Cash and bank accounts

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.

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.

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.

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.