Student activity funds are raised directly by students and their families to support clubs, athletic teams and other student-led organizations. In 2017, the Governmental Accounting Standards Board (GASB) released Statement No. 84 to increase oversight for this unique type of funding.
Given the many instances of theft following GASB 84's implementation, it's evident that districts are struggling to effectively manage student activity funds while adhering to the new requirements.
Student activity funds are atypical in many ways and present distinct challenges for school districts. Club advisers or team coaches, as opposed to professional accountants, often manage these funds under the supervision of school administrators. This arrangement increases the risk of errors, misuse and fraud.
Although student activity accounts typically contain relatively small balances, mismanagement can still have an outsized impact on students, educators and administrators. Moreover, isolated instances of theft or fraud can significantly damage a school's reputation for years.
Fortunately, districts can adopt digital wallets to meet GASB 84's requirements, defend against fraud, and optimize student activity fund management.
HOW DIGITAL WALLETS HELP MEET GASB 84'S REQUIREMENTS
GASB 84 establishes clear lines of authority and policies to formalize student activity fund management. It also requires districts to report all student activity funds in official year-end financial records.
Essentially, GASB 84 recategorized most student activity funds from "fiduciary activities" to "governmental activities," meaning they are subject to the same laws, board policies and administrative regulations as all other public school funds. However, the unique attributes of these funds make it challenging to roll them into existing accounting procedures seamlessly.
A digital wallet is a tool that school districts can provide to a distributed network of individuals to make rule-based purchases. This means that GASB 84's compliance and reporting standards are embedded in the digital wallet and accounted for at all times.
In effect, digital wallets enable club advisers to have flexible yet controlled access to student activity funds. Simultaneously, they allow administrators to maintain compliance and oversight to meet GASB 84's standards.
STUDENT ACTIVITY FUNDS: UNIQUE CHALLENGES AND TAILORED SOLUTIONS
School districts can use digital wallets to comply with the updated regulatory requirements while ensuring student activity funds directly support the students who raised them.
For example, one obstacle administrators often face is that student activity funds are spread across dozens of student groups, held in different sites and overseen by various individuals. Dispersed funds leave room for misuse and make complying with GASB 84's reporting requirements challenging.
Digital wallets streamline the management and oversight of student activity funds at both the local school and district levels while maintaining individual club access and control over their funds. This allows district chief financial officers (CFOs) to monitor all schools' finances through a single platform, while each school retains distinct access and reporting capabilities.
Students often raise funds in cash through activities like bake sales or car washes. Historically, districts track cash funds using paper ledgers or receipts, creating a time-consuming burden when it comes time for auditing and reporting. Digital wallets offer a solution by converting cash into digital funds and allowing administrators to manage them within a secure, controlled system — eliminating the need for manual, paper-based processes.
With digital wallets, reporting becomes more efficient, ensuring compliance with standards like GASB 84. No matter the transaction size, digital wallets provide administrators with complete oversight and full control over student activity funds.
GASB 84's stringent reporting requirements are necessary to prevent misuse of student activity funds. However, auditing student activity funds is time-intensive, with some large districts assigning over a dozen staff members to complete the necessary reporting requirements annually. Digital wallets can significantly reduce audit preparation time by automatically generating real-time, accurate financial records. These automated reports save valuable time for administrators while easing the workload on club advisers and coaches responsible for managing student organizations.
Students deserve straightforward and reliable access to the funds they raise for their student-led organizations. Digital wallets enable CFOs and administrators to securely and efficiently manage these funds, freeing up time for educators and ensuring student activity funds benefit the students who earned them.
Jamie Rosenberg is the co-founder and CEO of the digital wallet company ClassWallet.
