California Financial Wellness - Budget Planning Best Practices
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California charter schools face many challenges in operating schools including planning and maintaining school budgets. In this webinar, hear from two California charter leaders on financial wellness best practices.
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California Financial Wellness - Budget Planning Best Practices
- 1. Copyright © 201 Charter School Capital, Inc. All Rights Reserved. Financial Wellness: Budget Planning Best Practices Webinar 9/7/17
- 2. 2 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. WELCOME Spencer Styles, President and CEO Charter Impact Bonnie Bensen, Chief Financial Officer Fortune School of Education Stuart Ellis President and CEO Charter School Capital
- 3. 3 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. • Founded in 2010 • Initially one school in San Bernardino, CA • Opened 1 of 6 schools in Sacramento, CA in 2011 • Initial Student Enrollment: 215 • Current Student Enrollment: 1,800 • Current Number of Schools: 7 • Expanding to high school in August 2017 • Partnering with Cal Ploy San Luis Obispo and Cosumnes River College allowing students to graduate with AA degree Rex and Margaret Fortune School of Education FORTUNE BACKGROUND
- 4. 4 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. • Founded in 2010 to provide financial management and operational support (“back- office” services) to CA charter schools • Model of service resembles more of a hand-in- hand partnership than a “back” office company • # 1 priority is to provide timely, accurate financial information with dependable, responsive customer service at an affordable cost. • We help charters navigate from start-up through strategic growth and into long-term sustainability Charter Impact CHARTER IMPACT BACKGROUND
- 5. 5 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. WHAT WE’LL COVER • Charter school growth stages • Financial challenges school operators face • Budget planning best practices and takeaways Agenda Presentation is available to download at CharterSchoolCapital.org/Webinars
- 6. Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. Stages of Growth
- 7. 7 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. STAGES OF GROWTH # of Students Start-up Survival/Establish Growth Flexibility/Stability Sustainable Maturity Efficiency Time (years) 0 2-3 5-10 100% Students as a % of mature targets 10-25% 25-90% 90-100%
- 8. 8 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. CLOSURE CHALLENGES Reasons for charter school closures 42% 24% 19% 6% 5% 4% Financial Mismanagement Academic Authorizer Obstacles Facilities Other Source: The State of Charter Schools, The Center For Education Reform, December 2011
- 9. 9 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. STAGES OF GROWTH Strategic approach Start-up Growth Sustainability Financing Any liquidity Flexible/scalable Cost Facilities In target locale Modular Curb appeal/cost Community involvement Awareness Fulfill the promise Fabric of community Academic accountability Establish program Measure program Continuous improvement Operational support Outside experts Transitional resources In-house team
- 10. 10 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. FUNDING OPTIONS Start-up Growth Mature Grants/Fundraising X X X Revolving Loan/CDE Receivable Sales Long-term Lease Line of Credit Bond All cost of funds are NOT created equal
- 11. 11 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. Key Financial Benchmarks FINANCIAL WELLNESS Certificated Salaries 50% Classified and Admin 15% Rent 20% All Other 15% Site Based Schools Certificated Salaries 40% Classified and Admin 25% Rent 15% Other 20% Blended Learning Schools
- 12. Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. The Start-up Phase
- 13. 13 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. FINANCIAL WELLNESS Start-up phase Challenges Determining needs versus wants Understanding timing of payments and map to your budget and cash flow Finding suitable facilities / buying new facility Finding, selecting and managing relationships with vendors Know all the funding/financing stream options (PENSEC, LCFF, PCSGP) Preparation and planning for renewal starts Day 1
- 14. 14 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. FINANCIAL WELLNESS Start-up phase Best Practices Start with a petition budget Pay close attention to the budget and map to school priorities for the year Have a plan and show how costs frame the budget proposed Include all expenses – start with a budget that includes everything from your wish list and then prioritize Plan for potential surprises Build a budgeting process to follow annually
- 15. Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. The Growth Phase
- 16. 16 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. GROWTH ESTIMATOR
- 17. 17 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. FINANCIAL WELLNESS Growth phase Challenges Maintaining high expectations and being flexible Matching capital to operational needs Ensuring access to capital when needed Baseline budget Tie budgets to what is proposed – prioritize Managed growth – continued growth will allow more
- 18. 18 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. FINANCIAL WELLNESS Growth phase Best Practices Start with previous year’s budget rather than estimating Have solid enrollment projections to build budget needs Active management of cash flow + 30 day forecasting (visibility into the finances is key for EDs/CEOs of schools) Understand your AP – some outstanding must be paid regularly while others can be negotiated at longer terms (vendor maintenance) Partner with external service providers or have an experienced team member dedicated to focus on your financials, or both Always make payroll…always
- 19. 19 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. The Sustainable Maturity Phase
- 20. 20 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. FINANCIAL WELLNESS Mature phase Challenges Replication brings new challenges – learn from the past. Consistently request input from all stakeholders. Opening schools in new states adds complexity. Stay vigilant - state funding ebbs and flows. Keep the next downturn in the front of your mind and proactively prepare for it. State finances timing/flow Prepare for consistent turnover in technology to stay competitive, i.e. Chromebooks. Think ahead - repairs and replacement fund/preparing for deferred maintenance and major updates.
