Question: Is it an acceptable practice to give cash prizes to students? District staff wants to hold a tobacco education poster contest that would have a cash prize for the first, second, and third place winners. If this is legal, what would be the mechanics of paying these prizes? What sort of documentation would be required to issue the check, would we need a W-9 form, and so forth?

Response: Education code 44015 defines the criteria and process for employee or student awards:

"44015. (a) The governing board of a school district may make awards to employees who do any of the following:

(1) Propose procedures or ideas that thereafter are adopted and effectuated, and that result in eliminating or reducing district expenditures or improving operations.

(2) Perform special acts or special services in the public interest.

(3) By their superior accomplishments, make exceptional contributions to the efficiency, economy, or other improvement in

operations of the school district.

(b) The governing board of a school district may make awards to

pupils for excellence.

Before any awards are made pursuant to this section, the governing board shall adopt rules and regulations. The board may appoint one or more merit award committees made up of district officers, district employees, or private citizens to consider employee proposals, special acts, special services, or superior accomplishments and to act affirmatively or negatively thereon or to provide appropriate recommendations thereon to the board.

Any award granted under the provisions of this section that may be made by an awards committee under appropriate district rules, shall not exceed two hundred dollars ($200), unless a larger award is expressly approved by the governing board.

When an awards program is established in a school district pursuant to this section, the governing board shall budget funds for this purpose but may authorize awards from funds under its control whether or not budgeted funds have been provided or the funds budgeted are exhausted."

As noted in the code, the district should have established policy and procedures in place for such awards. CSBA does have a sample board policy and administrative regulation to address this item.

Cash awards are usually discouraged because internal controls cannot be established and documented. Also, with cash awards there is not type of control on what the money is spent on, so there can be negative outcomes depending on what the cash award is used for. Whenever possible, rather than giving cash awards, gift cards to restaurants or specific stores should be discussed. FCMAT suggests that you contact your independent auditor for acceptable methods of payment of a cash award if there is no other type of specific item or gift card that can be purchased.

3/26/03