1. Can school districts establish a revolving line of credit in their name?
No. Districts do not have the authority to borrow, except through bonds or capital lease agreements. Since a district does not have the authority to borrow, it may not establish a line of credit, which is a form of borrowing. However, the county may establish a line of credit for the district, with the county treasurer acting as the agent, subject to the provisions of A.R.S. §11-604.01. This line of credit should be used only to allow expenditures in budget-controlled funds when cash balances are insufficient.
2. Can school districts use an electronic payments clearing account?
Yes. A.R.S. §15-1221(B) allows a school district’s governing board to establish a bank account to make electronic payments to vendors including retirement contribution payments to the Arizona State Retirement System. The district should maintain a current list of employees the governing board authorizes to make payments from the account. Districts should refer to guidance in the USFR §VI-C, Cash.
3. Can school districts establish an auxiliary operations bank account at each school site?
No. Districts are allowed only one auxiliary operations bank account. A.R.S. §15-1126 states that auxiliary operations fund monies shall be deposited after authorization by the governing board in a bank account designated as the auxiliary operations fund or in an account with the county treasurer pursuant to section A.R.S. §15-996 that is designated as other monies. However, statute allows the governing board to establish an auxiliary operations revolving bank account for each school within the school district for necessary current expenditures in connection with school bookstore and athletic activities.
4. Can school districts establish an extracurricular activities fees tax credit (EAFTC) bank account?
No. Districts are not authorized to establish a separate bank account for EAFTC monies. Districts may deposit EAFTC monies in the Auxiliary Operations Fund bank account or directly with the county treasurer in Fund 525—Auxiliary Operations or Fund 526—Extracurricular Activities Fees Tax Credit. Districts may also deposit EAFTC monies in a miscellaneous receipts clearing bank account and then remit the monies monthly to the county treasurer for deposit in Fund 525 or Fund 526. (Please see EAFTC FAQ #2 for additional information on accounting for these monies.)
5. Should school districts allow booster clubs, parent-teacher organizations, parent-teacher-student organizations, or foundations to use the districts’ employer (taxpayer) identification numbers for the purpose of opening a bank account in the organization’s name?
No. Districts should not provide their employer (taxpayer) identification numbers to booster clubs, parent-teacher organizations (PTO), parent-teacher-student organizations (PTSO), or foundations for the purpose of opening bank accounts. District bank accounts must be authorized by the school districts’ governing boards and are limited to only those allowable under Arizona Revised Statutes. See USFR §VI-C, Cash. Therefore, districts should communicate to all known booster clubs, PTOs, PTSOs, and foundations that bank accounts must be established under the independent organizations’ own employer (taxpayer) identification numbers rather than the districts’ numbers.
Districts that become aware of unauthorized bank accounts should investigate the origin and use of such accounts to determine the proper disposition of the related monies. If it is determined that district monies are held in an unauthorized account, the district should work to recover such monies from the account and deposit them in the appropriate district bank account or with the County Treasurer. If unauthorized bank accounts are discovered that do not hold any district monies, the district should contact the individual bank branch where the unauthorized bank accounts were established and provide a written request that bank staff remove the district’s employer (taxpayer) identification number from the account and refrain from opening any accounts under the district’s name or employer (taxpayer) identification number without written evidence of the district governing board’s approval.
6. Which school district bank accounts are authorized to pay bank fees?
School districts are authorized to pay bank fees from the following accounts:
Districts should request that bank fees associated with any other bank account be charged directly to one of the authorized accounts listed above. If that is not possible, the District should reimburse the fees from an appropriate fund or authorized bank account.
7. Why are some accounts not allowed to pay bank fees?
Certain accounts are not allowed to pay bank fees for various reasons, depending on the type of account in question. For example, some clearing bank accounts are established as a holding place to safeguard and accumulate revenues a district receives directly until remitted to the county treasurer. No expenses, including bank fees, are allowed from these accounts to help ensure that revenues reported are not understated. Bank accounts established for a specific payment or expenditure purpose, such as withholding accounts for insurance and taxes, grants and gifts to teachers, and principals’ supplies, hold monies specifically designated for the purpose of the particular account. Using those monies for other expenditures, such as bank fees, would be a misuse of the designated monies and, in some cases, could overdraw the bank account. Finally, districts have a fiduciary duty related to student activities monies and may hold those monies in a bank account or on deposit with the county treasurer, in accordance with A.R.S. §15-1122. If a district chooses to hold those monies in a bank account, the bank fee is a district cost, not a student activities cost, so it should not be paid with student club monies.
8. Does the restriction on charging student clubs bank fees also prohibit charging payment processing fees from a bank or credit card processing company to student clubs that accept credit card payments?
While districts are required by statute (A.R.S. §15-1122) to hold student club monies in a designated bank account or on deposit with the county treasurer, statute does not require districts to allow clubs to accept credit card payments. Therefore, if a district chooses to allow student clubs to accept credit card payments, the district may also require the clubs to pay the associated processing fees. The district should have the clubs document their acknowledgment of the fees and the decision to accept credit card payments in their club minutes to support the payment of the processing fees. Alternatively, districts may choose to absorb the processing expense and reimburse the clubs from an allowable fund or bank account.
9. Can school districts use mobile bank deposits to deposit checks received at the district?
Nothing in the USFR prohibits school districts from using mobile bank deposits if they maintain good controls to ensure all monies are deposited, deposited checks are held securely for an appropriate time and then destroyed, and evidence of deposit is retained. Some items to address in ensuring good controls over mobile deposits are:
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