Question: Can a Student Body Account donate funds to a Parent Group or PTA? If not, why?
Response: ASB donating funds to a Parent Group or PTA is considered a gift of public funds. ASB donating directly to a student or person impacted by a natural disaster, or an outside organization that does not have non-profit status, would not only be considered a gift of public funds, but there would also be tax issues. Educational agencies, including ASB’s, are tax exempt due to the various funding sources they receive. This means that donations made by the ASB or educational agency are considered a gift of public funds and are considered unallowable. When taking that rule in the strictest sense, that would include making a donation to a community sponsored fundraiser regardless of the reason.
"Gift of Public Funds" is mentioned in the California Constitution. Article 16, Section 6, and provides that the State Legislature cannot authorize any county or other political subdivision to make a gift of public funds. Section 6 exempts certain types of expenditures from the prohibition, two of which may apply to school districts. First, Section 6 does not prohibit a school district from joining with other public agencies to enter a joint exercise of powers agreement, joining a publicly owned non-profit corporation, or joining another public agency as authorized by the Legislature in order to provide for payment of workers’ compensation, unemployment compensation, tort liability, or public liability losses. Second, Section 6 allows a school district to provide aid to private persons for the purpose of clearing debris during a period of disaster, if found to be in the public interest and if the aid is eligible for reimbursement.
Since a donation to a parent group/PTA does not fit within the above two exemptions, the governing board would need to make a determination as to whether this expenditure is in the public interest. On the surface, this expenditure does not appear to meet the legal criteria.
We would suggest that if the club does want to fundraise for the PTA/parent group, they should work directly with the organization so that the funds raised go directly to the community organization rather than be deposited into the ASB bank account first. The students then benefit from the experience of raising money for a cause they have approved and believe in, yet the ASB bank account is not part of the transaction at all. Then there are no issues relating to gift of public funds.
3/31/06
