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ManagingAthle,cBoosters&OtherOutsideGroups

PeterT.ZawadskiJune24,2016

Whydoesthisma;er?•  Boostergroupsandparentorganiza>onsprovidefundsthatdistrictscouldnotgenerateotherwise

•  Theyalsoprovideanavenueforparentsandthecommunitytoplayaroleinthedistrict

•  Boostergroupscanvaryinthenatureoftheirrela>onshipwithschoolboardsbasedonhowthegroupisorganized

•  Aboostergroup’sorganiza>onalstructure,aswellasfundsitgenerates,dictatesthatgroup’slegalrequirementsunderbothOhioandfederallaws

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OhioBoosterClubMisdeeds•  June2006:Findingforrecoveryof$1,800againsta

cheerleadingadviserovershoesandcampfeespaidforbycheerleaders.

•  October2008:AKePeringwomanwaschargedwithstealingmorethan$5,000fromtheFairmontAthle>cBoostersandayouthwrestlinggroup.

•  January2010:Aformersuperintendentwassentencedto8yearsinprisonforstealingalmost$300,000inClyde-GreenSpringsExemptedVillageSchoolDistrictfunds,including$161,725from6differentboostergroups.

•  November2011:TheformertreasureroftheFranklinHighSchoolbandboosterswasorderedtorepay$12,999forstealingcampfundsandconcessionstandreceipts.

OhioBoosterClubMisdeeds(cont’d)•  December2011:APorneyGeneralfiledacivillawsuitclaiming

moneylaundering,theaandracketeeringbytrusteesofaMansfieldsportsboostergroup.

•  March2012:TheformertreasureroftheNorthmontbandboosterswassentencedtoayearinprisonandorderedtorepaytheclub$10,136.

•  July2012:Theformertreasureroftheathle>cboostersintheClinton-Massieschooldistrictwasindictedongrandtheachargesinvolving$55,000missingfromtheclub’sgeneralandstadiumfunds.

•  September2012:Theformerpresidentofanathle>cboosterclubinNiles,TrumbullCounty,appearedincourtonchargesthathestolemorethan$21,000thatwassupposedtobeusedtosupportthevarsityfootballteam.–  SOURCE:LawrenceBudd,BoosterClubsFundsFaceStateScru2ny,DAYTONDAILYNEWS,Sept.25,

2012.

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GovernanceandStructure•  TherearenoOhiolawsthatspecificallyapplytoboostergroupopera>onorforma>on

•  Whileboostergroupscansupportpublicschooldistrictac>vi>es,theyarenotpublicen>>esandtheirofficersarenotpublicofficials

•  Also,despitethefactthattheymayraisefundsthatsupportdistrictac>vi>es,theyarenot(andshouldnotbeviewedas)extensionsoftheschooldistrictorboardofeduca>on(BOE)

Non-ProfitOrganiza,ons•  ThetypicalboostergroupisanNPO,alsoknownasa501(c)(3)becauseitisgovernedbythatsec>onofthefederaltaxcode

•  AllNPOsmustbeformedforcharitable,educa>onal,religious,scien>fic,communitydevelopmentorothersociallybeneficialpurpose

•  NPOscanhaveavarietyofcorporatestructures(i.e.unincorporatedassocia>ons,limitedliabilitycompanies),butmostpopularisthenonprofitcorpora>on(NPC)

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•  AnNPCisdefinedinOhiolawasacorpora>onformedforotherthanpecuniarygainorprofit,andwhosenetearningsarenotdistributabletoitsmembers,directors,officers,orotherprivatepersons

•  NPCs,likeotherNPOs,canhaveemployees,butthentheNPCissubjecttopayrolltaxes,workers’compensa>onrequirements,andotheremploymentregula>ons

•  Theperson(s)desiringtostartaboostergroupwillberesponsiblefordeterminingitscorporatestructure;adecisionmadeen>relyindependentlyfromaBOE

•  RequiredfilingwiththeOhioSecretaryofStateandapplyingfor/maintainingtaxexemptstatuswiththeIRSaretheresponsibilityofthegroup’sdirectors,nottheBOE

