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Financial Accounting for Local and State School Systems: 2009 Edition
NCES 2009-325
June 2009

Chapter 8: Activity Fund Guidelines — Types of Activity Funds and Proper Classification8

Activity funds are established to direct and account for monies used to support cocurricular and extracurricular student activities. As a general rule, cocurricular activities are any kinds of school-related activities outside the regular classroom that directly add value to the formal or stated curriculum. Cocurricular activities involve a wide range of student clubs and organizations. Extracurricular activities encompass a wide variety of other district-directed activities, typified by organized sports and other nonacademic interscholastic competitions. The accounting structure should take into consideration that individual states may have their own classifications for cocurricular and extracurricular activities. For example, some states might classify music and drama events as well as academic competitions (such as debate) as cocurricular, whereas other states might classify these activities as extracurricular. In either case, a system of classification for purposes of program cost accumulation and reporting is necessary.

Activity funds are unique to school districts. Two classifications are commonly recognized: student activity funds, which belong to the students and are used to support student organizations and clubs; and district activity funds, which belong to the school district and are used to support district programs. The distinction is based on the purpose of the funds, that is, the programs supported by the funds. These funds are

  • Student activity funds. These funds support activities that are based in student organizations. Students not only participate in the activities of the organization, but also are involved in managing and directing the organizationís activities. Approval to disburse monies from the student activity fund may rest with the student organization and its sponsor, rather than the board of education. Examples of authorized student activity funds include:

    • Art club
    • Auto club
    • Cheerleaders club
    • Chorus club
    • Class of 2007
    • Class of 2008
    • Class of 2009
    • Debate club
    • Drama club
    • Foreign language club
    • Journalism club
    • Marching band
    • National Honor Society
    • Pep club
    • Photography club
    • Student council

  • District activity funds. These funds belong to the district, are used to support its cocurricular and extracurricular activities, and are administered by the school district. Approval to disburse district activity fund monies, however, rests only with the school board. In other words, the district determines how district activity fund monies are spent and which district programs receive support. Examples of authorized district activity funds include:

    • Athletics
    • Band uniforms
    • Book fair
    • Lyceums
    • Music concerts
    • School plays
    • Special field trips

Although individual state laws may specify the accounting treatment for activity funds, distinguishing them in accordance with the definitions above suggests that student activity funds are fiduciary in nature whereas district activity funds represent district resources. Therefore, it is recommended that student activity funds be classified as agency (fiduciary) funds and district activity funds as special revenue funds. Student activity funds remain under the control of the school principal and are accounted for at the school site. District activity funds, in contrast, should be included with all other district funds and deposited in the district's accounts. Again, these recommended fund classifications are appropriate within the definitions provided; individual state laws may dictate the use of other types of funds.

Although a sharp distinction exists between student and district activity funds, it is the responsibility of the school district to account for all activity funds. All activity funds must be reported in the school district's financial statements and are subject to the district's audits.

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8 Detailed account code structures, classifications, and definitions, including new or revised codes, are found in chapter 4.

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