YANML, Petty Cash In The Red Version
November 16, 2023 7:30 PM Subscribe
My sister is mentally disabled and lives in a "ma and pop owned business" group home. I have financial power of attorney. I have a question about this group home's petty cash management as it relates to providing credit. A couple of months ago, I asked a question related to this petty cash account, but today's question is specifically related to allowing someone to go into debt.
The residents are not allowed to keep cash in their rooms. Instead, I deposit money into my sister's petty cash account at the group home, and when they go on outings, she chooses items to purchase, and her purchases are made with her petty cash funds. (They do not hand cash to her to make the purchase. Instead, they make the purchases for her and tally the totals independent of her. She never sees a receipt and I never see a receipt.)
Today, I got a text from the group home saying that my sister has overspent her petty cash and is now in the red, and that I must deposit money into her petty cash account to bring it back in the black. I had no idea there was an option to spend money even if you had no money. My sister's judgement is not good, so what is to stop her from spending hundreds of dollars when she does not have hundreds of dollars in her petty cash account, and then the group home insisting that I repay them?
Are they legally allowed to let her make purchases even if there is no money in her petty cash? Are they allowed to extend credit to her in this way? Under these circumstances, am I legally obligated to deposit funds into her petty cash account to bring the balance back to the black?
The residents are not allowed to keep cash in their rooms. Instead, I deposit money into my sister's petty cash account at the group home, and when they go on outings, she chooses items to purchase, and her purchases are made with her petty cash funds. (They do not hand cash to her to make the purchase. Instead, they make the purchases for her and tally the totals independent of her. She never sees a receipt and I never see a receipt.)
Today, I got a text from the group home saying that my sister has overspent her petty cash and is now in the red, and that I must deposit money into her petty cash account to bring it back in the black. I had no idea there was an option to spend money even if you had no money. My sister's judgement is not good, so what is to stop her from spending hundreds of dollars when she does not have hundreds of dollars in her petty cash account, and then the group home insisting that I repay them?
Are they legally allowed to let her make purchases even if there is no money in her petty cash? Are they allowed to extend credit to her in this way? Under these circumstances, am I legally obligated to deposit funds into her petty cash account to bring the balance back to the black?
Most states require lenders to be licensed but whether or not what the group home is doing counts as lending under your state's laws is not a question that can be answered with the info in your question.
But that doesn't really matter because the first step is looking at whatever agreement governs your sister's living in the home -- whether it's a lease or a contract or whatever -- to see if the petty cash policy is addressed there. If so, you'll have an answer or at least a clear sense of what questions to ask next. If not, you can ask them for the policy, or, as suggested above, just ask and find out if you can request that they not permit your sister to overdraw her petty cash (or to limit the amount she can overdraw it by if you don't mind adding an extra $10 every now and then but wouldn't be able to add $200 suddenly).
If you think there's something scammy going on (like them skimming money out of petty cash by not providing receipts), then that may be something to take up with the state agency that oversees group homes in your state or the attorney general's office.
posted by snaw at 7:58 PM on November 16, 2023 [2 favorites]
But that doesn't really matter because the first step is looking at whatever agreement governs your sister's living in the home -- whether it's a lease or a contract or whatever -- to see if the petty cash policy is addressed there. If so, you'll have an answer or at least a clear sense of what questions to ask next. If not, you can ask them for the policy, or, as suggested above, just ask and find out if you can request that they not permit your sister to overdraw her petty cash (or to limit the amount she can overdraw it by if you don't mind adding an extra $10 every now and then but wouldn't be able to add $200 suddenly).
If you think there's something scammy going on (like them skimming money out of petty cash by not providing receipts), then that may be something to take up with the state agency that oversees group homes in your state or the attorney general's office.
posted by snaw at 7:58 PM on November 16, 2023 [2 favorites]
Yes, I understand why you're concerned, but this is probably a situation in which you should review the home's policy and let them know in writing if you object to her going over by more than $X. She's effectively institutionalized. Imagine her not being able to buy deodorant or something because she was twelve cents short.
posted by praemunire at 8:37 PM on November 16, 2023 [5 favorites]
posted by praemunire at 8:37 PM on November 16, 2023 [5 favorites]
(What constitutes "credit" is a thorny problem and varies in part by state--I could go on about it for pages--but the question is really whether in practice this is good or bad for your sister and you.)
posted by praemunire at 8:39 PM on November 16, 2023 [2 favorites]
posted by praemunire at 8:39 PM on November 16, 2023 [2 favorites]
Best answer: I know that you were already unhappy with the way that the home manages their petty cash system. At the same time, your sister likes living there so you will want to tread gently here.
I think it is fine to tell them you were surprised to find out that your sister had been allowed to overdraw her account. If you think it would help, you can ask what their policy is. (I doubt from your earlier email that they have a written policy given that they don't even provide receipts for the expenses). I would tell them that you don't want them to allow her to overdraw her account (or overdraw by more than $x), recognizing that might mean that she can't get something she wants, even if it is just a few dollars over the amount in her account.