•  NPOsneedtoobtaintheirowntaxIDnumbersandpostalpermits

•  Nonetheless,soundBOEpolicywouldhaveadministra>onconfirmthatboostergroupsareincompliancewithallrequiredfilings

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Rela,onshiptoBoardofEduca,on•  BoostergroupscaneitherbeofficiallyrecognizedbytheBOEortreatedasothercommunitygroups

•  Ifthegroupisofficiallyrecognized:– BOEpassesaresolu>onannuallyrecognizingthegroupasaschool-sponsoredorganiza>on

– WriPenagreementexecutedbetweenBOEandgroup– Approvaltouseschoolname,logo,emblem,mascot,etc.forfundraisingpurposes

– Chaperonesandvolunteersmustbefingerprinted– BOEpolicyshouldrequireadministra>veapprovalofboosterevents/ac>vi>esandpermitadesignatedofficialtoaPendboostergroupmee>ngs

•  Ifgroupdoesnotgetofficialrecogni>on:– Treatedlikeanyothercommunitygroup,i.e.BoyScouts,4-HClub,MADD

– MustcompleteBOEfacilityuseformsandcomplywithallrules

– Mustbeclearinadver>singandateventsthatthegroupisnotBOE-sponsored•  Iftheshowchoirboostersareraisingmoneyforcostumes,theycannotusetheBOElogoonflyerswithoutpriorapprovalfromtheBOE

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AgreementforRecognizedGroups•  Setsforthinwri>ngthetermstheBOErequiresforofficialrecogni>onandmaintenanceofthatrecogni>on– Compliancewithstatutes– ProvideBOEwithcopiesofallfilingswiththeOhioSecretaryofState,OhioAPorneyGeneral,OhioDept.ofTaxa>on,andtheIRS

– ProvideBOEwithcopiesofallannualtaxandauditreports

Addi,onalItemsinAgreement! UseofBOEname,emblem,mascot,etc.! Requirementtopar>cipateinannualNPOtrainingputonbytheOAG

! Reimbursementforinsurancecoverage! Handlingoffunds! DegreeofoversightbyBOE•  Boardneedstoensureit’sprotected,andshouldhavehandsinboostergroupfunds

! Employeeinvolvementinboostergroups

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•  BEADVISED:theOAGrecentlyissuedarulerequiringboostergroupwithgrossreceiptsof$25Kormoretoregisterannually

•  Boostergroupsmustsubmit: ! Annualreportsandtaxinforma>on! Ar>clesofincorpora>on! Bylaws! Cons>tu>on! IRSdetermina>onoftax-exemptstatusandno>ceifstatusisrevoked

! No>fica>onofdissolu>on! Annualfeebetween$50-$200dependingonassetsheld

BoardPolicyandBestPrac,ce•  TheBOEshouldhavepoliciesregula>ngtheac>vi>esofthesegroups

•  TheBOEmaywanttoincludelanguageinthepolicyregardingtheuseofdistrictname,mascot,etc.,andcompliancewithOhiorulesforcharitableorganiza>ons

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•  Policyshouldsetforth:– Appropriateseongsandac>vi>esforboosterfunc>ons,i.e.gambling/alcohol,insurance

– Whetherfunc>onsandfund-raisingac>vi>esmustbeapprovedbytheBOE

– Useandcontrolofboosterfunds– Righttolookatbookstoensurefundsarehandled,maintained,documentedandspentappropriately" Valuingin-kinddona>ons,incomestatements,expenses

" Sinceschool/districtisabeneficiaryofthefunds(i.e.newbanduniforms),ithasaninterestinwhetherthefundsareproperlyhandled

ShouldaBOEmemberordistrictadministratorbeaboostergroupofficer?

