Response: Education Code 48937 establishes the guidelines for the supervision and audit of student funds.  As a result, your district should have policies and procedures that govern both the business and accounting practices of the ASB.  With that said, there is not a code section that would apply specifically to deficits in an ASB budget, whether for a specific club or for the general student body account as a whole.  However, prudent business practice would dictate that deficit balances are cleared when the books are closed at the end of each fiscal year.

Within the ASB Constitution you should find information related to business practices of the organization.  Our suggestion to schools, regarding their ASB budgets, is that they be balanced each month and that ongoing monitoring is occurring, including review of budget versus actuals.  Doing these types of reviews on a monthly basis provides a real time view of the actual income and expenses and helps to avoid the prospect of deficit balances.  In any event, best practices and accounting protocol both dictate that negative balances be cleared at the end of the fiscal year.

A decision cannot be arbitrarily made that the ASB take money from clubs to offset the overall ASB financial deficit.  Remember, clubs are raising money for a specific purpose that is voted upon by the students.  The clubs having to use their fund-raising proceeds to cover another entity’s deficit is not fair to those students.  And, remember that all high school clubs, because they are considered organized ASB, must have pre-approval prior to any expenditures occurring.  This pre-approval must be by three individuals per education code:  a student representative, the club advisor, and the principal/designee.  It is hard to imagine various clubs voting to use their funds for another’s club’s deficit.  And that deficit cannot be covered without that specific approval occurring.

But the deficit must be covered somehow . . . in many cases there can be a temporary "loan" from the district that the ASB has to pay back over the next fiscal year.  It’s an important conversation to have. The fact is that the deficit should not have occurred in the first place so it’s a good opportunity to change overall practices, procedures and oversight so that it does not occur again.

9/7/07