The Cost of Cash in K-12 Education: Time, Fraud, Mismanagement & Safety

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Neil Steinhardt, cost of cash


“According to the Association of Certified Fraud Examiners it is not uncommon for a school to collect $1.5M per year in cafeteria and student activity funds.”

Neil Steinhardt, Co-Founder & President ClassWallet

For as long as there have been schools, teachers have been collecting cash from students. Field trips, lunches, fundraisers, it’s easy for parents to drop some bills into a child’s backpack and teachers are collecting, receipting, aggregating and reporting the collection. School secretaries become drop boxes.  This model leaves open, however, an avenue for misuse.  School auditors have an easy time exposing fraud, waste and non-compliance. Even with the advent of credit cards and mobile payments, cash is ubiquitous in K-12 schools districts. The system works but at a cost and it’s a lot more expensive than you think. Time, fraud, mismanagement and safety are the hidden costs of cash.

“1 in 5 households, earning less than $50,000 annually, prefer cash.” – TYSY U.S. Consumer Payment Study

We are all exposed to the changing landscape as payment technology advances. In the US, credit and debit cards are ubiquitously accepted and mobile payments are gaining market share, however, cash is still preferred by 1 in 5 households earning less than $50,000 per year. TYSY, a leading credit card processor, recently published a survey sharing that more than 30% of the respondents felt cash was the most secure tender for an offline transaction.

And there is a lot of cash in schools! According to the Association of Certified Fraud Examiners it’s not uncommon for a school to collect $1.5M per year in cafeteria and student activity funds, even more at schools with active booster clubs. And with more than 100,000 schools that’s a lot of cash. And it doesn’t come in for free.

According to the Organization for Economic Co-operation and Development, teachers spend 2.5 hours per week dealing with administration duties. If 3.5% of that was spent collecting and reconciling moneys in the classroom that’s more than 5 class hours per year. And that’s just the teacher’s time. School secretaries, assistant principals and auditors spend that much time or more reconciling the cash from collection to deposit to spend and ultimately audit.

Once the cash comes in to a school, it is subject to a level of fraud that won’t surprise an auditor, but might raise eyebrows of parents. Most fraud is committed by loose enforcement of controls around the timely reporting of deposits, receipting, and use of “petty cash” for reimbursement and other purposes not directly tied to reason of the collection. A quick google search of “K-12 Fraud” shows innumerable school officials who’ve been caught with a hand in the till. And that’s only after the kids turn in the cash. Untold thousands disappear in backpacks, classroom desks and admin offices. As long as schools collect cash there will be fraud.

And finally, there is a safety issue. While cyber-bullying gets most of the attention, the trope of the bully stealing a kid’s lunch money is still alive and well as long as kids are forced to courier cash from home to school. According to the California Healthy Kids Survey, more than 20% of middle schoolers report having property stolen at least one time. Sending cash to school puts a target on your child’s back and creates a wholly avoidable safety issue in schools.

So, while the cost of processing a credit card is somewhat easy to calculate, 3-5% plus fees, the cost of cash is a little less obvious. Time, fraud, mismanagement and safety all add a cost to the “free” processing of cash and put an extra burden on students, teachers and administrators.

The process of uncovering the cost of cash in K-12 education has been eye-opening for me and my team.  Are you living this reality in a school and interested in learning how ClassWallet helps keep cash out of schools?

Contact us today for a free demo.