A School Business Administrator wears many hats overseeing school operations, financial management, business planning and other responsibilities. With so many moving parts, handing off to a successor requires meticulous organization.
In addition to classroom instruction, schools regularly organize enrichment activities like field trips and school-sponsored clubs. Monies collected are held in a Student Activities Fund broken down by specific purpose. Schools assign an “advisor,” usually a teacher, who must keep detailed records of collections and disbursements for each sub-account. The school principal has ultimate responsibility to approve use of funds, but the School Business Administrator sets and oversees the process.
The state provides general guidelines for the accounting and use of these funds, but each district customizes procedures based on its unique needs. Therefore, smooth transfer from one School Business Administrator to the next depends on good recordkeeping and clear processes.
Challenge
Our client, a northern New Jersey K-8 school district serves approximately 1100 students. The parent community is highly engaged and supportive of extracurricular activities. Over several years, the District’s Student Activities Fund had accumulated more funds than it spent. Nisivoccia accountants Jenna Bauer and Petya Seaman pointed this out during their yearly audits of District finances. The District attempted to research the causation of the accumulated funds but did not have the time to specifically identify the complete accounting of the accumulation.
When the District’s School Business Administrator decided to retire, she sought Jenna and Petya’s expert advice to develop a strategy to utilize the accumulated funds to reduce the cost of future trips as well as to create a plan for implementing strong internal controls for her successor to use going forward.
Solution
Jenna and Petya are well-versed in handling school funds. Clarity and transparency are critical to protecting the District and the assigned fund advisors, from errors or misunderstandings about how money is collected, recorded, and disbursed.
To begin the process, Jenna and Petya reviewed current District policy to ensure it adhered to the appropriate statutes and regulations. They also reviewed the District’s financials. Accounting procedures for Student Activities Funds require that each activity and/or student group, defines allowable expenditures and has a clear audit trail.
Following the review, they set up meetings with the Principals, Superintendent, School Business Administrator and the people responsible for day to day accounting for student activities to be sure they fully understood the needs of the District and the requirements of the State. One main objective was to identify which non-curricular school activities should be included in the Student Activities Fund, and outline how each activity would collect and disburse funds. Finally, they collaborated with the outgoing School Business Administrator to document a process of clear internal controls. To address the issue of accumulated funds, Jenna and Petya recommended allocating a portion of the amount each year, over the next several years, to reduce the cost for 8th grade activities until the funds were exhausted.
Result
Once the plan was complete, the School Business Administrator arranged a meeting with the Superintendent, School Principals and school secretaries/club advisors to present the final plan. Jenna, Petya and the outgoing School Business Administrator introduced the new plan and fielded questions during an extensive Q&A period. Their goal was to ensure that everyone understood the reason behind the changes and agreed with the proposed internal control procedures and spend down plan. By the end of the meeting, all interested parties agreed to adopt and implement the recommendations.
As a result of the comprehensive procedures and detailed plan, the District improved internal controls, ensured compliance with State law and regulations, and implemented a plan to reduce the accumulated funds. The outgoing School Business Administrator retired with peace-of-mind and a seamless transition to her replacement was completed.