by California State PTA Leadership Services Commission
Your PTA’s efforts to provide programs for students and to support your schools often require that you contract with individuals or companies to fundraise or provide services. California State PTA recommends a number of ways you can assure that the PTA, its members, its funds, its students, and its reputation are protected when you enter into these kinds of contracts.
Secure Approvals in Advance
PTA’s process includes:
- Association advance approval of the event/program,
- Approval of the budget, and release of funds, and
- Authorization to sign contracts by the president and one other elected officer.
Following these initial steps, the executive board can then direct a committee chair to present a plan for executive board approval. Following approval of that plan, the executive board approves and authorizes payments up to the released or budgeted fund amount.
Should the full payment request from the service provider exceed the association’s budgeted amount or funds released, payment can only be made for the released amount. Then the remaining amount is approved by the association through a budget amendment, release of funds, and authorization for payment of the remaining balance.
Check Your Insurance Coverage
PTA executive board leaders should confer with AIM Insurance before a contract for services is considered. It is important to know if PTA insurance will cover the activity, if additional insurance is required, or if the activity is prohibited by PTA or PTA insurance. When activities become an annual tradition, PTAs should still consult with AIM because insurance coverage may have changed. It is important to be very clear with AIM when discussing the proposed activity as failure to disclose something can affect the insurance.
Make Sure PTA Remains in Charge
When a PTA contracts for services, PTA leaders must assure that the PTA maintains responsibility for all the decisions and supervision related to the activity and for the payments to the vendors. When PTA members make payments to vendors using their own personal finances, they do so at personal risk because they may then officially become the “employer,” instead of the PTA.
Follow Government Insurance Rules
PTAs must report individuals hired to perform a service correctly on the required annual PTA Worker Compensation report in December/January and determine if IRS 1099s must be filed in January. California law requires businesses with more than one employee (including the owner) to carry their own workers’ compensation insurance. The PTA chair, contract signers, and treasurer should determine if the individual has workers’ compensation coverage when any contract is signed. If an individual does not have workers’ compensation insurance on their own, the PTA must provide it for them as their “employer.” Their own personal liability insurance is not the same as workers’ compensation.
The vendor’s provided insurance declaration sheet includes the insurance coverage types, including but not limited to automobile, liability, product liability, and/or workers’ compensation. That declaration should name PTA as an additional insured, and show coverage is evident for the date of the activity. When coverage expires before the event is held, PTA must request an updated declaration proof of insurance. Check with your school district to see what their requirements are for vendors.
Work With Your School District
When contracting with individuals who provide services to students during the instructional day, and on an ongoing basis, PTAs should donate funds to school districts’ school site accounts. Fiduciary agreements are required. These positions may include instructional assistants, certificated teachers, computer technicians, playground supervisors, etc. Some school districts require payments for assembly presenters be handled similarly. All employment through a school district is short term and there is no guarantee of funding/rehiring from year to year. The current board cannot encumber a future board by entering into a multi-year contract. PTAs must also follow school districts’ safety requirements for individuals on campuses.
Pay Attention to Conflicts of Interest
All elected and appointed PTA executive board members are required to fill out a conflict/whistleblower form each year. This is an IRS requirement of all non-profits.
A board member can provide a paid service for the PTA through their own business but they must disclose the business on the form. In addition, your PTA must get at least three bids for the job, including the board member’s. They are not allowed to see the other bids because that would be giving them an unfair advantage over the other bidders. The board member must excuse themselves during the discussions of the bids and they can’t be in the room when the board votes on which bid to take. The board should be taking the best bid even if that means they will disappoint the board member.
When in Doubt, Ask
PTA’s business practices are in place to protect our leaders and the association as a whole. That includes fiduciary responsibility regarding contracts, insurance, and payments. Whenever you have questions you can refer to the California State PTA Toolkit, the PTA Insurance Guide and insurance provider, and contact PTA leaders through channels.