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PTA funds should not be used to purchase personal gifts, equipment for staff lounges and lunchrooms or for furnishings for principals’ offices. Personal gifts include gift cards and gifts for baby showers, Secretary’s Day, bereavements, weddings, or birthdays. If the membership determines that such items are necessary, the individual members can make personal donations to purchase the designated items. These donations should not be commingled with PTA funds.

PTA programs promoting parent education, home and school cooperation, children’s well-being, community betterment, and funding for education must have first priority on PTA funds. However, when a PTA is asked to purchase or provide materials for the local school, it is necessary to follow certain guidelines so that the gift will be acceptable to both the PTA membership and the school district.

When making gifts, a Fiduciary Agreement should be completed by the PTA and signed by all involved showing all parties acknowledge and agree to gift restrictions. The Fiduciary Agreement should then be accepted by the school board and recorded in the school board meeting minutes. If a Fiduciary Agreement is not completed, gifts to the school that are accepted by the school district become the property of that district and can be moved or used at any school within the school district.

Certain gifts, such as funding for field trips, enrichment programs, teacher aides, special instructors, books, classroom supplies, or major equipment purchases, require prior approval from the PTA membership, school principal, and school district. Many school districts have policies and regulations on accepting gifts. Be sure to check with the school district before purchasing any materials or gifting funds to the school.

PTA members must approve all expenditures of funds, including the amount of monies to be used for gifts to the school, prior to the expenditure of those funds. This approval must come in the form of a motion and vote at a meeting of the membership and must be recorded in the association minutes of the meeting. Since PTA membership is new each year, funds cannot be committed from one year to the next unless funds were raised for a specific purpose and are therefore restricted. One example might be funds raised over three years for a major purchase. If restricted funds are not used for their designated purpose the funds must be returned to the donors or the donors must agree to a new purpose.

A gift to the school should benefit the largest number of students possible. Gifts should be in the form of a donation, presented and accepted by the school board at a school board meeting and recorded in the school board minutes. This ensures the school district will assume responsibility for the liability, maintenance and upkeep of any equipment purchased. Check with the school district to determine whether it is better to donate money for any equipment and have the district purchase the item(s) instead of the PTA purchasing the item(s) and then gifting them to the school.

At the first association meeting following the acceptance of the gift by the school board, a description of what was given to the school district must be noted again, and the date the school board accepted the gift must be recorded in the PTA association minutes.

The school district is subject to fiduciary responsibility. If the school district accepts money or equipment that is given subject to a restriction, then the restriction must be honored or the law will impose personal liability on the officers or trustees of the school district in their individual capacities. It is possible that the law would merely require the refund of the gift not used for the restricted purpose. The law does not do that automatically – there must be a complaint filed with the school district by the donor.

If the school district or any recipient is not willing to honor the restrictions on use which accompany a charitable contribution, then the recipient must decline to accept the gift. There is no duty of any recipient, including a PTA, of an offered charitable gift to actually accept the gift if there is a restriction attached.

Model Practices for Districts, Councils and Units

It is very important that certain records be retained. The current letter of determination, the current bylaws and standing rules approved by the state parliamentarian and the articles of incorporation (for incorporated PTAs) should be readily available at all times.

A policy was adopted by the State Board of Directors and Board of Managers November 2016 and meets all applicable state and federal statutes as it relates to document retention and non-profit organizations. This policy is intended as a guide for model practices at the local district, council and unit level.

Purposes of the Policy include (a) retention and maintenance of documents necessary for the proper functioning of local PTA as well as to comply with applicable legal requirements; (b) destruction of documents which no longer need to be retained; and (c) guidance for the Board of Directors (the “Board”), officers, and other constituencies with respect to their responsibilities concerning document retention and destruction.

Please refer to the Toolkit online at toolkit.capta.org for the complete policy recommended for all districts, councils and units.

