It's legal for you to create a discretionary fund for the principal, but I wouldn't recommend doing it in the way she's suggesting. What you should do is allocate a specific amount of your budget (say $500) for a discretionary fund for the principal, with the money to be donated to the principal in $50 increments as needed. Thus, you give her $50 to put in an office safe or deposit in a school account. When that money is gone, she gets another $50. If she needs more for something specific, that request must be approved by the board. In this way you're only risking $50 at a time. There's more money in the budget, but it belongs to the PTO until the point at which it's donated to the principal. You don't have control over how the money is spent, but it's OK to ask for an accounting. It's common for principals to use discretionary money to help needy children, so make it clear you don't need any confidential information -- ie purchased lunch for 5 children at a total cost of $10, vs. gave Timmy Smith $2.50 to purchase lunch.
- Craig
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