I've heard stories where this worked very well and and equal number of horror stories. But more than your bylaws, I'd check your district policy and your state law.
In Texas, it would not be legal for the school to manage the funds of independent parent groups such as PTO, PTA, band boosters, etc.
Note - if the group were set up more as a school committee and not an independent group, it might be different.
I actually think the scenario of the school being the treasurer can work if (big if) everyone is on board with the idea, there's an efficient process for distribution of funds and reports, and if there's written documentation of how things work.
I have been involved in both situations. I have been a president on an elementary school PTO for 4 years and on the board for 8 years. The PTO board has always managed our own funds and had our own account. 3 years ago we got a new principal who wanted to control our funds through the school account. According to our by-laws everything has to me voted on by the board and than approved by the general PTO. Everyone voted against the funds being control by the school. It didn't make the principal happy, but she got over it.
Now I'am the president of a middle school PTSO. They have their funds ran by the school and it is a headache. The principal tried to keep some of our money and use it for his own purpose. If we need a check for anything we have to wait until the secretary can get around to it, and if she is gone we are out of luck. We have to get our financial statements from the secretary which takes time. And if the board decides to have something done at the school during summer break like landscaping or new signs, we can't do it. Our new board has elected to open up their own account and manage their own money. However we still have $12,000 in the fund ran by the school and we can't transfer it into our own account. We have to find something to buy with the money in order to drain the account. It is a mess!
Another school in town had their money ran by the school. Their principal drained the school's activity fund and then transfer some of their PTO money into her account without permission from their board. Unfortunely there was nothing they could do.
I agree with PatO, we need to hear what exactly your group's Bylaws read. If your group is a non-profit, 501C(3), then it is more than likely that your Bylaws indicate that the group's funds are to be controlled by the directors or officers of the group. It seems (though we need more info) that the Principal has not actually tried to be voted into a position, such as President, but just controlled the group for a year.
Let us know what your Bylaws state and everything will come from that. If you don't have a copy of your Bylaws, but your group does have them, then you, likely as a member, have the right to be provided a copy of them. If your group does not have Bylaws then I would start focusing there.
With so much in the news lately about people making off with thousands of dollars in school funds, nonprofit funds, and so on, the original idea of having two or more people handling the money is a great idea. It protects the funds and the people who are handling the money with the checks and balances system. In my city, the middle school bookkeeper was just arrested for embezzeling thousands of dollars over about 5 years. Yikes!
It is called a PTO for a reason. P=Parent T=Teacher
Gather a group of active parents and schedule a meeting with those involved. Site some "fundraising funds gone missing" episodes in the news, and say that you would like to protect the teachers, the principal, and the school by making sure they could never fall under any undue suspicion.