•  Nolawsprohibitthisprac>ce,butit’snotagoodidea

•  Theopportunityforconflictsofinterestistoogreatandcreatesanappearanceofimproprietysincetheindividualwillbeservingtwomasters

•  BOEshaveenoughissuesontheirplateswithoutinvi>ngaddi>onalscru>nybyhavingtheiremployeesandmembersserveonboostergroupssuppor>ngcertaindistrictac>vi>es

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Insurance•  BoostergroupsandtheirofficersarenotprotectedbyOhio’ssovereignimmunitylawsortheBOE’sliabilityinsuranceevenifthegroupisofficiallyrecognizedsotheyshouldobtainadequategeneralliabilitycoverage

•  Addi>onally,aBOEcanpurchaseapolicytocover“schoolsupporten>>es”againstliabilityfordamagesorinjurytopersonorpropertyifcertaincriteriaaremet

•  A“school-supporten>ty”isanyNPOformedforthesupportofschooldistrictprograms

•  Exceptforfindingsofrecoveryinanauditreport,aBOEmayindemnify,defend,andholdharmlessa“schoolsupporten>ty”againstacivillawsuit,andmayprovidefortheen>ty’sdefenseinacriminalproceeding,if:– En>ty/individualwasac>nginproperscopeofservice– En>ty/individualwasac>ngwithgoodfaithbeliefthatconductwaslawfulandinthedistrict’sbestinterest

– Expensesandobliga>onsmustnotexceedamountsappropriatedforsuchpurposesbytheBOE

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•  BOEmustadoptaresolu>onspecifying:– Theamountofinsurance– Thenecessityofinsurance– Statementofes>matedpremiumasquotedinwri>ngbytwoinsurancecompaniesifmorethanonecompanyofferscoverage

•  Purchasefromproperlylicensedcompanyofferingthelowestbid/pricequota>on

•  BOEmustrequirethegrouptoreimburseitforcostofcoverage

BoosterGroupAc,vi,esOnDistrictPremises

•  Whetherofficiallyrecognizedornot,uponrequestandpaymentofareasonablefee,aBOEshallpermituseofschoolbuildingandpropertytoholdeduca>onal,religious,civic,socialorrecrea>onalmee>ngsorentertainment– Mustbenonexclusiveandopentothepublic– MustfollowBOEpolicyforfacilityuse

•  BOEcanrequiregrouptopayfordamageaboveordinarywearandtear,andactualexpensesforlight,heat,andjanitorialservice

•  BOEmustmakedecisionaboutwhethertopermitgamblingandsaleofalcohol

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AlcoholSales•  RequiresOHDept.ofCommercepermitsF,F-2orF-6andalcoholpurchasefromallowablesuppliers

FPermit:–  Allowstheholdertosellbeer–  Issuedtoanassocia>onof10ormorepeople,alaborunion,charitableorganiza>on,oremployerof10ormorepersons

–  Permitgoodfor5daysmax–  Nomorethan2permitsissuedtosameapplicantinany30-dayperiod

–  Specialeventsincludesocial,recrea>onal,benevolent,charitable,fraternal,poli>cal,patrio>corathle>cpurpose

–  Eventmustbenot-for-profit

AlcoholSales(cont’d)

•  F-2Permit:– AllowsNPOstosellbeer,wineandmixedbeveragesforspecialevents

–  Individualdrinksalesonly– Eventheldonpremiseslocatedinapoli>calsubdivision

– “Premises”isclearlydefined– Permitgoodfor4daysmax–  IndividualNPOscanonlyreceive2permitsperyear

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AlcoholSales(cont’d)•  F-6Permit:–  Allowsforthedistribu>onofwinefor501(c)(3)en>>es–  Permitgoodfor3daysmax–  Costcanbeincludedinadmissionprice–  Organizerscanassistwithpouring–  Canreceive6permitsperyear

•  Applicantsforpermitsmustno>fythechiefpeaceofficerofthepoli>calsubdivisionofthedate,place,>meanddura>onoftheevent

•  ExceptforF-2permits,iftheeventisheldwithin500feetoflandcontainingaschool,church,library,publicplaygroundortownshippark,thenno>ceandahearingmayapply

•  Restric>ons:– Permitgoodfor5daysmax– Nomorethan2permitsissuedtosameapplicantinany30-dayperiod