At the same time, I think you need to take a deep breath and prepare yourself so you don't get too frazzled by all of these on-going frustrations with the petty cash system.
That said, there may be an state required ombudsman's office that you could talk to you if you really wanted to know more about whether there are rules and if others consider this objectionable enough to complain. At my mother's facility the contact for the ombudsman's office was posted in the front room. However, you should know that while they will usually agree to keep things confidential, if they start asking questions at the home, it may be perfectly clear to the owners who was the source of problem so be careful here too.
posted by metahawk at 9:15 PM on November 16, 2023 [1 favorite]
I think it is fine to tell them you were surprised to find out that your sister had been allowed to overdraw her account. If you think it would help, you can ask what their policy is. (I doubt from your earlier email that they have a written policy given that they don't even provide receipts for the expenses). I would tell them that you don't want them to allow her to overdraw her account (or overdraw by more than $x), recognizing that might mean that she can't get something she wants, even if it is just a few dollars over the amount in her account.
At the same time, I think you need to take a deep breath and prepare yourself so you don't get too frazzled by all of these on-going frustrations with the petty cash system.
That said, there may be an state required ombudsman's office that you could talk to you if you really wanted to know more about whether there are rules and if others consider this objectionable enough to complain. At my mother's facility the contact for the ombudsman's office was posted in the front room. However, you should know that while they will usually agree to keep things confidential, if they start asking questions at the home, it may be perfectly clear to the owners who was the source of problem so be careful here too.
posted by metahawk at 9:15 PM on November 16, 2023 [1 favorite]
From what you've described here, it does not sound like the group home workers look at the petty cash balance for each resident before they allow them to make purchases. It sounds more like they just allow residents to make reasonable purchases and then those amounts are deducted from resident's balances with the receipts later. Otherwise, they'd have to have a balance for each resident on their phone or something and then check it before any purchase to make sure there is enough. That does not sound practical and I don't think you should expect that.
Ultimately, it sounds like your concern here is not really about them allowing your sister's account to go somewhat negative, which seems more like a convenience they provide to you and your sister rather than a problem, but that your sister may spend a large sum of money. If you're worried about that, maybe it would be more useful to have a discussion with the home about what they would do if your sister wanted to spend more than $100 at once or whatever amount you think is the appropriate threshold. Asking them to intervene in that case seems like a reasonable request (and may be something they would already do). If you're concerned about a bunch of smaller purchases adding up, you could address that with them too.
In all honesty, I think if you approach them with complaints about them allowing the balance to go negative or even worse start talking about legalities of them being allowed to extend credit, they will probably not receive that well. I wouldn't recommend that approach.
posted by ssg at 9:46 PM on November 16, 2023 [12 favorites]
Ultimately, it sounds like your concern here is not really about them allowing your sister's account to go somewhat negative, which seems more like a convenience they provide to you and your sister rather than a problem, but that your sister may spend a large sum of money. If you're worried about that, maybe it would be more useful to have a discussion with the home about what they would do if your sister wanted to spend more than $100 at once or whatever amount you think is the appropriate threshold. Asking them to intervene in that case seems like a reasonable request (and may be something they would already do). If you're concerned about a bunch of smaller purchases adding up, you could address that with them too.
In all honesty, I think if you approach them with complaints about them allowing the balance to go negative or even worse start talking about legalities of them being allowed to extend credit, they will probably not receive that well. I wouldn't recommend that approach.
posted by ssg at 9:46 PM on November 16, 2023 [12 favorites]
When I worked in a group home they had literal physical cash that they bought with them so this could not happen. What are they doing instead? Are they using credit or debit cards? I don’t understand how it’s going over. It seems to me that this would be remarkably easy to fix by literally just using the cash to make the purchases. I would ask how this happened, then request that they use the cash moving forward if possible so this doesn’t happen again.
This is strange and not something I had ever heard of so listen to the alarm bells your gut is sending out about this.
posted by Amy93 at 3:33 AM on November 17, 2023 [3 favorites]
This is strange and not something I had ever heard of so listen to the alarm bells your gut is sending out about this.
posted by Amy93 at 3:33 AM on November 17, 2023 [3 favorites]
Best answer: I say this as a lawyer and a parent who has to deal with mistrust in institutions that have control over my loved one (ie schools). You have to simultaneously approach this from a cooperative position and an investigative position.
Your viewpoint is not wrong - they should have better documentation and control over petty cash. But as an institution, they may be making a choice not to expend the resources on that. Institutions like schools & care homes have limited resources and sometimes make choices like that (expressly or just by practice). So just because they don’t have the controls over cash that really are for the best doesn’t necessarily mean it’s a bad place. And, trying to force the institution to change may be impossible even if there is an underlying legal issue. Institutions just *will not comply* if the effort is too burdensome and the consequences are not immediate & large.
