Just wondering if anyone else has ran into this - last year the president of our PTO "lost" about $400 in cash (personally, the rest of us think she stole it, didnt lose it). We (vice pres, treasurer and myself - the secretary) immediately went to the principal and was told that the districts legal department said that PTO is a separate entity of the school and they could not provide us with any advice or help in the situation. We even went to the district office and was told the same. With that, we gave up and at the end of last year, closed the bank acct and disbanded the pto. The rest of us on the board refused to continue with a president that could have stolen money.
About a week ago, the former treasurer rcvd a phone call from the principal, asking for all bank statements/records, claiming that the district was auditing the former pto's monies. Now in a way this is great news, bc of the situation with the president, but the treasurer and vice president are nervous and concerned about what this means (apparently they dont have all of the receipts for last year).
My question is in regards to the audit - how can the district audit if we are a separate entity and couldn't help us before? I am perfectly fine with an audit and think it should have been done last yr after what happened, but just confused as to why now? Has anyone else been through this before?

Thanks!

I'm brand new to this, (I just joined our PTO and have only been to one meeting so far) but appreciate your question and will watch for answers because of what our PTO is currently going through:

After maintaining a PTO bank account with safeguards for several years (with no problems and all funds/receipts accounted for) our School District suddenly demanded that our PTO turn over our bank account and balance to them. They withdrew the money and closed the PTO's account. They said that they were required by the state of Colorado to keep all PTO money in their account as a line item under our School's Activity Fund to protect against fraud, theft, & liability issues. (I can see their point on this, because our PTO was using their tax ID# at the time, and didn't have one of their own, nor did they have their own insurance.) Now if the PTO wishes to access any of their money, they need to provide a written requisition to the school and be approved by the secretary before they can access their money.

Some PTO members are upset about this, and would like to have a separate bank account, (again set-up with safeguards), their own tax ID# and their own insurance. This alternative has seemed to infuriate the school, and they are insisting that the State of Colorado will not allow this, but we are not finding any evidence to support that claim.

I have also been told that at the last PTO meeting before this, only 2 parents were in attendance (compared to many teachers and administrators) and the Principal made a motion requiring the PTO to pay the School $500 per semester to be used at the principals discretion. The motion was passed.

Now the PTO has very little funds left. They are currently holding a fund raiser and have committed the money they will raise to playground improvements. (which will cost $2,000) However, they may not be able to fulfill that commitment due to the $500 obligation. When asked what would happen if they didn't have enough money in their account and couldn't pay the $500, the secretary said it would go into arrears and be owed. Does this mean that the members of the PTO are liable for this debt? Can it be legally collected upon? Is it legal for a school to set an ongoing payment obligation for a PTO in the first place?

I don't know what to think about all of this and am having a hard time getting straight answers. In a way it is a similar situation to your stealing situation. Should a school also have internal safeguards in place to protect the use of PTO money...especially if the school is controlling the PTO (by majority) and the PTO's money (by housing the account) and can elect to not have to disclose how the money was spent?

These are just a few of my questions, and I don't have all the facts I'm sure. However, I would think that if your School District wants to audit your PTO's old account you should count your blessings! You reported the missing money to them and they may help you discover where it went, when it went; and give you a chance to bond together in the quest for an honest and cooperative financial relationship. Too bad they didn't have your back when you needed them and it wasn't convenient (or legal?) for them to get involved, but maybe this will help you all make better arrangements for a future PTO. OR...perhaps they have recently discovered that they WERE liable for the PTO's account and DID have a responsibility...I would ask them this (again). That is what our School District is saying...that they were liable for anything that could happen to the PTO funds, and so our PTO MUST be "under their umbrella" for liability reasons, and therefore they must manage our account. (But if you had had your own tax ID number, and insurance, the case may have been different and they would not have been liable, but I don't know the answer to that yet...)

Something to think about anyway, and it didn't look like anyone else had responded to you so I thought that I would!

