State governments across the U.S have been experiencing the pressures of huge budget deficits caused by dwindling tax revenues and systemic spending problems. As a result, millions of dollars in state aid directed to K-12 public schools have been slashed. The consequence is difficult spending cut decisions that land on school boards. Extracurricular activities can be one of the first areas cut, but it can also be a sensitive and tricky form of saving district money. Almost every school in the U.S. offers an array of extracurricular activities that students can par take in, encompassing interests from sports, music and hobbies. These clubs can offer students with an increased feeling of individual and group responsibility, physical strength and endurance, competition, accomplishment and sense of community connection. However, not all clubs are equal in enrollment, cost to maintain, or popularity. Activities such as football and drama attract more students, but can also account for the highest stipends that teachers can earn. Generally, teachers are offered additional pay to their teaching salaries to instruct after school clubs based on their type, meeting frequency and professional experience in running the club.
The most popular clubs are: sports, the performing arts and academic clubs; with vocational, honor societies, publications and hobbies accounting for the remaining club participation. According to a recent national survey, 79% of America’s middle and high school students regularly participate in activities both after school and on weekends, and 57% have some kind of non-school activity nearly every day.
With the cap on school taxes, and reductions in state funding, many districts are having difficult times maintaining a budget that can cover all the stipends a school would ideally like to have. At Board meetings, especially during the budget season, District members express concern as to possible cuts of clubs when voting on their local school budgets. It is important that school districts demonstrate that the programs and funds are well managed. Districts can take steps to ensure that funds allocated to extracurricular activities are properly controlled and being directed appropriately.
As part of our testing as internal auditors, we verify that stipend payments are correct as per the district’s contract. We encourage districts to perform their own internal assessment. Some good controls we expect to see is evidence that the:
- Board appointment specifying the employee has been approved to perform this position.
- Clubs are keeping records of attendance. This can be accomplished by the club advisor maintaining attendance records at each meeting. Each school should have a list of the current clubs, the advisor(s) assigned, and the frequency of meetings. In addition, a timesheet should be completed by the employee that indicates the dates the advisor met with the club. The timesheet should be reviewed and approved by the employee’s supervisor/building principal.
- Payroll department properly paid the club advisor. The payroll clerk should indicate their review on the timesheet submitted. Periodically, a summary payroll transaction report can be run throughout the year to verify payments are being made to the correct account codes.
Districts should make sure that annual board approval procedures are in place for new and sustaining club formation and to select their respective advisors. The compensation amount paid to the advisors directing these activities are negotiated agreements with the district and respective Teachers Associations, which takes into consideration different aspects of the club and advisor. In some districts, each activity is assigned a code and tier (i.e. step) with the pay associated based on certain years of service with a specific club. School districts should make sure that teachers are earning the correct wage given the exact dimensions of the position and ensure that the stipend is noted in the teachers’ contract as well as on the personnel schedule approved by the Board. Controls over approval and recording of stipend amounts can help decrease incorrect payments made.
Club advisors should be required to document their activities to ensure student participation is at adequate levels and meetings are held regularly. Attendance should be taken and recorded in a consistent manner using signature sheets or indicating presence on a class roster, with the club name and date indicated. An additional control would include recording minutes of the meetings. These documents will help reflect actual frequency of activities and participation and can be used to adjust stipends structure (i.e. to a per-session basis) accordingly if found suitable.
With the cost of advisors, transportation and maintaining club equipment creeping up, districts are forced to look deeper into what extracurricular activities their district is to offer for the upcoming year. Ensuring that you are making accurate stipend payments is critical to managing district funds. Additionally, school districts may want to place emphasis on evaluating their current club participation in order to continue offering activities that provide students the most value, staying within available funding restrictions.
Shari Diamond, CIA
Shari has been with Cerini & Associates, LLP since 2008 where she works primarily with the firm’s school district clients providing internal audit and claims audit services. She has over twenty years’ experience performing internal audits, risk assessments, and compliance reviews, as well as recommending processes to strengthen the internal controls environment while increasing efficiencies. Her prior experience at PWC and Northrop Grumman included performing Information Technology audits.