Charter Schools - Managing Cash for Solid Growth
 

Charter Schools - Managing Cash for Solid Growth

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Growth strategies for managing cash presented at the 2013 North Carolina Alliance for Charter Schools Conference.

Growth strategies for managing cash presented at the 2013 North Carolina Alliance for Charter Schools Conference.

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  • Provide a bridge from the finance industry to the charter school community, ensuring reliable and flexible access to funding for charter schools. We understand the challenges charter schools face – especially in today's economic climate – and our business is dedicated to help address them.HQ in Portland, Oregon (Not sure this is relevant – just highlights we’re not local and may not know their market)

Charter Schools - Managing Cash for Solid Growth Charter Schools - Managing Cash for Solid Growth Presentation Transcript

  • MANAGINGCASH FOR SOLID GROWTH NC Alliance forCharter Schools Conference March 22, 2013 Copyright © 2013 Charter School Capital, Inc.
  • Welcome. Copyright © 2013 Charter School Capital, Inc.
  • WELCOMEPanelists• Stuart Ellis – Founder and CEO• Jon Dahlberg – VP of Business Development and Facilities3Copyright © 2013 Charter School Capital, Inc.
  • MANAGING GROWTHWhat We Will Cover Today• Cash flow growth – Basics – Identifying your growth initiatives – Sources and evaluation• Growth capital options – Working capital – Facilities – Resource development4Copyright © 2013 Charter School Capital, Inc.
  • WHO WE ARE100% Dedicated to charter schools• Specialty finance company serving only charter schools – Working capital – Facilities capital – Resource Development capital• Began funding charter schools in California in 2007• Over $500M of funding provided to date• Team of 30+ professionals dedicated to delivering timely and flexible solutions• Relationships with over 300 charter schools serving 250,000 students• National footprint• Stellar track record with schools and investors5Copyright © 2013 Charter School Capital, Inc.
  • WHERE WE ARECSC ? 1,000 ? 11StudentsSchools 40,000 31,000 147 72 23,000 64,000 5,000 41,000 116` 184 16 19,000 235 122,000 6,000 43 328 259 17 103,000 26,000 4 300 126,000 164 80 6 10,000 17,000 49,000 360 33 48 26,000 22 45,000 63 360 18,000 82,000 81 4,000 21,000 4 50 32,000 179 412,000 18 41 45,000 53 983 10,000 109 7,000 40 19,000 6,000 135,000 11,000 17,000 20 47 27 524 31 84 56,000 104 188,000 43,000 280 9,000 99 179,000 31 520 6 Copyright © 2013 Charter School Capital, Inc.
  • Planning For Growth Copyright © 2013 Charter School Capital, Inc.
  • CASH FLOW BASICSGrowth requires good cash flow management• Think of cash flow as a tool• Reduce emotions from cash flow decisions• Less time managing cash flow means more time educating students• School size and mission doesn’t impact cash flow management8Copyright © 2013 Charter School Capital, Inc.
  • CASH FLOW FOR GROWTH Goal: Greater Impact • Continuous and dynamic • Open and transparent GROWTH communication • Relationship-based9Copyright © 2013 Charter School Capital, Inc.
  • IDENTIFYING GROWTHINITIATIVESWhat if money wasn’t an issue?• “I would promote my school more aggressively and more frequently.”• “I would expand my existing facility to add more grades or classrooms.”• “I would increase or add new programs to better serve my students, their families and the community.”• “I would increase my use of technology to further engage my students and empower my teachers.”• “I would invest is professional development for my teachers so they are trained on the latest instructional best practices.”• “I would replicate my program in a new location in our city or state.”10Copyright © 2013 Charter School Capital, Inc.
  • DIVERSITY OF CAPITALUse different sources for different needs• Working and growth capital – Short term liquidity• Facilities financing – Long term stability• Resource development – “Free Money” as much and often as possible11Copyright © 2013 Charter School Capital, Inc.
  • EVALUATING ANY CAPITAL Compare Costs: • Evaluate costs1 • Measured in dollars, not interest rates • Include your time – it is VALUABLE! Compare Risks: • Access to funding – can you get as much as you need2 • Increased Costs – are the costs known or estimated • Default risk – what is the risk of default • What is the impact on the business (school)12Copyright © 2013 Charter School Capital, Inc.
  • Working Capital Growth Copyright © 2013 Charter School Capital, Inc.
  • WORKING CAPTIALBalanced budget ≠ successful cash flow management July August September October November December January February March April May June Cash Flow Need Available Cash Flow14Copyright © 2013 Charter School Capital, Inc.
  • WORKING CAPITALFunding options for your school• Loans• Lines of credit• Private loans• Receivables sale15Copyright © 2013 Charter School Capital, Inc.
  • FUNDING OPTIONS Receivable Loan Private Loan LOC Sales Criteria Amount of need At Application At Application Varies Flexible (Limited) Access ~ 20 - 30% ? ~ 20 - 30% > 90% Cost Varies ? Varies Fixed Default Risk School School(?) School StateCollateral Constraints Large ? Large Small (Blanket Lien) (Blanket Lien) (only Receivable) 16 Copyright © 2013 Charter School Capital, Inc.
  • Facilities Growth Copyright © 2013 Charter School Capital, Inc.
  • FACILITIES CAPTIAL OPTIONS Traditional Traditional BANK LT Lease / LT Lease Criteria Cash Cash Bank Bond Bond Option Bank OptionCash neededAnnual costUnderwritingSecurityGrowth Options 18 Copyright © 2013 Charter School Capital, Inc.
  • FACILITIES CAPTIAL OPTIONS Traditional LT Lease /Criteria Cash Bond Bank OptionCash neededAnnual costUnderwritingSecurityGrowth Options Comparison for illustrative purposes only. Rankings are based on how 19 hypothetical “School A” might view its options based on unique attributes and Copyright © 2013 Charter School Capital, Inc. objectives.
  • FACILITY FINANCINGCustomized to meet specific need of each school• Full-service specialty resource – Selecting the right funding partner / structure o Bond, Loan, LT Lease + Option – Commercial developer – Architect – General Contractor – Design/build• Flexible and adaptive to each unique project• Ongoing access to working/growth capital20Copyright © 2013 Charter School Capital, Inc.
  • FACILITY FINANCINGQualification criteria for any structure• Stable or increasing enrollment• Strong demand – waiting list, expanding grades, market growth• Experienced leadership team• Market leading academic performance• Sound financial performance• Debt service/facility cost < 20% of total revenue• Compelling or differentiated story21Copyright © 2013 Charter School Capital, Inc.
  • Resource Development Growth Copyright © 2013 Charter School Capital, Inc.
  • RESOURCE DEVELOPMENTConnecting schools to alternative sources of funding• Supplement school personnel resources to identify and pursue “no- cost” funding sources• Federal and state entitlement funding – Working capital to bridge delay to earned entitlement program funding – Medicaid reimbursement administrative services• Grants and philanthropic funding – Identify national/regional sources – Aggregate schools into categories oStudent demographics oGeographic preferences/orientation oAcademic/program focus23Copyright © 2013 Charter School Capital, Inc.
  • WHAT GROWTH MEANSCapital provides the leverage to reach more students• Identify the initiative• Communicate clearly with all key stakeholders• Know the right funding source for your needs• Evaluate all the cost24Copyright © 2013 Charter School Capital, Inc.
  • Presentation available at:SlideShare.net/CharterSchoolCapital Questions? Copyright © 2013 Charter School Capital, Inc.
  • Jon Dahlberg Thank you! jdahlberg@charterschoolcapital.org26Copyright © 2013 Charter School Capital, Inc.