which was likely to support certain student activities. Further, expending the funds as college scholarships excludes those students who presumably participated in ASB activities and fundraising efforts, but who are not enrolled in a college or university in the immediate future.

In other words, where existing policies allow, an LEA may wish to make alternative accommodations given the current COVID-19 circumstances with the use of a board resolution. Such a resolution would suspend current policy, and should include a detailed explanation regarding the need for one-time relief resulting from the COVID-19 pandemic. It should also delineate a timeline for the use of any unspent funds, as well as a declaration that any exception to existing policy applies exclusively to the current school year and is not intended to establish precedent.

Where questions remain regarding compliance with Education Code provisions, FCMAT recommends seeking additional guidance from the district’s external auditors and/or legal counsel.

Anything purchased by a district, including the ASB, must be in compliance with the law and local board policy, and cannot be considered a gift of public funds. Purchases should be used to promote the students’ general welfare, morale and educational experiences. The purchases must also be for goods and services other than those the school entity should provide from its own funding sources. And, in general, the purchases should be for the benefit of student groups, and not individual students (for exclusions, please see the FCMAT Associated Student Body (ASB) Accounting Manual and Desk Reference, Chapter 14 – Allowable and Questionable Expenses.

In middle schools, high schools and community colleges, the students should be the primary authority that decides how ASB funds are spent. FCMAT is often asked whether an item is an appropriate use of ASB funds. That means that a student must preapprove the expenditure, as well as two adults. Per Education Code, all three authorizers must be specific representatives of the school/ASB. The ASB Accounting Manual and Desk Reference contains a significant amount of guidance regarding sound district and ASB policy, specific rules related to ASB transactions, and guidance on allowable and prohibited purchases. However, there is no master list of ASB transactions and expenditures, and a determining factor is whether the type of activity is permitted in governing board policy and approved by the governing board. FCMAT recommends contacting the appropriate staff in the district business office for further guidance.

The governing board must authorize student body organizations to conduct fundraising activities. FCMAT’s Associated Student Body (ASB) Accounting Manual and Desk Reference contains guidance on issues governing boards may choose to consider when approving fundraising activities. It also contains fundraisers the governing board cannot allow and others that it should not typically allow. For further details, please see the FCMAT ASB Accounting Manual and Desk Reference, Chapter 8, Fundraising Events.

Gift cards are generally discouraged as an ASB purchase because internal controls for gift cards can be difficult to establish and maintain. As cash equivalents, gift cards can be challenging to track and control once purchased by, or donated to, the school district or ASB. Most issuing vendors treat gift cards no differently than cash purchases, with no identification, purchase authorization, or other control mechanism required. As such, without appropriate internal controls, gift cards can be stolen, used inappropriately or partially depleted without authorization or knowledge of the card holder.

As a student award, Education Code Section 44015 states that before any student awards can be allowable, the governing board must adopt “rules and regulations” permitting awards to students. Such a policy should describe what types of awards are permitted, the specific criteria for receiving an award, the maximum award value, and so on. Note that any award granted under the provisions of this section shall not exceed $200 in value unless a larger award is expressly approved by the governing board. To provide a gift card as a student award, the district’s governing board policy should specifically state that gift cards are an allowable award. In these instances, ASB funds may be used to purchase gift cards if funds were raised specifically for this purpose through an appropriately approved fundraiser.

Donations to nonprofit organizations and students or families in need usually are not allowable because they are considered a gift of public funds, no matter how worthy the cause. In general, fundraising that occurs on campus should be for the benefit of the ASB and not for other organizations. However, a student group may organize a fundraiser to support an outside organization, such as a charity, as long as the fundraising event is clearly identified as raising funds to donate to that charity. Because of liability issues, all donations should be in the form of checks made payable to the charity and should be picked up by or delivered directly to the charity each day so that funds are not deposited in the ASB account or stored on campus. 

If it is not possible to have the checks made directly to the outside organization and not stored on campus, open a trust account within the ASB specifically for these donations (with district governing board approval), then write a check to the organization in the amount raised when the fundraiser is over. It is crucial to ensure that the district’s governing board (not its designee) approves this fundraiser and that all paperwork associated with the fundraiser clearly documents that the only funds donated to the outside organization were those raised for that specific purpose. No funds from other clubs, inactive accounts, or fundraisers not approved by the governing board should be donated to outside organizations, because they were not raised for that specific purpose.

Another viable option is to work with a parent group that has its own tax identification number and sufficient internal controls and ask them to operate the fundraiser, because groups such as this are not subject to the rules regarding gifts of public funds.

For further information, please see the FCMAT Associated Student Body (ASB) Accounting Manual and Desk Reference Chapter 14 – Allowable and Questionable Expenses, subheading Donations.

The FCMAT Associated Student Body (ASB) Accounting Manual and Desk Reference can be downloaded for free at http://fcmat.org/2015-asb-accounting-manual-fraud-prevention-guide-and-desk-reference

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