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Earlier this year, students on a Florida debate team were devastated to discover that their coach had stolen thousands of dollars from the club’s student activity fund, emptying its account and leaving the team unable to pay for meals provided at debate tournaments. Given the coach was the only one responsible for overseeing the funds, by the time anyone realized the money was stolen, it was too late to get it back.
Unfortunately, this is not an isolated incident. Historically, student activity funds have posed serious issues for school districts, despite their low monetary value relative to the total budget. Often, club advisors or team coaches manage these funds under the leadership of a school administrator rather than a full-time accountant employed by the school or district, which makes them especially vulnerable to error, misuse, and fraud.
Despite the balances maintained in typical student activity accounts, mismanagement of student activity funds can have an outsized impact on students, educators, and administrators. One club’s failure to pay a bus company for transportation, for example, could risk the bus company withholding service to an entire district. Traditional payment methods make it difficult to pay for student meals while traveling.
Principals, school boards, and district chief financial officers (CFOs) have limited visibility into the management of student activity funds, which forces them to remedy issues retroactively. Fixing accounting errors requires administrators to spend significant time and energy on small problems, which could be better spent addressing critical, district-wide issues impacting students and teachers.
School districts can use digital wallets to meet these revised regulatory requirements including some provisions for internal service funds under GASB 84 and ensure student activity funds benefit the students who generated the funds.
Digital wallets drive accountability and transparency
Districts can implement digital wallets to quickly establish spending limits and approve transactions in real-time, helping them proactively and efficiently manage student activity funds.
Student activity funds are a unique type of funding with a distinct set of challenges. For instance, these funds are frequently used outside of school hours because that’s when extracurricular activities occur. If cash or a check is left in a locked classroom, there is no way to access that funding until the following morning when the school reopens. Digital wallets are an online solution ensuring that compliant funding is accessible to students and their advisors anywhere, at any time.
Another hurdle administrators face is that these funds are usually dispersed across various student groups, held in separate sites and overseen by different individuals, all leaving room for disorganization and misuse.
Fortunately, digital wallets centralize management and oversight of student activity funds, either at the local school level or district level, while preserving individual club access and control to the funds. As such, school CFOs can use a single platform to monitor each school’s purses, but each school has unique individual access to their purses and reporting.
Additionally, students raise these funds at events like bake sales or car washes, meaning they’re collected and distributed in cash. As such, these funds are traditionally managed in paper ledgers or with paper receipts, making auditing and reporting requirements a time-intensive burden. However, using digital wallets, administrators can convert cash funds into digital dollars and manage them in a controlled environment, eliminating paper-based and manual processes.
Digital wallets facilitate efficient reporting processes to ensure schools meet standards like GASB-84. Regardless of how big or small the transaction is, digital wallets give administrators clear visibility and total control over funds.
Digital wallets: Quicker, safer and more compliant
These features can dramatically shorten audit preparation times by automatically generating real-time, accurate financial records, saving critical time for administrators and significantly reducing the burden on student organizations’ advisors and coaches.
Conversations with Internal Auditors indicate that auditing these funds is a significant use of time. Some large districts dedicate over a dozen staff yearly just to audit these funds. Efficiencies created by digital wallets will allow for staff to be redirected to other priorities and save audit time and burden.
Students deserve easy and reliable access to the funding they earn for their student-led organizations. With digital wallets, CFOs and administrators can securely and effectively manage student activity funds. As a result, administrators and educators save valuable time, and students benefit from dependable access to their funds.
