Question: A district has called with a question regarding spending of student body funds. The high school principal is going to propose at a board meeting that the student body purchase a van for the district and wants to finance the van and the student body would make payments over several years. Can this be done legally?

Response: There are quite a few considerations involved in the answer to this question. The ASB can purchase a vehicle. Generally, good fiscal policy dictates that ASB profits purchases should benefit the general student activities. If the ASB purchases the vehicle, it must be responsible for all repair, upkeep, and adequate insurance (refer to CDE Accounting Procedures for Student Organizations).

Many school district governing boards have by policy prohibited student body organizations from the ownership of equipment or other fixed assets to avoid problems relating to ownership and insurance. In such districts where fixed assets are purchased by student body organizations, the organization usually donates them to the school district. The district then sets up appropriate accounting records and obtains necessary insurance coverage.

If student body organizations are permitted to acquire ownership of fixed assets, attention should be given to their control through procedures as noted above.

There is concern regarding the ASB entering into a contract to purchase the vehicle. The question of the ASB membership being composed of minors. Also, what is the personal liability of the adult(s) who become involved in the negotiations of the contract? FCMAT recommends that the concept of the ASB purchase is introduced at the board meeting and the board gives direction for further information to be collected and presented. Then, at the next board meeting, information from legal counsel and risk management issues can be discussed prior to any decision.