– Specialeventsincludesocial,recrea>onal,benevolent,charitable,fraternal,poli>cal,patrio>corathle>cpurpose

– Eventmustbenot-for-profit

Gambling•  GamblingforprofitisillegalunlesspermiPedbystatute

•  Twoclassifica>onsofgamblingunderOhiolaw:–  “Schemeofchance”isaslotmachineorloPery(unlessotherwiseauthorizedunderanotherchapteroftheORC),numbersgame,poolconductedforprofit,orotherschemeinwhichapar>cipantgivesvaluableconsidera>onforachancetowinaprize,butdoesnotincludebingo,askill-basedamusementmachine,orapoolnotconductedforprofit.“Valuableconsidera>on”isseparatelydefined.

–  “Gameofchance”meanspoker,craps,roulePe,orothergameinwhichaplayergivesanythingofvalueinthehopeofgain,theoutcomeofwhichisdeterminedlargelybychance,butdoesnotincludebingo.

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•  Gamblingconductedbyacharitableorganiza>onforfundraisingpurposesisallowed.

•  Requirementstoqualify:– ReceiptofalePerfromtheIRSdeterminingittobea501(a)or501(c)(3)tax-exemptorganiza>on

– Thecharitableorganiza>onsponsoringtheeventmusthavebeenincon>nualexistenceinOhioforatleast2years

•  Addi>onalrestric>onsongamblingfundraisers:– Gameofchancecannotbeconductedduringorwithin10hoursofanybingogame

– Gamblingac>vi>esmustberestrictedto“gamesofchance”or“schemesofchance”

– Fundraisingac>vitycannotbea“skill-based”ac>vity

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– CrapsandroulePeareprohibitedfromcharitablefundraisingac>vi>es– “Gamesofchance”canonlybeconductedduring“fes>vals”thatdonotexceed4daysandnotmorethantwiceayear,orforfes>valsthatlast5consecu>vedays,notmorethanonceperyear

– “Gamesofchance”canonlybeheldonpropertyownedbythecharitableorganiza>onorpropertyleasedtothembyagovernmentalen>ty

– Charitableorganiza>onsmustobtainalicensefromtheofficeoftheAPorneyGeneraltoconductabingogame

–  Individualshelpingwiththegamblingfund-raisercannotbepaid,eitherdirectlyorindirectly

– Aaerprizesarepaidout,allmoneymustbegiventotheschoolorretainedbythe501(c)(3)organiza>onforuseincharitablepurposes

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IndividualFundraisingAccounts•  IFAsarepopular,butusuallyillegal•  IFAsareprohibitedin“charitable”organiza>ons,suchas501(c)(3)s,schools,andboostergroups

•  Ifaboosterclubconfersabenefitonapar2cipantinreturnfortheirfundraisingac2vi2es...theboosterclubisprovidingaprivatebenefittothatpar2cipant.Consequently,suchprac2cescouldresultintheorganiza2onfailingtobedescribedinsec2on501(c)(3).2011IRSMemoranda

•  Chari>escanonlybeoperatedforlimited,sociallybeneficialpurposesandallac>vi>esmustbeinfurtheranceofthosepurposes

•  IRSinterpreta>onisthatanindividualisnotacharitablepurpose,soIFAsthatgivebenefitstoprivateindividualsdefeatthecharitablepurposeofthatorganiza>on

•  IRSwantsanyfundsgeneratedtogototheorganiza>onasawhole

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•  Thesameprohibi>onappliestovolunteerhours•  BOEsshouldincludelanguageintheiragreementwithboostergroupsprohibi>ngIFAs

•  Allfundraisingshouldbevoluntary– Studentsshouldnotberequiredtopayanon-par>cipa>onfeeiftheydonotwanttopar>cipateinafundraiser

– BUTstudentscanberequiredtopar>cipateinfundraisingasacondi>onofmembershiponthefootballteam,marchingband,chessclub,etc.