So that means that your option is to try to develop a solution on a 1:1 basis that relies on your relationship with individuals in the insitution, and is something that can be feasibly executed based on the insitution as it is, not as you would ideally like it to be. So you’re not going to get an accounting overhaul. But maybe there is a manager who will email you monthly with the balance. Maybe you can chat with the caregivers and remind them not to let her spend too much. Maybe you can ask if she can use a debit card you can track online. You have to approach it in a collaborative problem solving manner focused on the individual problem, rather than a takedown of their obviously problematic lack of financial controls.
At the same time, you have to make sure that the insitution is not abusing or ill-serving your loved one. Visit often. Observe. Ask an outside professional for their opinion. Accompany your sister on doctors visits to make sure she gets seen by professionals who can detect abuse. Verify best practices for preventing abuse. Get connected to a group of family members with loved ones in group homes to understand broader issues.
posted by haptic_avenger at 3:59 AM on November 17, 2023 [22 favorites]
Your viewpoint is not wrong - they should have better documentation and control over petty cash. But as an institution, they may be making a choice not to expend the resources on that. Institutions like schools & care homes have limited resources and sometimes make choices like that (expressly or just by practice). So just because they don’t have the controls over cash that really are for the best doesn’t necessarily mean it’s a bad place. And, trying to force the institution to change may be impossible even if there is an underlying legal issue. Institutions just *will not comply* if the effort is too burdensome and the consequences are not immediate & large.
So that means that your option is to try to develop a solution on a 1:1 basis that relies on your relationship with individuals in the insitution, and is something that can be feasibly executed based on the insitution as it is, not as you would ideally like it to be. So you’re not going to get an accounting overhaul. But maybe there is a manager who will email you monthly with the balance. Maybe you can chat with the caregivers and remind them not to let her spend too much. Maybe you can ask if she can use a debit card you can track online. You have to approach it in a collaborative problem solving manner focused on the individual problem, rather than a takedown of their obviously problematic lack of financial controls.
At the same time, you have to make sure that the insitution is not abusing or ill-serving your loved one. Visit often. Observe. Ask an outside professional for their opinion. Accompany your sister on doctors visits to make sure she gets seen by professionals who can detect abuse. Verify best practices for preventing abuse. Get connected to a group of family members with loved ones in group homes to understand broader issues.
posted by haptic_avenger at 3:59 AM on November 17, 2023 [22 favorites]
Reading between the lines - are you concerned they are outright stealing from her? You haven’t actually said so, but if that’s the concern, you’re asking a different question than people are answering here.
posted by showbiz_liz at 5:22 AM on November 17, 2023 [1 favorite]
posted by showbiz_liz at 5:22 AM on November 17, 2023 [1 favorite]
Is the fear that you might be being conned? And that perhaps this going into the red is someone testing your limits to see what they can get away with, in addition to the fear that boundaries around genuine extra spending aren’t clear?
If you’re worried about someone testing your limits you could decide on them in advance now, maybe write down at what point you would want to try to take action.
For instance, if I end up spending $200 overall topping up the petty cash that’s gone into the red, I will try to look for another solution.
And also for peace of mind have a discussion about what amount you think is reasonable to go into the red in the first place on any occasion. I would suggest this could be the amount someone might spend on a normal shopping trip and to be fairly generous with it, as really it’s the overall amount you end up spending that matters.
posted by mosswinter at 5:30 AM on November 17, 2023 [1 favorite]
If you’re worried about someone testing your limits you could decide on them in advance now, maybe write down at what point you would want to try to take action.
For instance, if I end up spending $200 overall topping up the petty cash that’s gone into the red, I will try to look for another solution.
And also for peace of mind have a discussion about what amount you think is reasonable to go into the red in the first place on any occasion. I would suggest this could be the amount someone might spend on a normal shopping trip and to be fairly generous with it, as really it’s the overall amount you end up spending that matters.
posted by mosswinter at 5:30 AM on November 17, 2023 [1 favorite]
There is a difference between what the law allows and what people do on a day-to-day basis to make things work in a practical way. Your question is all about what the law allows. But do you want to have a letter-of-the-law relationship with this organization? If you like this group home and your sister seems happy there, it seems like you would do better to have a practical discussion with the organization about what you are comfortable with, rather than turning this relationship into a formal and legalistic one.
posted by Mid at 7:03 AM on November 17, 2023 [4 favorites]
posted by Mid at 7:03 AM on November 17, 2023 [4 favorites]
I would address this as a concern with them, and I would also ask that they change their practice to supply receipts
posted by TimHare at 8:03 AM on November 17, 2023 [1 favorite]
posted by TimHare at 8:03 AM on November 17, 2023 [1 favorite]
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The good sense of the people who take the residents? It’s petty cash. Letting someone go over by a little bit seems like a friendly, human thing to do. If you don’t want them to let her go over by even a penny, you could try telling them that. If it end up costing you an extra $100/month and you don’t like that, just let them know. But absent more details about the sums or frequency, I don’t see any problem here.
posted by Winnie the Proust at 7:52 PM on November 16, 2023 [6 favorites]