As students and staff recover from major pandemic-related disruptions - mental health challenges, staff shortages, absenteeism, and lost instructional time - a residual effect will be how to dispose of property no longer needed due to or purchased because of the pandemic. Many schools have a surplus of, and no longer a use for, thousands of pounds of plexiglass, out-of-date and unsalvageable laptop computers, and countless masks. Disposing of this personal property in the correct manner is paramount to staying compliant with the auditor.
Every school’s process will vary slightly, and the district’s board policy is the guidepost for the exact process of property disposal for the district. Each board policy is drafted in accordance with Ohio Revised Code (ORC) 3313.41 and has small variances depending upon preferences and drafters.
If a district’s personal property subject to disposal is valued in excess of $10,000, the property must first be offered for sale at public auction, unless a statutory exception applies. The district must first advertise the public auction by giving at least 30 days’ notice by publication in a newspaper of general circulation or by posting notices in five of the most public places in the district. Although the notice is an antiquated method, public auctions can be online on such sites as govdeals.com and publicsurplus.com. These sites can be used for personal property under the $10,000 threshold as well. It should be noted that “public auction” is not a defined term in the Ohio Revised Code.
Once personal property has been offered at public auction at least one time and no acceptable bids have been received, the district may sell the property at a private sale. Regardless of how the property was offered in public auction, the property can be sold in a single or several lots for public sale and does not need to mimic the public auction lot size. The code does not provide any elements necessary for a private sale. Also, personal property over the $10,000 demarcation can be sold to certain government entities listed in ORC 3313.41(C) without the requirement to perform a public auction first.
If the board determines, by resolution, that the property is no longer needed for school purposes, is obsolete, or is not fit for the use for which it was acquired, and in the opinion of the board the value is under $2,500, the property may be donated. The property may only be donated to an eligible 501(c)(3) nonprofit organization located in Ohio and exempt from federal income taxation under 26 U.S.C. 501(a) and 501(c)(3). The preference of each board will determine what other items may be required of a charitable organization to receive donations, such as evidence that the organization is a nonprofit organization located in Ohio and exempt from federal income taxation; the primary purpose of the organization; the types of property the organization needs and why; and the agent of the organization to whom will receive the donation.
Every district’s discretion regarding equipment disposal will fall in between the following ranges: above $10,000 for public auction or under $2,500 for donation to a charitable organization. The code does not address when the supplies or equipment should be disposed of in the dumpster. Obviously, every school is trying to get the most amount of money out of property that is obsolete or no longer of use, but the district can set how many times a piece of property is attempted to be sold or donated before it should be properly disposed of as trash removal.
If private property was purchased with federal funds, federal standards for property disposal differ depending upon which type of property is considered for disposal (CFR § 200.310 through § 200.316 provide guidance). For the most part, equipment under § 200.313 will be the most disposed of property items. In general, districts may dispose of property valued under $5,000 with no responsibility to the federal awarding agency. If the district has reached out to the federal awarding agency and has not received instruction for disposition in 120 days, the district can dispose of the property in a manner it sees fit. However, if the federal awarding agency provides instruction, the district may retain 10 percent or $500, whichever is less, from the sale for selling and handling expenses.
While the Ohio Revised Code sets forth certain requirements for the disposal of personal property, each district has some leeway with respect to its policy. If your district has items that are piling up in a storage room, look to district policy to determine if a specific procedure could be altered to enhance the efficiency of property disposal in your district.
Ralph Lusher is an associate at Walter Haverfield who focuses his practice on education law. Walter Haverfield is an OASBO Gold Sponsor. He can be reached at rlusher@walterhav.com or 614.246.2269.