Refunds

This is the time of year when schools have questions about left over money in a student’s meal account or unused punches remaining on a meal ticket. Schools have no statutory authority to retain any overages, no matter how small the amount. Therefore, the following set of guidelines addresses these questions:

• What must a school do at the end of a school year with money that remains in a student’s meal account or unused punches on a meal ticket?
  • If a student will be returning to the school the next school year, any remaining money or unused punches must accrue to the benefit of the student for use the next fall. If meal prices will be increasing for next school year or differ between grade levels, it may be best to refund any remaining ticket value unless the district chooses to honor outstanding punches for a meal even though the cost of those meals is now higher.
  • If a student has graduated or will otherwise not be returning, the school must refund the money to the student’s parent or guardian. The parent/guardian paid the money in return for certain goods – the meals. The school may not keep any part of the money if it has not provided all of the purchased goods. To do so is theft.
• What if the amount remaining in the account is just a few cents?
  • The amount is irrelevant. The money is the property of the parent, not the school.
• May a school have a policy to the effect that a refund will be made upon request of a parent/guardian/adult student?
  • No. The school cannot put the burden of requesting a refund (for what belongs to the parent anyway) on the parent. The school could give parents the option of receiving a refund or making a donation of the remaining money to the school, but cannot sit back and wait for a parent to make the first move.
• How is the remaining money to be returned?
  • This can be done at the discretion of the school, as long as the means are reasonable. Different circumstances will determine whether it is reasonable to send a check home with a student vs. mailing the check to the parent. If a school sends cash home with a student, the school should take some common sense steps such as documenting that it has done so, putting the money in an envelope with the parent’s name on it, making sure that other students are not aware that a student will be carrying home cash, etc. Carefully consider the age and maturity level of the student, as well as safety factors (will this make the student a target of thieves?), before sending cash home with a student.
• What about students who are “no shows” with no notice to the school?
  • Once a school is reasonably certain that a student will not be returning, the school needs to take reasonable steps to ascertain a forwarding address. If another school makes contact to ask for the student’s records, work with that school. If no other school makes such contact, the school holding money that belongs to the student’s family may have to work with other public officials (city hall, e.g.) to try to locate the family.
  • If, after making reasonable attempts, the school cannot locate the family, the school should ask its accountant and/or auditor how to handle the funds that remain in the student’s account.
• How are schools to handle the issue of lost tickets?
  • Students – of all ages! – lose things. If a school can figure out from its records how many punches are remaining on the ticket, the school may issue a replacement, but this is at the discretion of the school. It may not be unreasonable for the school to say “sorry” and require that a new ticket be purchased.
• What rights does a school have when the family owes the school money?
  • When parents or guardians owe money for meals, a school has but one option – to file a small claim against the parent or guardian. (Of course, this follows letters and phone calls to appeal to the adult to make payment.) Presumably, if the family does not qualify for free or reduced meals, the family has the wherewithal to pay for the meals. A school may want to offer to have the family apply (or reapply) for f/r meals.
  • Once certain that the ability to pay is not an issue, it is relatively painless to file a small claim. The clerk of court in the county in which the family resides has all the forms a school needs. The filing fee and service fee (the clerk will take care of service, which is usually via certified mail) are approximately $50, and the parent/guardian will be ordered to reimburse the school for those amounts if judgment is entered in favor of the school. Someone from the school must appear at the small claims hearing, so there is an investment in someone’s time. But a school may not punish the student by withholding a report card, for example. There is no legal obligation to feed a student whose parent/guardian has not purchased meals. Use good judgment here; younger children need the nutrition and cannot be held to account for the actions or inactions of the adults in their lives.

Students Who Owe Money

Collecting money owed from students for school lunch can be a frustrating experience. Schools and school districts need to be aware that certain debt collection practices are prohibited by law. A school or school district is prohibited by Iowa Code chapter 537 (the Consumer Credit Code) from doing any of the following:

1. Posting a list of names of students who owe money for school lunch – even if the amount is not listed.
2. Communicate to anyone except the student and student’s family that money is owed. This does not prohibit a school from hiring an attorney or agent to collect the debt. Nor does it prohibit a school, once judgment is obtain, from legally collecting on the judgment by garnishing wages or seizing bank accounts of the debtor.
3. Send a note home with a student if anything on the outside of the envelope indicates that the letter is about money owed to the school.

Although the question arose in the context of school lunch, the above information applies to any debt owed to a school or school district. Protect yourselves and know what chapter 537 does and does not allow.