California Financial Wellness - Budget Planning Best Practices

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


• 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


• 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


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


Stages of Growth


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%


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


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


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


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


The Start-up Phase


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


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


The Growth Phase


GROWTH ESTIMATOR


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


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


The Sustainable Maturity Phase


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.


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


Questions?Download presentation at:

CharterSchoolCapital.org/Webinars


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]

California Financial Wellness - Budget Planning Best Practices

Education

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