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CFO report finds student activity accounts routinely overspend; board plans coding, training and policy changes
Summary
Finance staff told the board that Student Activity Fund revenues have trailed expenditures for years, with accounting practices masking deficits via interfund transfers; next steps include chart-of-accounts updates, staff training, annual activity budgets and improved oversight.
Finance staff presented a multi-year review of the Student Activity Fund (Fund 21) at the June 9 Iowa City Community School District board meeting, concluding that expenses have outpaced true revenues for several years and that accounting practices—particularly misclassification of admissions and fundraisers—have obscured the problem.
CFO Patricia (Pat) Moore and staff member Kurt explained that Fund 21 is intended to support extracurricular and co-curricular student activities and that state rules (Iowa Administrative Code 281—98.7) require fund revenues to come from student-related sources and be used for student activities. However, the district has used interfund accounting transfers (not cash) to cover negative activity-account balances prior to filing the Certified Annual Report (CAR), a practice that has accumulated over time.
Kurt and Moore showed data indicating true revenues have often lagged expenditures; one slide traced activity-fund transfers rising from roughly $172,000 in FY2015 to about $900,000 in FY2023. Staff said coding errors (for example, admissions coded as fundraisers and travel/meal expenses charged to a general supply code) make it difficult to identify where spending is concentrated.
“To get better decisions we need clean data at the front end,” Kurt said, and Moore outlined next steps: update the chart of accounts to align with Iowa Department of Education requirements, provide enhanced staff training, require annual activity budgets, perform regular account reviews, and develop a public-use policy for the Student Activity Fund.
Board discussion focused on equity (disparities among buildings with different fundraising capacity), whether the district should retain centralized control over admissions revenue or return control to buildings, and communication to parents and coaches about changes. Directors acknowledged this will be a multi-year culture change and pledged to include athletic secretaries, building staff and principals in planning.
Why it matters: Student activity money funds athletics, music, clubs and related student experiences. Persistent deficits mean other district funds have been used for accounting coverage in the short term; correcting coding and budget practices will affect how programs pay for travel, uniforms and supplies.
What’s next: Staff will update account codes, expand training this summer, work with athletic directors and principals to redesign coding and budget practices, and present corrected data and policy recommendations to the board.