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IssuewithNon-Par,cipa,onFees•  Aproblemwithrequiringstudents/parentstopar>cipateinfundraisingariseswhenpar>cipa>onisindirectpropor>ontothebenefitstheyexpecttoreceivefromafundraisingac>vity– “ShowChoir”Example

•  Non-par>cipa>onfeesarepermissiblewhenstudentsarenotrequiredtoraiseaspecificamountandthenon-par>cipa>onfeeissetatasingle,fixedamountforallfundraisingevents

Non-Par,cipa,onFeeBestPrac,ces

•  Anon-par>cipa>onfeeshouldnotequaltheamountastudentisexpectedtoraise

•  Studentsshouldnotbeprohibitedfrompar>cipa>nginthebooster-supportedac>vityorfromreceivingadistribu>onofthetotalfundsraisedbecausetheypaidthenon-par>cipa>onfee,areexcusedfromthefundraiser,ordonotraisetheexpectedamountforapar>cularfundraiser

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IFAsCreatePoten,alforPenal,es

•  IFAsmayresultinthelossoftax-exemptstatusandtheimposi>onoflargemonetarypenal>es

•  Schooldistrictsarenotclassifiedas501(c)(3)sbutIRSregula>onsapplysimilarlimita>onstothem

•  IfaschooloperatesIFAsoracceptsdona>onsthatconferaprivatebenefittoanindividual,thedistrictmaybepenalizedbytheIRSinasimilarmanner

Disincen,vesWillArise

•  Thisconceptofcoopera>veorcollec>vefundraisingcreatesadisincen>ve,assomestudentsmaybelessinclinedtopar>cipate

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LiabilityandEthicalIssuesRiskManagement

•  Boostergroupsshouldbeencouragedtodevelopariskmanagementprograminconsulta>onwiththeirinsurancecompanyandtheBOE

•  Acomprehensiveprogramwillinclude:! Developmentofinternalcontrolsforfiscalmanagement

! FollowingBOEpoliciesandadministra>veguidelines

! Holdgroupofficers,employees,andvolunteersaccountable

! Trainingofficers,employees,andvolunteersonfiscalmanagementandliabilityissues

CriminalRecordsCheck

•  Whilenotrequiredbylawforboostergroups,itisabestprac>cetorequirecriminalchecksforallboostergroupofficers,employees,andvolunteerswhowillhaveaccesstostudents

•  Ohiolawrequiresthesheriff’sofficetoprovidesexoffenderno>fica>ontovolunteerorganiza>onshavingcontactwithminors,ortoanyorganiza>onthatrequestsno>fica>on

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TitleIX•  TitleIXprohibitssex-baseddiscrimina>onineduca>onalprogramsandac>vi>es

•  Boostergroupdona>onsmayresultinTitleIXliabilityforadistrictifthefundsarenotequallydistributedamongboys’andgirls’teams

•  Boostergroupsoaengenerateanddesignatemoneyforaspecificsport,whichleadstoanimbalanceamongsexes

•  ItistheresponsibilityoftheBOEtocorrectanyimbalance,whichmayentailalloca>ngitsownresources

•  OCRstatesintheTitleIXAthle2csInves2gator’sManual:– Whereboosterclubsprovidebenefitsandservicesthatassistonlyteamsofonesex,theins2tu2onshallensurethatteamsoftheothersexreceiveequivalentbenefitsandservices.Ifboosterclubsprovidebenefitsandservicestoathletesofonesexthataregreaterthanwhattheins2tu2oniscapableofprovidingtoathletesoftheothersex,thentheins2tu2onshalltakeac2ontoensurethatbenefitsandservicesareequivalentforbothsexes

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Danielsv.SchoolBoardofBrevardCty.995F.Supp.1394(M.D.Fla.1997)

•  Boostergroupmoneywasusedtogivehighschoolboys’baseballteamanelectronicscoreboard,baongcage,bleachers,signs,bathroomfacili>es,concessionstand,pressbox,announcersbooth,andfieldligh>ng

•  Nofundswereusedforthegirls’soaballteam•  Thecourtissuedapreliminaryinjunc>onorderingtheBOEtoprovidecomparablefacili>esforthesoaballteamincludingremovalofbarrierssothefacili>escouldbeaccessedbybothteams