RETENTION SCHEDULE

PERMANENT STORAGE

Accounting & Finance

• Annual Financial Statements & Financial Review Reports
• Cancelled Checks – special, such as loan repayment
• General Ledger

Contributions/Gifts/Grants

• Contribution Records
• Documents Evidencing Terms of Gifts

Governance

• Articles of Incorporation & Amendments
• Bylaws & Amendments
• Minute Books, including Association, Board & Committee Minutes
• Annual Reports & Returns to State & Federal Agencies
  • IRS 990N, 990EZ or 990
  • Franchise Tax Board 199N or Form 199
  • Attorney General –
    • RRF-1
    • CT-TR-1 (if applicable)
    • Raffle Reports (if applicable)
• Secretary of State SI-100 (if incorporated, filed biennially)
• IRS Rulings
• Licenses and Permits
• Employer Identification Number (EIN) Designation
• Any other correspondence with State or Federal Agencies

Electronic Mail (Email)

• Emails considered important or of lasting significance

Retirement & Pension Records

Insurance

• Property, D&O, Workers’ Compensation & General Liability Insurance Policies
• Insurance Claims Records

Legal Correspondence

10 YEAR STORAGE

• Personnel Records
• Employee Contracts
• Personal Property Leases

7 YEAR STORAGE

• Accounts Payable
• Accounts Receivable
• Bank Statements, Reconciliations & Deposit Slips
• Cancelled Checks – routine
• Credit Card receipts
• Employee/Business Expense Reports/Documents
• Interim Financial Statements
• Grant Records

3 YEAR STORAGE

• Conflict/Whistleblower forms

2 YEAR STORAGE

• Hard copy correspondence and internal memoranda – routine matters
• Electronically stored documents – routine matters

12 MONTH STORAGE

• Emails – routine

California State PTA believes books and reading are vitally important to the lives of children and the development of an informed citizenry. The public library is a symbol of our democracy, and a good school library is essential to an effective educational program for lifelong learning.

This section defines or explains terms that financial officers and chairmen may encounter in their PTA work.

