Question: Some questions have come up about generating revenue for school sites to spend on curricular use through the general fund.  We have organized high school ASB's.

First, can a school site sell non-required supplies (paper, pencils, etc.) to students at a profit and have the funds go directly into the general fund for expenditure on curricular programs?

Second, if the answer to the above question is "no", then can the ASB sell the items, and donate the proceeds to the district for use in the curricular programs?

Response: It is perfectly acceptable for a school district and/or ASB to have a fund-raiser.  That fund-raiser would need to have specific board approval in any case, so you would need to verify what board policy states as the correct process to do so.

There is nothing barring a profit being made on non-required supplies, and nothing that bars that profit going to the district rather than to ASB.  But, if ASB sells the items, the funds should stay with ASB, as ASB should not make a "donation" to the district.  Commingling of funds is never advised, and transferring these funds would be partially classified as commingling of funds.

We are not aware of districts selling non-required supplies to supplement site budgets, as that is normally an ASB fund-raiser, with the funds then going to ASB for the "extras". But that does not mean the district cannot do so unless there are laws or board policy specifically stating it cannot be done. Normally, business activities done by an educational agency are recorded in enterprise funds, rather than the general fund, though, which is part of your question.  For that reason, we suggest you verify with your independent auditor whether or not it is acceptable for these supplies to be sold by the district rather than ASB; also work with your auditors to ensure you are using the appropriate fund and entries to record the transactions related to revenue and expenditures.

Don’t forget that there are tax consequences when profits are made on selling supplies like this, so ensure you are clear on taxing guidelines as well.

10/29/07