The Business Office recently reviewed the practice of purchasing gift cards with school district funds.  As a part of the research, the accounting staff consulted:

1. The Minnesota Department of Education
2. The Uniform Financial Accounting and Reporting Standards for school districts
3. The Minnesota State Auditor’s Office
4. The Minnesota State Statutes
5. The Internal Revenue Service
6. The  Office of the Minnesota Attorney General

Schools buy gift cards from school district funds for staff to be redeemed for instructional materials or for students as academic or behavior rewards.  Currently, Accounts Payable does reimburse schools for gift card purchases

The District’s auditors have brought to the administration's attention that it is not possible to tell what was purchased with the gift card and therefore impossible to know if it was a valid expenditure.  The receipt for the gift card does not constitute proper documentation for a district expenditure unless it were to include information of what was purchased with the gift card.  In addition, the Internal Revenue Circular 15 states that gift certificates to students, parents and volunteers must have prior approval of the superintendent.

District legal counsel has provided the Business Office with a written determination that no employee can receive a gift card as an incentive or in return for services.  The purchase of gift cards for employees with public funds constitutes an unlawful gratuity and is a violation of collective bargaining.  If a gift card were to be given, the value of the card would be taxable as income to the employee.

Conclusion

1. Gift cards are not allowed to be purchased for employees as an incentive or in return for services.
2. Gift cards are not allowed to be purchased for classroom or student use with general fund dollars, including intraschool funds, because of the difficulty in meeting the requirements for approval and for valid documentation.
3. Gift cards purchased for classroom or student use as specifically approved by a grant or donation will be allowed, with the caution that the following requirements must be met:
   1. Approval shall be in writing as part of the grant or donation documents
   2. the payment request must include documentation of what was purchased with the gift card.