It’s a Changing World for Adult Support Groups Too

by Tom Maynard, Executive Director, Texas FFA Association

As educators, we work in a world that remains in a state of flux. It seems as though everything is contingent on the next gathering of the legislature or board of education—local or state.  For our adult support groups, life has remained fairly simple and reasonably unchanged—work hard, raise money for kids and don’t do anything illegal.  Simple.  That is about to change courtesy of marauding attorneys and book-cooking execs.

GASB AND YOUR SUPPORT ORGANIZATION

Adult support groups will need to establish their own tax exempt status as independent organizations and may be subject to auditing as a part of the school district’s annual audit –all due to tougher audit standards and additional guidelines to determine whether organizations qualify as component organizations.

The Governmental Accounting Standards Board establishes standards for auditing governmental entities—including school districts.  In the wake of recent corporate scandals—Enron and others—GASB handed down guidelines which further define what is a component unit of the school district and consequently must be included as part of the district’s annual audit and which must be cut loose and operated as an independent organization with its own tax exempt status.

WHAT DOES THIS MEAN FOR YOUR SUPPORT GROUP? 

Your school district will likely contact you or your support group leadership requesting information concerning revenues, assets and the amount of money spent on behalf of your schools students or employees to determine if the organization’s expenditures are “significant and material” to the district.  If deemed so, your organization will have additional reporting requirements to comply with the district’s audit requirements to avoid audit problems which could potentially lower the school district’s bond rating or TEA financial rating.  It also means that it can no longer use the school district’s tax exempt status, Employee Identification Number (EIN) or bank accounts. 

WHAT DO WE DO?

Tax Exempt Status  If your local FFA support group does not have its own 501(c)(3) tax exempt status, your school district will likely require you to establish this with the IRS by filing articles of incorporation and bylaws with the state secretary of state’s office and applying for tax exempt status and a EIN from the IRS.  Unfortunately, this is an expensive, time consuming process and will be a daunting task for many campus support groups.  The good news is that as an FFA support group, your organization can use the FFA’s tax exempt group number by completing a short one-page document that can be downloaded at the bottom of this page.  Please complete the form and fax it to the Texas FFA office at 512-617-8219. This is necessary as the state and national organizations must know who is using this group number.

Employee Identification Number (Federal Tax ID) Getting a federal number by filing an SS-4 is relatively easy and can be done online, over the phone or the old-fashion way—on paper.  The online version can be accessed via the IRS website: www.irs.gov.  On the sidebar to the left is a search box.  Enter “apply online, EIN” and in the search results you will find the link to the online employer ID number.  Follow that link and scroll down to the “Apply ONLINE NOW” link.  This brings up the application.  Note that the application does not accept any punctuation except hyphens and ampersands.  You will not need to complete all blanks—just the applicable ones: 1,3, 4a, 4b, 6, 8a-(other) 10, 14 (other) and the name, title and phone and fax numbers.  Under 8a, you will need the Group Exemption Number (GEN).  Please call or e-mail the Texas FFA office to get that number.  You will get your EIN within 15 to 20 seconds after submission.  Record this number on paper immediately, before printing or saving the page.  If you lose that page, it will be four to five days before the IRS can access it.  This process can be accomplished via telephone at 800-829-4933, option 1 or by downloading and mailing form SS-4 available for download at: http://www.irs.gov/pub/irs-fill/fss4.pdf.

BANKING PROCEDURES

Most booster clubs have bank accounts already.  As a local FFA advisor, you need to keep in mind that as the local advisor, in accordance to national policy, you have an oversight responsibility for any support group that operates under the name and trademarks of the FFA.  An advisor should always be present when the support organization meets.  In many districts, two-signature checks are required as a matter of policy, and if this is not the case in your district, it is highly recommended.  In addition, having and following very clear written policies and procedures concerning disbursements of monies and conflicts of interest are critical to avoiding some of the common pitfalls of volunteer organizations.  Your organization should have a clear audit trail to ensure accountability for funds raised and spent in the name of an FFA-affiliated group.  The local school district has policies related to organizations associated with school activities and your school district’s auditor can be an excellent resource in setting up systems with the proper financial controls to ensure complete accountability.

SUPPORT GROUPS AND FAIR LABOR STANDARDS ACT

Overtime provisions of the Fair Labor Standards Act have recently become an issue for school districts.  A number of school districts have been sued for back pay, penalties and attorney’s fees.  This is a Great-Depression-Era law.  However, many schools have been loose in compliance and attorneys are looking for work.

How does this impact your support group?  It is common practice to employ the services of hourly employees of a school district to perform volunteer or contract work on for FFA or support group functions.  For example, many chapters hold banquet functions in the cafeteria and employ cafeteria workers to cook or to assist in the serving catered meals.  According to FLSA provisions, even though this work is done on a volunteer or contract basis, it counts toward the forty hour week used to determine overtime because it is work done on behalf of a school-related activity and it is work that is the same as or similar to work they perform for the district.

Another area of concern is the members of your adult organization who are also employed by the school in jobs which are covered by FLSA.  Your volunteers cannot perform the same work for a school-related organization as they do for the school district.  For example, a cafeteria worker preparing food in your football concessions stand because his/her son is a member of your FFA chapter.  If the same parent was taking money instead of preparing food, it would be allowable.  No doubt, this scenario was likely not the original intent of the law, but sadly, we live in an increasingly litigious society which requires us to jump through some ridiculous legal hoops.

WHAT DO WE DO?

Before asking a school employee to perform services for you, check with your administration. A school employee may be subject to disciplinary action for working overtime without authorization.  You will likely have to pay time and a half for services if you employ the services of these school employees.  They cannot do it on a volunteer basis.  If any of your volunteers are school employees who are not professional or administrative staff, make sure that they are not performing the same duties for the support group as they do for the school district.