We are often asked as claims auditors if a school can pay for community or PTA events, or certain items in honor of an employee or Board member. Our role is to ensure that schools protect the integrity of public funds. Overall, school law states that school districts cannot make gifts or charitable contributions of public funds. However, determining what is and isn’t a gift of public funds can vary among districts and causes additional scrutiny of the expense being reviewed. Article 8, Section 1 of the New York State Constitution prohibits gift of public funds. According to Article 8, Section 1 of the New York State Constitution, “No county, city, town, village or school district shall give or loan any money or property to or in aid of any individual, or private corporation or association, or private undertaking, or become directly or indirectly the owner of stock in, or bonds of, any private corporation or association”. There is some vagueness of the law that leaves room for interpretation by the schools, auditors, and the legal system. Basically though, neither public funds nor public property can be used for a private purpose or benefit. They must be used only for a public purpose that is within the authority of a school district. Some situations where school districts are prohibited from using district funds include:
- Making a donation in memory of the parent of a school district employee;
- Paying more than an agreed upon obligation or contract as the funds expended are considered to be gifted (funds given must be for an agreed upon amount and for the public’s benefit in order to be permitted by the state);
- Purchasing sweaters or jackets for students who have participated in athletics activities (extra-classroom activity funds may be used for this purpose, if duly authorized, because they are not school district moneys);
- Purchasing graduation pins and flowers for students; and
- Paying for a dinner, picnic, or similar outing for employees and/or officers unless pursuant to a collective bargaining agreement.
- Purchasing a plaque of nominal value in recognition of service by unsalaried individuals;
- Paying only for the meals of board members at a dinner held to recognize service, provided the cost of the dinner is reasonable;
- Paying only for the meal of a retiring board member at a dinner held to honor the retiring board member; and
- Purchasing pins for employees in recognition of their years of service.