School booster and parent teacher organizations are about to come under increased scrutiny from the Ohio Attorney General’s Office.
Alarmed by reports of misuse of booster funds, the office was authorized in August by Ohio lawmakers to begin requiring all boosters and PTOs who handle more than $25,000 to provide annual reports including financial records.
In communities around the state, during the past four years, booster club officials have been charged with embezzlement, theft or misuse of funds intended to benefit kids in their school district. Combined, booster clubs and PTOs around the state manage millions of dollars in assets, officials said. Assets include money that flows in and and out of the club coffers and equipment and property the groups own.
Until now, booster groups and PTOs in Ohio were exempted from state law that already required registration with the Attorney General’s Office by other charitable trusts and non-profits operating in the state. It’s become a serious enough issue that the Ohio Attorney General’s office pressed to expand the requirement for the groups.
“There are significant assets at risk,” said Beth Short, outreach and education coordinator for the office’s charitable law section. “The kids and teachers are the ones that suffer when adequate care isn’t taken.”
Authorities have prosecuted a handful of theft cases from booster clubs in the past four years in the Dayton area.
In October 2008, Montgomery County Common Pleas Court Judge Timothy O’Connell barred Angela Monnin from serving as a volunteer for any school system or community organization as part of her punishment for theft of funds from the Fairmont Athletic Boosters and Kettering Youth Wrestling Association. Monnin also was placed on probation for five years and ordered to repay the boosters $2,864 and the wrestling group $2,463 she allegedly pocketed while working concessions stands at sports events.
In March, the former treasurer of the Northmont Band Boosters, Darrell Hatfield, was ordered to serve 12 months in jail and pay $10,136.03 he allegedly spent on his own expenses and trips. Hatfield, who had been in jail five previous times for theft-related offenses, is appealing the sentence, according to court records.
The reporting change, authorized by the state legislature Aug. 10, brings Ohio in line with other states taking steps to better scrutinize school support groups. For example, in 2007, Tennessee lawmakers passed the School Support Organization Financial Accountability Act, which requires boosters and other private groups supporting public schools to report annual financial activity and other information to the state treasurer.
Sandra Pfau Englund, a lawyer, and former band booster and PTO president, started Parent Booster USA to assist groups around the country trying to operate successfully and comply with state and federal laws, including the new reporting required in Ohio. Other help is available from governments and organizations, from the IRS to the Ohio High School Athletic Association to the North American Booster Club Association to the Ohio High School Athletic Association.
“To the extent the state of Ohio can increase the transparency and accountability for outside boosters organizations, it will improve the general public’s level of trust toward the school district,” said Tom Isaacs, assistant superintendent of the Warren County Educational Service Center and former superintendent of Waynesville schools.
The state changes come on the heels of an Internal Revenue Service decision in 2011 to start revoking the tax-exempt status of non-profits — including school support groups — who failed to file tax returns for three years. The revocations were the latest step in a process requiring most non-profits with gross receipts of less than $25,000 to begin filing with the IRS.
Last week, sports booster groups listed in Northridge, Springboro and Franklin school districts were among 16,964 charitable organizations in Ohio – 448,272 nationwide — whose tax-exempt status has been automatically revoked, according to the IRS database. Contributions by donors to groups whose status has been revoked aren’t tax deductible and the organizations themselves are subject to taxation until the non-profit status is reinstated.
In Northridge, Athletic Director Mark Bailey said the Northridge Bear Boosters met in the high school cafeteria, but used no district accounts. Booster club officials could not be reached. In Northridge and other districts, booster groups focused on bands, specific sports and other programs, remained in good standing with the IRS.
The IRS posted the Franklin Athetic Boosters’ revocation in June 2011. In the past six years, the group, formed in the 1940s, has covered most of the financing for the school district’s new $1.2 million football stadium, and another $175,000 for a weight room, locker room and stadium upgrades and scholarships through fund-raisers, concessions proceeds and donations, officials said. Last year the group raised $359,840 and contributed $397,081, Treasurer Janine Jablonski said.
While the Franklin boosters are working to regain tax-exempt status through the IRS, some groups continue to operate without complying with government registration requirements, while others likely will cease to exist.
Bob Knipper, president of the Franklin boosters and manager of the local Huntington Bank branch, said the group’s tax exempt status was revoked by the IRS for failing to file all the proper forms and faced an $850 fee to get reinstated. He said the group’s “bank mentality” and procedures already in place ensured booster funds helped fund sports programs.
By requiring the groups to file, the IRS created another hurdle for community fund-raisers, Knipper said.
“They did it for all the big charities that don’t do what they’re supposed to. It hurt all the little ones,” he said.
The AG said other booster groups in Ohio hold assets of $500,000 or more.
In Springboro, a check for reportedly $130,000 was made out to the Sprinboro Athletic Boosters Association by a booster officer, board member Jim Rigano said in mid-June. That was after board members began a financial review of the athletic department and booster financial reports.
The group was working to regain tax-exempt status through the IRS and ready to comply with the new requirements from the Ohio AG, officials said last week.
“We need to have things in place, just to protect everyone,” said Susanne Edwards, the Springboro group’s president.
New state oversight
The state’s online registration system for nonprofits and charities went live on Dec. 1, 2011. Last week, technicians were finalizing changes that will allow booster and PTO groups to begin filing.
“We want to ensure limited funds get to their intended purpose and beneficiaries,” Short said, adding a range of resources would be available to help educate groups on their responsibilities and best practices.
Each registering group will be required to provide annual financial data, articles of incorporation, the names of trustees, directors and officers, as well as accounting of spending on programs and administration.
The Clark-Shawnee Athletic Boosters hired Parent Booster USA to help manage the demands of operations and regulation. Michael Young, president of the Clark-Shawnee group, said the new state regulations would be another obstacle for his group.
“I think it’s the unfortunate byproduct of others who have tried to take advantage of the tax exempt laws that are in place,” Young said. He added that he thinks the state and federal governments also are interested in using the move to identify potential additional tax revenues.
Staff Writer Marc Pendleton contributed to this report.