The way I understand it, if you have your own tax ID# and your own EIN# you are a separate entity and your funds cannot be touched by the school or the school district; if you are using the school's numbers then that doesn't apply.
When I became President I discovered that even though we had our own numbers it was the school's information that was listed on the bank account and being used by the board; we immediately closed the bank account and moved it to a new bank, and the correct numbers were supplied to our board members, even though the prevailing attitude seemed to be that it didn't matter which ones we used.
Now I've been told that while the school has always been very good about allowing us to store items and cash in their safe, if an auditor from the school district finds them in there they become the property of the school so the only thing we keep in there now is our checkbook.

Our School Board has had enough problems this year between budget cuts and other issues that the chances of this happening has become much more real in my opinion.

As to the OP's question, I also would be curious about why no one was interested in the problem last year and now they suddenly want these documents; I think a talk with a lawyer now might save a lot of hassle down the line.

I too will be very curious as to the answers above. I am also from Colorado and our accountant for PTO has been very strict that we keep our books totally separate from the school's books. All monies are put into our PTO account and paid out - sometimes reimbursements go to the school. But we have never heard about that law in Colorado. I am having her check into this, as well.

My understanding has also been, that if you have a separate i.d. number and everything is done as a separate legal entity, that the funds must be kept separate. Otherwise it would be co-mingling funds - which is not legal!

I really hope this is not the case, as I spend much of my day as PTO President dealing with a difficult school board. There is no doubt in my mind they would take every penny from our group and use it as they wanted. And the whole point of enrichment for our children would go by the wayside. I think this would end up disbanding our PTO very quickly!!

I cocur with the responders who say that if the PTO has its own tax id number and is banking using that number, the money (and risk and responsibility) belongs to the PTO, not to the school. I guess there could be unique laws in Colorado, but I'd be checking that out carefully before assuming the district can have control over the PTO's money.

I would be very curious why Michelle's school is suddenly so interested in the PTO's record-keeping. I would ask lots of questions and ask to be included in the financial review process. Those records belonged to your PTO, and as a former officer, you should want to be part of the review team. I am not a lawyer or an accountant, so you may want to seek professional advice if you or your fellow former officers are put in a difficult situation regarding the past financial controls.

Ideally, a PTO should be doing its own annual financial review in which case the missing money might or might not have been found.

Someone above asked about whether the officers could be personally responsible. As soon as your PTO starts handling other people's money, it's a good idea to incorporate in your state. That simple step protects the indivdual officers from any personal liability.

To New-At-This, I don't see how a school can demand that your PTO pay more money than it has. You aren't under contract to them. You're just trying to do good things for the students. If your budget can't support the $500/semester payment, then your members shouldn't have approved the expenditure. This is a good time to do a formal budget so your members, and the school admin, can see how you expect to raise money, how much, and how you plan to spend it. We have an allocation for the prinicipal to spend at her discretion in our annual PTO budget, but it's contingent (like all expense categories) on our ability to raise the funds we projected. If our fundraising falls short, we will revisit and amend our expense budget. It would be a very uncooperative principal who would demand that she get her total allocation if it meant we had to eliminate a family event or some enrichment actiivity due to low fundraising.

If you're not sure how to institute some good financial controls, take a look around this website. There's lots of advice that can help your PTO protect its money and hopefully keep the district eyeballs out of your business.

Thank you all so much! I obviously have much to learn and am so grateful for this website! (I just hope I didn't get too off track from the original topic posted here!)

I hope our PTO officers can survive through this. One officer walked into the school's office and got publicly scolded and screamed at for 20 minutes in front of other parents by the school secretary! The Principal has threatened to stop supporting the PTO, and they say we can no longer have a PTO unless we do whatever we must to keep her support. Only 2-5 parents come to the PTO meetings (compared to at least 10 school staff members) as the climate is so hostile. Votes are always won by the school because of the imbalance. The school staff members say they are intimidated and afraid to vote against the principal for fear of adversely affecting or losing their jobs. All 3 of the involved parents say they want to start over and get another bank account, ID #, insurance, etc., but the school secretary got very upset over the notion and started insisting that we get a lawyer if we want to do that because we will need one. What a mess! I'm wondering where the "betterment of the children" is in all of this! That's what I wanted to do by joining PTO....but it looks like that may be a quite a ways off from where we are now! So thanks for your experience and comments!