Budgeting & Special Funds

In This Section


Budgeting

 

A budget shows a plan for how your PTA will raise money and spend money to implement the PTA mission. A budget does not dictate what your PTA must do. It simply represents what your PTA intends to do.

A finance or budget committee usually has the responsibility of developing a budget for the PTA. This committee may be elected or appointed according to the PTA bylaws and usually consists of three or five members, one of whom is the treasurer, who may act as chair. Be sure to consult your PTA’s bylaws and/or policies and procedures to determine the composition of your PTA’s committee. 

4 Steps to Develop a Budget


  1. Consider your PTA's goals and the resources needed to achieve your planned activities. Study the previous year's budget and treasurer's reports to determine how well that budget met your PTA's needs.
  2. Determine your PTA's projected financial needs, taking into consideration the funds needed for the approved programs, fundraising events, and leadership development (i.e., Council/Regional training, State PTA Convention, National PTA Convention). Determine how funds will be raised to meet these requirements.
  3. Develop a one-year budget that shows existing funds, as well as projected funds raised and anticipated expenditure or receipts for the year's activities. Expenditures should equal receipts. Check your PTA bylaws to see how the year is defined. See Sample Budget.
  4. Present the draft budget for approval to the PTA board or executive committee. Incorporate feedback and then present the draft budget to the PTA membership during a general meeting where a quorum is determined to be present. A majority vote of the members present and voting is required for adoption.

Using Your Budget

Throughout the year, the Finance Committee is responsible for tracking the actual results and comparing them to the budget. Whenever a new opportunity arises to further the mission of the PTA (e.g., running an un-budgeted activity or obtaining sponsor funding), the Finance Committee should carefully weigh whether it should be undertaken. Ideally, an un-budgeted activity should have a positive or neutral impact on the PTA's overall budget.

Amending Your Budget

The budget is only an estimate of the planned expenditures for the year. When there are additional expenses or a change in an allocated expenditure, the budget may need to be amended by a vote of the association at any regular meeting, or at a special meeting called for that purpose. Check your bylaws for specific guidance.

Download a Sample Budget

Special Funds

There are four budget and expense questions many PTA leaders ask:

  1. How much should we have in case of an emergency?
  2. Can we designate or restrict funds for a specific purpose?
  3. What happens to the excess funds at the end of the school year—how much can we roll over?
  4. Can we use "Sunshine Funds" to provide assistance to an individual or family in the event of a personal crisis?

Emergency Reserve

The emergency reserve fund is considered an integral part of each PTA's planning and budget process. This fund is intended to serve as a means to retain financial stability in the event of an unforeseen circumstance such as unplanned expenses arising from a project or an unexpected increase in inflation. As a rule, a healthy reserve is between one-half to one full year's average expenditures.

Restricted Funds

While it is a common PTA rule that one board cannot obligate the next year's board, there is one exception to that rule. The IRS has strict rules on restricted funds. When money is raised for a specific purpose (e.g., technology, a new playground, etc.), the money raised must be spent on that purpose. It does not matter if it is one year, five years, or 25 years from now.

If your PTA wishes to use restricted funds for an alternate purpose, the donors must be notified and given the option to have their donation refunded to them. However, if you advertise that money raised is going toward something specific as well as other PTA projects, the collected funds are not restricted, and your board — and future boards — are able to use that money for whatever budget purpose they desire.

Excess Funds

There is no ruling from the IRS or National PTA that limits the amount of money that a PTA may carry over to the next budget year. No PTA board has the authority to write checks to the school or the principal for un-budgeted items to "clean out" the accounts. Expenditures must be approved by the general membership at a meeting. Every PTA should try to leave sufficient funds for leadership training for new board members (i.e., Council/Regional training, State PTA Convention or National PTA Convention), startup expenses for the new school year, etc. Funds not spent in one budget year should be included in the new budget.

Sunshine Funds: Assisting an Individual or Family in Crisis

"Sunshine Funds" sometimes refers to a PTA's effort to provide assistance to an individual or family in the case of a catastrophic event, such as a house fire or other disaster. While these efforts are well-intentioned, using your PTA budget for such a cause could result in losing your PTA's tax‐exempt status with the IRS because of the "inurement of benefit rule". This rule prohibits 501(c)(3) organizations from giving funds to the benefit of a specific person or family. Read more about this rule and see examples in PTA's Sunshine Fund Guide.

Download Sunshine Funds: Guidelines for Support in Times of Crisis

See All PTA’s Finance Tools, Templates & Resources

Back to Top