- 21. 21 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. FINANCIAL WELLNESS Mature phase Best Practices Strategic enrollment = Stable growth Continually monitor process and budgeting Negotiate with and manage vendors to get the terms that work best for the school Know your financial target benchmarks and manage to them Tap in to working capital to extend available cash for growth Process (ex. Fortune) Target cash reserve to cover any economic downturn Long term facilities needs and technology needs Single year deficits – know how to manage these deficit years when arise
- 22. Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. Questions? Download presentation at: CharterSchoolCapital.org/Webinars
- 23. 23 Copyright © 2017 Charter School Capital, Inc. All Rights Reserved. Thank You Download presentation: CharterSchoolCapital.org/Webinars Contact us for a personalized review of the Growth Estimator to see details for your school. Email GrowCharters@charterschoolcapital.org. Panelists Stuart Ellis, sellis@charterschoolcapital.org 877-272-1001 Spencer Styles, sstyles@charterimpact.com Bonnie Bensen, bbensen@fortuneschool.us
Editor's Notes
- STUART
- STUART Start-up Fact - NC study of 70 charter schools – 87% of school failures happen in the first three years. Growth Fact – Sustainable Maturity Fact –
- Charter schools are challenged in a number of operational areas. Interestingly, 42% of charter schools fail due to financial issues. Charter school capital was created for the sole purpose of funding charter schools and we believe we can play a key role is assisting charter schools to overcome many of the finance challenges they face. Although this pie charter shows distinct boundaries between many of the identified categories, we all know financial issues can contribute across the board. Specific example could be the mismanagement of funds due to the challenge associated with cash flow. Additionally, the need for funding of technology to support academic initiatives. Finally, our experience indicates that the challenges associated with facilities tends to begin in the lack of flexible financing approaches that can address the unique needs of charter schools.
- Kapil
- MARSHALL
- What are the challenges schools face during the growth phase? · Adjusting to higher expectations and new and/or changing state/sponsor accountability requirements · The ability to advance from incremental progress in student performance to higher levels of performance and expectations · Managing with limited resources and often, facing greater demands for services · Inefficient or inadequate operating and data systems (including student assessment systems) · The annual loss of high quality teachers and leaders · The ability to recruit, select and hire new teachers for schools with increasing enrollments · The lack of adequate capital for FFE, marketing and curriculum for increasing student enrollments or campuses · Inadequate funding and/or lack of quality professional development and leadership training necessary to meet new expectations, curriculum and standards. What can schools do to meet these challenges? · Build in ‘longer term’ expectations for continuous growth and development and create the right school culture from the beginning. · School Improvement plans must have a clear delineation of the multi-year goals and measures, and must include clear strategies, actions, milestones and evaluation component. · Schools and their staff must be prepared for the “roll out” of Common Core State Standards and the implications for curriculum, leader and teacher knowledge and skills, and how schools and classrooms should be organized. · Greater access to resources and expanding the learning environment via technology. · Conduct an annual “Quality Review” grounded in school standards of excellence. · Make “Capacity Building” and on-going priority (on-going training and development of school leaders and teachers, staff recruitment). · Create structures within schools that enable teachers to track their students’ progress and advance changes in practice on a routine basis. · Improved ‘assessment’ systems that provide teachers and school leaders with user friendly, real time data and information.
- Bonnie