Question: Policy on Carry over of funds

Where do people stand on the issue of carrying over funds from year to year? Our 5th grade committee receives a budget for end of year activities. They sometimes hold a fundraiser in the name of the PTO to supplement their committees budget. If all of the money they raise themselves is not used that year they want it to carryover to the next year's 5th grade budget. Our new treasurer is against the practice as it creates accounting issues (the amount has been contested in years past and has become a very contentious issue of late.) He contends that the money not spent by any committee, should go back into the big PTO pot and we begin again the next year. Any comments or advice?

Asked by Anonymous



Advice from PTO Today

Craig writes:
This is an interesting question and different from the one we usually hear. (Should PTOs be allowed to carry over money from year to year? Yes.) The way I understand it, it's essentially an accounting issue. You normally allocate, say, $500 to the fifth grade committee. If there's $200 left over at the end of the year, should next year's budget be $500 or $700? The committee feels like it has some right to the money because they raised some of it themselves. Certainly zeroing out the budget for the new year is a standard accounting practice. The idea is that you budget based on what's best for the organization this year vs. what you needed last year. If the fifth grade committee needs $700 instead of $500, let them make the case, that thinking goes, and you can balance it against all of your other needs for the year. The problem with that practice is that people decide if their budget is going to be zeroed out at the end of the year, they'd better spend any surplus before that time comes. This is a classic Catch-22 fairly typical in the corporate world. In effect, you don't have to worry about any surplus coming back because everybody spends the money before it can be considered surplus. I think the way around this in your situation might be to set a maximum carryover. If the committee has money left in the budget at the end of the year, let them carry no more than (say) $100 to the new year. That way you reward them for being frugal with their money, and you minimize the haggling over the amount. Plus the accounting is easier because you have a standard amount of carryover.

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