• Approval by Membership – The requirement that all expenditures, programs and projects, including those specified in the budget, must obtain approval and/or ratification by the membership. All approval of expenditures, programs and projects MUST be recorded in the minutes.
• Authorization for Payment – An authorization for payment documents approval to pay bills for services or supplies, or reimbursement to a member for expenses. After approval by the association, the completed authorization for payment permits the treasurer to write checks. All bills, receipts and invoices should be attached to approved authorization.
• Bylaws – Specific rules of operation for the orderly conduct of business adopted by vote of the members. All PTA bylaws have certain specified, starred sections in common which cannot be changed. Any change in bylaws requires approval of the state parliamentarian, a 30-day prior notice and a two-thirds vote of the membership.
• Cash Verification Form – A form to document receipt of coins, currency and checks from membership, fundraisers, and donations, which protects and safeguards volunteers’ handling of PTA funds.
• Carry-over Funds – These funds represent the amount which is set aside to begin operations at the beginning of the next PTA fiscal year, prior to the onset of fundraising activities.
• Certificate of Insurance – A document issued by the insurance broker certifying that an insurance policy covering general liability is in force. A Certificate of Insurance is emailed to all unit, council, and district PTAs in good standing. A copy may be obtained by contacting the California State PTA insurance broker.
• Channels – The formal communication route through the association to ensure that each level within the association is informed. In PTA, the channel is from the unit to the council (if in council) or from the unit to the district PTA (when there is no council), from the council to the district PTA, and from the district PTA to California State PTA.
• Commingled Funds – Funds from two organizations deposited together. Because a unit is a 501(c)(3) nonprofit association, it must comply with all Internal Revenue Service (IRS) requirements, regulations and laws. The IRS considers all funds in PTA accounts to belong to the association regardless of source. A PTA must handle only those funds over which it has full control and the total amount must be declared as gross income to the PTA. All funds in the PTA account must have association approval for disbursement.
• Contract – A legally enforceable agreement between two or more persons or organizations. Contracts must be approved by the PTA membership before being signed by two elected officers, one of whom must be the president.
• Contributions – Donations of money, property, or services received by the PTA from individuals or businesses. PTAs must follow Internal Revenue Service guidelines for receipts for contributions.
• Embezzlement – Stealing of money entrusted into one’s care by means of fraud for one’s own use.
• Facilities Use Permit – A permit required by most school districts that when approved authorizes the PTA to use school site facilities.
• Fiscal Year – The financial accounting period established by the PTA, and identified in the Bylaws for Local PTA/PTSA Units, Article XIII, Section 7, as a time for the association to close its financial books and records for the past 12-month period. The IRS is notified of the fiscal year at the time of organization when IRS Form SS-4 is submitted.
• Founders Day Freewill Offering – A freewill offering commemorating the founders of PTA. Contributions are forwarded through channels to California State PTA and set aside in a special fund for leadership services. The contributions are considered as “funds not belonging to the unit, council, or district” and are not included as income in the budget.
• Gifts to Individuals – A personal gift to a PTA member or school staff. Gifts to individuals cannot be paid for with PTA funds. Personal gifts include gift cards, gifts for baby showers, secretary’s day, bereavements, weddings, or birthdays. If the unit wishes to recognize an individual, donations must be collected as freewill offerings and the money maintained separately from PTA funds.
• Gifts to Schools – Gifts to the school that benefit the largest number of students possible. Be sure to check with the school district before purchasing any materials for the school. Gifts should be in the form of a donation, presented and accepted by the school board at a school board meeting, and recorded in the school board minutes. Always use a fiduciary agreement.
• Good Standing – The term applies to units, councils and districts that have met all requirements specified in the bylaws, which includes remittance of insurance premiums and membership per capita to California State PTA by the established due dates.
• Grants – A specific set of dollars given by businesses, foundations, and corporations to an organization to perform specific functions. Projects for which PTA is seeking grants must promote the Purposes of the PTA and be relevant to the goals of PTA.
• Gross Receipts – The total amount of receipts before any deductions are taken or expenses are paid. For the purpose of completing the IRS Form 990, monies forwarded through channels to the California State PTA office are not considered gross receipts. This includes membership per capita, Founders Day freewill offerings, and insurance premiums.
• Hold Harmless Agreement – An agreement in which the signing party assumes responsibility for all acts and all liability for any injuries that occur related to an event. PTA MUST NOT SIGN A HOLD HARMLESS AGREEMENT WITHOUT PERMISSION FROM AIM INSURANCE. California State PTA insurance does not cover vendors, concessionaires, or service providers; these entities must provide Evidence of Insurance to each PTA unless annual Evidence of Insurance has been filed with the California State PTA Insurance Broker. A Hold Harmless Agreement may be found in the Insurance Guide.
• Membership Per Capita – The amount of money that must be forwarded through channels for each membership received in the unit in order to be considered a unit in good standing by California State PTA.
• Minutes – The permanent legal record of all action taken by the association and the executive board. All financial reports become a part of the minutes.
• Noncommercial Policy – A policy requiring that the name PTA, a registered service mark, or the names of PTA officers shall not be used in conjunction with the commercial activities of other organizations including, but not limited to, the promotion of their goods and services.
• Ratification – The approval by the membership of an action taken by the PTA executive board as specified in Bylaws for Local PTA/PTSA Units, Article VIII, Section 2b.
• Reconciliation of Funds – The process of bringing into agreement the bank balance as shown on the bank statement, the checkbook ledger, and the check register. The purpose is to ensure that the bank records and the association’s financial records are correct, to identify outstanding checks, and to determine the actual balance against which future checks may be drawn.
• Reimbursement of Expenses – Allowable out-of-pocket officers’ expenses shown as a line item on the budget adopted by the association are reimbursable. Reimbursement is made upon the submission of an expense statement and/or receipts.
• Sales Tax – A tax imposed on the purchase of products. Units are considered consumers by the California State Board of Equalization and they are not required to charge sales tax on merchandise sold. Units do pay sales tax on the price of merchandise purchased for resale or use.
• Scrip – A coupon which may be redeemed in lieu of using cash at the store that issued the scrip. Scrip is purchased, usually from grocery stores, in large amounts for a discount off the face value. The PTA sells the scrip at the full value, raising funds for the unit. Many companies now offer electronic e-scrip.
• Scholarships – Funds to assist students in furthering their educational objectives. The scholarship program, including the amount and number of scholarships to be awarded, must be approved by the membership.
• Sponsorship – Financial support received from a business. The law permits a PTA to receive corporate sponsorship income tax free, if the sponsorship is linked to a specific event and the event is held once per year. The PTA gives the corporate sponsor an acknowledgment of thanks in return for the sponsorship.
• Unallocated Reserve Funds – The amount remaining after making allocations for budgeted programs and activities, and may be used to cover any unexpected or unplanned expenses in the current fiscal year. The association must adopt a budget amendment to transfer funds from Unallocated Reserves to a specific budget category prior to disbursing funds.