•  Priortoissuingtheinjunc>ontheCourtgavetheBOEanopportunitytosubmitaremedialplanaaerdetermina>onthattheBOEviolatedTitleIX

•  Inissuingtheinjunc>ontheCourtwrites:...theCourthadhopedforconstruc2veinput,suchasalong-rangefiscalplantoremedytheinequi2esiden2fiedintheCourt’spriororder.UnfortunatelytheBoard’splanleavesmuchtobedesired;itcreatestheimpressionthattheBoardisnotassensi2veasitshouldberegardingthenecessityofcompliancewithTitleIX...TheBoard’splanessen2allyimposes“separatedisadvantage,”punishingboththeboy’sandgirls’teams,ratherthanimprovingthegirls’teamtotheleveltheboys’teamhasenjoyedforyears.

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•  In2014,theU.S.Dept.ofEduca>ondirectsaMichiganschooldistricttoteardownbleachersbuiltbythePlymouthHighSchoolBaseballBoostersbecausethesoaballteamdidnotreceivesimilarfacilityrenova>ons.

•  In2013,soaballplayersfiledsuitagainstaNewYorkschooldistrictbecausethesoaballfieldwasnotcomparabletotheboys’baseballstadium.

Add’lTitleIXLi2ga2onExamples

WhatDoesThisMean?•  WhenaBOEno>cesaninequityexists,itmustremedytheproblem– Givegreateramountsfromthegeneralfundtothesexthatdoesnotreceiveboostersupport

– Seektocontroltheboosterbudgettoallocatefundsequally

– Rejectdona>onsifboostergrouprefusestoprovideequitablefunds,orthegeneralfundcannotcoverthediscrepancy

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OhioEthicsLaw

OECOpinionNo.2008-01•  EthicslawprohibitsaschoolemployeecompensatedbytheBOEtoserveasacoachfromreceivingcompensa>onforthesameservicesfromanyothersource,includingboostergroups

•  R.C.2921.43prohibitsapublicservantfromaccep>ng,andprohibitsanypersonfromgiving,anycompensa>onasasupplementtohis/herpubliccompensa>on

•  Boostersmays>llmakegiasorendowmentstothedistrictforuseasthedistrictchooses

OECOpinionNo.90-003•  Ethicslawsdonotprohibitaboardmemberorhis/heremployerfromdoingbusinesswithaboostergroup

•  Boostergroupsareseparatelegalen>>esandarenotsubjecttotheprohibi>onsinR.C.2921.42(A)(4);however,boardmembersmaynotsellgoodstoboostergroupsifthegoodswillul>matelybeusedbythedistrict

•  Boardmembersmaydonategoodsorservicestotheschooldistrictstheyserve,providedthatthememberreceivesnopecuniarygainfromthedona>onandhe/shedoesnotusethedona>ontosecureanythingofvaluefortheboardmemberorhis/herbusiness

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Booster-SupportedConstruc,onIfconstruc>onprojectisfunded100%byboosters,thenBoarddoesnotneedtofollowcompe>>vebiddingproceduresinR.C.3313.46.But,iftheBoardisresponsiblefor$25,000ormoreoftheproject,thenfollowcompe>>vebiddingprocedures.Boardoversightofbooster–supportedconstruc>onprojects:

–  Verifyorganiza>onhassufficientfundstocompletetheirfiscalobliga>onsundertheproject;

–  Ensuretheyobtainednecessarypermits,zoningapproval,etc.;–  Provideinputandobtainagreementoverthedesignoftheproject;–  Mayneedalicenseagreementforaccesstoschoolpremises;–  Besureliabilityinsurancecoverstheconstruc>onproject;and–  Obtainwaivers,releases,andindemnifica>onagreements.

BoosterBenefits•  Money•  Bandinstruments•  Uniforms•  FacilityImprovements&Construc>onProjectsIMPORTANTLY-HaveownershippasstotheBoardbywayofa“gia,”suchthattheBoardadoptsaresolu>onaccep>ngthegia/dona>on.

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QUESTIONS?

PeterZawadskipzawadski@walterhav.com