Copyright © 201 Charter School Capital, Inc. All Rights Reserved.
Financial
Wellness:
Budget Planning
Best Practices
Webinar
9/7/17
2Copyright © 2017 Charter School Capital, Inc. All Rights Reserved.
WELCOME
Spencer Styles,
President and CEOCharter Impact
Bonnie Bensen,
Chief Financial OfficerFortune School of
Education
Stuart Ellis
President and CEOCharter School
Capital
3Copyright © 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
4Copyright © 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
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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
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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%
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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
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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
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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
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Key Financial Benchmarks
FINANCIAL WELLNESS
Certificated Salaries
50%
Classified and Admin
15%
Rent20%
All Other15%
Site Based Schools
Certificated Salaries
40%
Classified and Admin25%
Rent15%
Other20%
Blended Learning Schools
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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
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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
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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
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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
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The Sustainable Maturity Phase
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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.
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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
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Questions?Download presentation at:
CharterSchoolCapital.org/Webinars
23Copyright © 2017 Charter School Capital, Inc. All Rights Reserved.
Thank YouDownload presentation: CharterSchoolCapital.org/Webinars
Contact us for a personalized review of the Growth Estimator to see
details for your school. Email [email protected].
Panelists
Stuart Ellis, [email protected]
877-272-1001
Spencer Styles, [email protected]
Bonnie Bensen, [email protected]