 

It is preferable to gift the funds to the school district directly for the services required, since the school district has experience and expertise as an employer (Fiduciary Agreements and Gifts to Schools). A financial gift must not be viewed as an ongoing commitment, since each PTA association must adopt the annual budget. To determine whether a person should be considered an employee or an independent contractor, the IRS has rules that help determine how to classify the people the PTA hires. This affects how much the PTA pays in taxes, whether the PTA needs to withhold from workers’ paychecks, and what tax documents the PTA needs to file.

An individual’s desire to be one or the other is not a deciding factor. Serious consequences can occur if a person who is actually an employee is paid as an independent contractor. The unit can be held liable for the individual’s taxes that should have been withheld, as well as any applicable penalties. An employer must generally withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment taxes on wages paid to an employee. However, an employer generally does not have to withhold or pay any taxes on payments made to independent contractors.

Here are seven things every PTA should know about hiring people as independent contractors versus hiring them as employees.

The IRS uses three characteristics to determine the relationship between an employer and worker:

• Behavioral Control covers facts that show whether the PTA has a right to direct or control how the work is done through instructions, training or other means.
• Financial Control covers facts that show whether the PTA has a right to direct or control the financial and business aspects of the worker’s job.
• Type of Relationship factor relates to how the worker and the PTA perceive their relationship.

If the PTA has the right to control or direct not only what is to be done, but also how it is to be done, then the worker is most likely an employee.

If the PTA can direct or control only the result of the work done – and not the means and methods of accomplishing the result – then the worker is probably an independent contractor.

An employer who misclassifies a worker as independent contractor can end up with substantial tax bills.

Additionally, the employer can face penalties for failing to pay employment taxes and for failing to file required tax forms.

Both employer and worker can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.

A simple and appropriate way to thank volunteers for their time and effort supporting the PTA is to plan and budget for a volunteer appreciation event near the end of the school year. Invite all volunteers who helped with PTA activities and programs during the year. The PTA may present each volunteer with a certificate of recognition. If the PTA wishes to reward volunteers with personal gifts, the association may vote to do so and seek out donations to cover those items. Alternatively, officers or other members may make donations to pay for such items.

The PTA may also wish to consider recognizing volunteers through the California State PTA Honorary Service Award Program.

California State PTA understands the importance of staff appreciation in building a stronger home-to-school connection. PTA resources may be used for this type of expense.

Acceptable expenditures may include a staff lunch as long as the expenses follow the guidelines for hospitality and the expenses are approved by the membership.

Personal gifts for staff must not be purchased with PTA funds. You may take freewill cash donations/gifts for this purpose but the money must not be deposited in the PTA’s bank account.

Major purchases such as computers, copy machines, air conditioners, and/or audiovisual equipment, as well as books and classroom and playground equipment, must meet school district standards and may be required to be purchased through the school district. If possible, try to reach an agreement with the school district stating that the purchase remains at the school site to which it was originally donated and that the PTA can use the equipment for PTA purposes (See Fiduciary Agreements and Gifts to Schools).

Technology plays an important role in the future of education. PTAs will likely be asked to help supply technological equipment and materials to the schools. The following guidelines are for PTAs’ use when purchasing computers and/or other technological equipment:

All purchases should be made in consultation with the school district. PTAs should study the school district and school site computer plans before purchasing any technological equipment. In making equipment (or software) purchases, PTAs should determine how the equipment will be used to enhance the instructional program and make sure that:

• There is a comprehensive school district plan for how equipment will be used in conjunction with school curriculum;
• The equipment to be purchased falls within the school district’s overall plan;
• The staff is trained to use the equipment, and there is an ongoing in-service training program to keep teachers current with technology opportunities; and
• Adequate school district funds will be allocated for appropriate software purchases.

In order to fulfill PTA’s parent education responsibility, PTAs are encouraged to secure a commitment from the school principal and the school board that the computers donated may also be used by PTA for parent education programs, website development and PTA newsletters, etc., when not being used in conjunction with the regular school curriculum.