PTO Today

I am a 2nd-year principal at an elementary school. In the past, the PTO and the school have shared a checking/bank account. Both groups, the PTO and the school, have amicably expressed the desire & need to have seperate checking/bank accounts.

I have some questions about how this is carried out and fulfilled. My name and the name of school secretary are required signatures for the school account. Who should be on the "signature card" for the PTO account?

The PTO President has expressed a desire to NOT have her name on the PTO account's signature card, and also a request for my name to be on the PTO signature card (in case of emergency, etc).

Can someone please explain how this process/practice is carried out for maximal effectiveness? [Whose name should be on each account]

Thanks in advance for your help.

Your issues may be larger than a mere bank account. If the PTO is seen as an independent entity (as is most common), and not under the school's umbrella, then it needs to examine its business structure.

The general rule of the thumb is that if an organization has less than $5000 per year GROSS income, it can operate pretty informally. But if the PTO is exceeding that threshold, it should be set up with the IRS as a 501(c)(3) organization. (The $5000 represents everything coming in; not what's left after expenses.)

Whether the PTO is operating properly (legally) may have an impact on your decisions regarding the bank account.

The PTO should get its own EIN (Employers Identification Number) and establish the bank account. The treasurer and at least one, probably two, other officers or board members should be signers on the account. Usually the President is one of these. (Note - getting an EIN is very simple. No cost; can be done online or over the phone with the IRS in minutes.)

Whether or not the principal should be on the account is a matter of opinion/personal preference and there is no wrong or right answer. Your official role in the PTO may also impact the decision. In our elementary PTO, the principal was a signer, adding valuable continuity and a vested stakeholder who was easy to track down for a signature. (And the principal was one of our board members.)

In our middle school PTO, the principal wouldn't touch our bank account with a ten foot pole. He and the PTO work well together, but he feels that he should have no rights to the PTO bank account.

Here on the Forum, you'll hear both opinions.

Many organizations find it very convenient to have the principal as a signer. Some feel it's a conflict of interest. In some school districts, the policy is that the principal not be on parent group accounts - so that might be a consideration. If you know the PTO is not setup legally, you might not [U]want[/U] your name on the account.

I would think it fairly unusual for the PTO President not to be a signer.

To learn more about properly organizing a PTO in the business sense, you may want to view this post.

P.S. If the PTO is not independent and basically functions as a committee under the school's umbrella, you should follow whatever the accounting practices are for the school.

As President my name is on it along with our treasurer. For some reason the bank wanted another signature also so our secretary is on it. We do only have the treasurer to write out the checks (less confusion) but we are all allowed to if it is an emergency.

WOW cannot think of one THING to add to JHB...in fact I'm going to copy and save it!!!
d

One other note. Standard accounting best practices dictate that each check have two signatures. So [B]whomever[/B] is on the account, you typically want two people plus at least one spare.

So I'm not suggesting turning over the checkbook to the principal - that's the treasurer's job. But the principal often makes a very convenient second signature.

Although anyone with signing authority [I]could[/I] write a check, it's normally the treasurer who initiates the transaction, with another signer serving as the second signature. But in the event the treasurer were unavailable and the matter couldn't wait, another signer could initiate the check with another authorized person being the second signature.

IF your PTO is set up with its own Tax Identification number and is recognized by your state with a Certificate of Incorporation, then they can set up their own account. Typically, the Treasurer and President are co-signers on the account. You should really have two and it shouldn't be a school employee.
I don't know why the President wouldn't want to be on the account, its still the Treasurer that is ultimately responsbile for the account and its transactions. However, your Vice President can step up in the event your President cannot (that should be in the bylaws anyway for events or responsibilities).

__________________
Doing it for my one and only ~~ my son!

You do want a tax identification number (EIN) to open the bank account rather than using an individual's social security number. That number is issued by the IRS.

But your ability to have a bank account has nothing to do with whether your organization is incorporated or not. The PTO can be independent of the school whether or not it's ever applied for incorporated.

Whether or not to have a school employee (especially the principal) is an organization by organization decision. That's the part that has opinions on both sides.

If the PTO is independant, as it sounds (otherwise why would the Principal be looking to separate the accounts?), then without a doubt the accounts should be separated. I don't see why the PTO President would be so reluctant to do this as it protects the group. I would never want my school's Principal to have the authority to sign our checks.

Regards,
PresidentJim

Maybe the PTO president is reluctant because she's afraid of being held liable if the PTO is sued or if $$ is misapporpriated. If the PTO is incorporated, the officers are not at personal risk. And if the officers are bonded, even better.

Exactly...

So the point is, if this PTO is incorporated, then I don't see any reason why the PTO shouldn't have their own account.

If the PTO is not incorporated, then my recommendation would be to look into becoming independant, for many different reasons. One of which is the protection of the officers that comes with it.

PresidentJim