Thank you all for your comments. We have actually accounted for the $5000 in the past as an automatic expense to safeguard ourselves, but after being the Treasurer for the past 4 years, I've finally come to realize that if we ever did start the year with $5000 then we would be in serious trouble. We've also recently re-visited our by-laws and there was no mention of minimum or maximum starting funds...so what we were living by was based on rumors.
We usually spend over $5000 with nothing coming in by the end of September and another $4500 in October with again very little coming in. Most of these expenses can't even be deferred because they are time sensitive.
The good news is our executive board met tonight. We factored in $9000 to end the year. It was a tough budget meeting with difficult decisions, but we made it come out balanced.
For anyone interested, we've posted our Elementary School Budget Template in the File Exchange section of this website. It's served us well.
You'll find a lot of these "rules" for which no one knows the source or if they are even really true. Sometimes it's a total mystery, sometimes it stems from an old policy no longer relevant, and sometimes it's like the game of "gossip" with a kernal of truth that's been misunderstood or distorted over time. And sometimes they ARE true. You are smart to check them out.
The others are right, there is no legal limitation set by the IRS or other government body. However, you do need to check your bylaws. It's possible that was a rule your group adopted formally or even informally.
There is often a concern among parent groups that they not raise money for which there is not a planned use. So carrying over large unallocated funds is a sensitive subject. The general feeling is that the kids/families who raise the funds in a given year should benefit from them. That's not to say you cannot carry over funds - event signifcant amounts - but the best idea is to have a valid reason that is supported by your membership.
We have in our PTO by-laws that the PTO shall have at least 5,000.00 to start the school year off each year.
This covers start up expenses at the beginning of each year-- for paper, ink our beginning of the year fun events, etc.... and we budget for that 5,000.00 in an expense line when we do our budget. Check out your by-laws to make sure there's nothing there.
As the Treasurer of an elementary school PTL, the question has come up as to how much money we are allowed to have to start the year. Rumor had it that we couldn't have more than $5000 and I don't know where to confirm that information.
We have a very detailed budget with itemized Income and Expense line items and we'd be in the red by the end of September if abided by that guideline. Fortunately, we've always started with significantly more, but I want to ensure that we're not breaking any rules.
