Year of Publication



Martin School of Public Policy and Administration

Date Available


Executive Summary

Across the United States, K-12 school systems receive and disburse a significant amount of funds at the school level. These funds are classified as school activity funds and may be broken into two distinct categories: 1) student activity funds and 2) district activity funds. Student activity funds are generally derived from fundraising activities of students to support a particular student group or organization such as the Y-Club, senior class, or student council. District activity funds are generated in the normal course of school business and may include funds such as locker fees, parking permit fees, school picture sales, or vending machine commissions. District activity funds are not raised by any specific student group and therefore should be accounted for at the district level. Athletic event ticket sales may also be considered district activity funds as these tickets are sold to the general public and not exclusively to students.

School activity funds do not include funds raised by PTA, PTO, athletic booster groups, or other support organizations. These organizations operate independently of the school or school district under their own tax identification number. School districts may exercise some control over the activities of these organizations, but do not account for the funds raised by these organizations in school district bank accounts.

A significant amount of funds received by individual schools is in cash, increasing the need for internal controls and segregation of duties. Internal controls provide schools with reasonable assurance that student activity funds are properly managed and accounted for according to all applicable laws and regulations. Segregation of duties is intended student activity purposes. This necessitates that schools be given guidance on how to properly record and account for these funds. Kentucky issues this guidance through the Kentucky Department of Education’s “Accounting Procedures for Kentucky School Activity Funds” also known as “Redbook”. “Redbook” provides a minimum standard that schools must follow in accounting for student activity funds.

Through comparison to the guidance issued at the state level by the seven states bordering Kentucky and guidance from the National Center for Education Statistics (NCES), the strength of Kentucky’s 2013 “Redbook” guidance is assessed. Recommendations are made for how Kentucky might improve guidance related to internal controls and segregation of duties in future versions of “Redbook” by learning from the NCES guidance and guidelines issued by the seven states bordering Kentucky.



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