Boston Public Schools Paid Employees with Student Activities Dollars

An IRS audit revealed BPS issued off-the-books payments to some staff members.

A line of yellow school buses

Photo via iStock.com/billnoll

Student activity funds, as stipulated by the federal Department of Education, are to be used for things like sets for the drama club’s upcoming play, cameras so the yearbook club can document the school year, and markers so the student council can decorate for the homecoming dance.

Shockingly, student activity funds are not designated for under-the-table payments to Boston Public Schools employees. But that’s exactly what happened.

According to an Internal Revenue Service audit obtained by the Boston Globe, BPS provided employees with off-the-books compensation pooled from student activity accounts. Not only does diverting the money from student-related expenditures violate federal and state law, but because the income was not reported to the IRS and subsequently went untaxed, the payments skirt federal tax law, too.

WGBH reports that the city will subsequently pay nearly $30,000 in fines and back taxes, including more than $12,000 for improper filing practices. Student activity activity dollars funded $32,389 in additional employee wages in 2014, according to WGBH.

The revelations, however, weren’t exactly news to top school officials. According to the Globe, leaders have known what the IRS dug up for months, and in a June memo obtained by the Globe, Superintendent Tommy Chang directed school principals and headmasters to stop using student-activity money for employee compensation. Guess that’s fixed, then.

Richard Weir, a BPS spokesman, said in a statement to the Globe that the district has taken “a number of steps to retrain and educate staff to ensure all accounting procedures are appropriately adhered to.” Accounting practices can be confusing to the untrained eye, so thank goodness the ambiguity around whether money designated for student activities belongs in the pockets of employees has been resolved.

According to State Education Department guidelines, student groups can deposit the money they raise through bake sales and car washes into a student activity account. In this case, however, that dollar you spent on a brownie to support the debate club may have actually gone to a staff member. Samuel Tyler, the president of the watchdog group Boston Municipal Research Bureau, told the Globe that such mismanagement of the student activities funds could “diminish interest in supporting these programs” in the future.

BPS said in a statement that the district is complying with the IRS’s recommended review of accounting practices. The district intends to roll out a new financial reporting structure for student activities accounts by the start of next school year, and the updated guidelines are already in place in three schools.

BPS does spend a lot on each student; in fact, in 2015, the U.S. Census found it had the highest per-pupil spending of any of the nation’s largest districts. However, that doesn’t mean that dollars students raise for themselves are there for the taking.

This post was updated at 12:08 p.m. on November 27 with additional statements from Boston Public Schools and at 4:17 p.m. on November 28 with specific audit data from WGBH.