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					Charter School Fiscal Management
        Fiscal Year 2010/11

 Presented by:
 Fiscal Crisis and Management Assistance Team (FCMAT)
 California School Information Services (CSIS)
 Schools Legal Services
        Welcome and Introductions
Jim Cerreta, CPA, CFE
    Fiscal Intervention Specialist, FCMAT
Bill Hornback
      Attorney, Schools Legal Services
Michelle Plumbtree
    Chief Management Analyst, FCMAT
Gary Quiring
    Implementation Specialist, FCMAT/CSIS
Explanation of Workshop Binder
                        Did you Know?
•   Nationwide, California has the largest number of charter schools serving the
    largest number of students.
•   There are currently more than 800 charter schools with more than 285,000
    students enrolled.
•   Charter schools, though successful in raising student achievement, are
    closing their doors due to their lack of knowledge about managing the
    business and fiscal requirements of their schools.
•   CDE data shows nearly two-thirds (65%) of all charter schools that closed
    since 2004 reported positive trends in API growth and failed for reasons
    unrelated to successful academic performance.
•   Both the authorizers with oversight responsibility and the charter schools
    they serve need to better understand and meet their respective
                 What Can We Do?
• Make sure there is an understanding that:
   • Effective financial management of charter school resources is as
     important to the success of a charter school as the strength of
     the curriculum or the dedication of its founders.
   • Collaborative efforts between public schools and charter schools
     are in the best interest of all of our students; it is essential to
     understand each other’s regulatory and reporting environments.
   • The need for effective site-based financial management at
     charters has never been greater.
   • Sharing best practices to build capacity for effective financial
     management is a win-win situation.
       What Is A Charter School?

Presented by:
Bill Hornback, Counsel, Schools Legal Service
Michelle Plumbtree, Chief Management Analyst, FCMAT
          What Is A Charter School?

• A public school that operates independently of an existing
  school district structure and which may provide instruction in
  any grade or grades, kindergarten through 12.
• Usually created or organized by a group of teachers, parents,
  community leaders, a community-based organization, or the
  school district.
• Exempt from most laws and regulations governing traditional
  public schools in exchange for a performance-based
  accountability contract.
   What Is A Charter School? (cont.)

• Except where otherwise specifically required, charter
  schools in California are generally exempt from state
  laws governing school districts, whether or not these
  laws are in the California Education Code.
   What Is A Charter School? (cont.)

• Charter schools may be authorized by a district, a
  county board of education (CBE), or by the California
  State Board of Education (SBE).
• Specific goals and operating procedures for the
  charter school are detailed in an agreement, or
• Additional details are often set forth in a memorandum
  of understanding or “MOU.”
        What is the Purpose
        of Charter Schools?

• Improve student learning
• Increase learning opportunities for all students,
  especially those who are academically low-achieving
• Encourage the use of different and innovative
  teaching methods
• Create new professional opportunities for teachers
             What is the Purpose
         of Charter Schools? (cont.)
• Provide parents and students with expanded choice
  within the public school system
• Hold schools accountable for meeting measurable
  performance outcomes
• Provide competition within the public school system to
  spur improvement in all schools
      What is the Legislative Intent?

• Charter schools are an integral part of the California
  educational system.
• The establishment of charter schools should be
• Charter schools are part of the public school system
  but are free from most of the state laws that apply
  uniquely to school districts.
 What is the Legislative Intent? (cont.)

• Charter schools are under the jurisdiction of the
  public school system and the exclusive control of
  the officers of the public schools, and are entitled
  to full and fair funding.
• The laws governing charter schools are to be
  liberally construed to effectuate their intent.
What Laws Apply to a Charter School?

• Constitutions, both state and federal
• The California Charter Schools Act
• All federal laws (e.g., special education)
• Laws generally applicable to governmental entities but
  not specifically aimed at school districts (e.g., open
  meeting laws)
• Others listed in the materials
What is the Difference Between a Dependent and
        an Independent Charter School?

 • Traditionally, a “Dependent” school is “your” school for
   all purposes.
 • Traditionally, an “Independent” school may only be
   “your” school for limited purposes.
 • There is a growing trend among school districts to mix
   things up.
           What is a “Conversion”
             Charter School?

When an existing school site is converted into a
charter school, whether an independent or
dependent charter school, the school is likely to
be considered a “conversion” charter school.
  Other Important Considerations

• LEA Status
• Classroom- or Non-classroom-based instruction
• Countywide Charters – no appeal of a denial, but
  there is appeal of a non-renewal or revocation
• Statewide Charters – may no longer exist after the
  case of CSBA v. SBE (Aspire)
Charter School Petitions and Renewals

     Presented by:
     Bill Hornback, Counsel, Schools Legal Service
     Charter Petitions and Renewals
                Before the Storm

•   Have a policy in place
•   Identify possible resources for assistance, as needed
•   Be aware of what’s going on around you
•   Petitioner meetings?
•   Taking it to another level . . . Resolving disputes,
    dissatisfaction, resistance to change NOW, before it
    becomes a “charter” topic.
    Charter Petitions and Renewals (cont.)
         What Are My Legal Obligations?
• Schedule and hold a public hearing
• Review the petition
• Vote on whether or not to grant the petition
• Adopt findings of fact upon which a denial is going to
  be based
• If granted, adopt an MOU
• If granted, begin supervisorial oversight
  Charter Petitions and Renewals (cont.)
   What are the Grounds for Petition Denial?
• The charter school presents an unsound educational
  program for the pupils who are to be enrolled in the
  charter school.
• The petitioners are demonstrably unlikely to
  successfully implement the program set forth in the
• The petition does not contain the required number of
  Charter Petitions and Renewals (cont.)
What are the Grounds for Petition Denial? (cont.)

• The petition does not contain an affirmation of each
  of the required conditions.
• The petition does not contain reasonably
  comprehensive descriptions of all of the required
Charter Petitions and Renewals (cont.)
  What are the Possible Vote Results?

 • Grant the petition
 • Grant the petition with conditions before
   commencing operations
 • Conditionally grant the petition
 • Deny the petition after adopting fact findings
 Charter Petitions and Renewals (cont.)
There is a Timeline, and the Clock is Ticking
• Immediately upon receiving a petition . . .
• In the first week . . .
• In the first 30 days . . .
• In the first 60 days . . .
• Taking it to the next level – consider results of
  an appeal / grant on appeal . . .
• After the fact - Going into competition?
Charter Petitions and Renewals (cont.)

           Revisions to the Petition

 •   Can the reviewing agency revise the petition?
 •   Can the reviewing agency suggest improvements?
 •   Is there any obligation to do either?
 •   What happens in the “perfect” world?
    Charter Petitions and Renewals , cont.
  What are the Indications of Success / Failure?
• Budget, budget, budget – problems indicate likely
• Conflicts of interest, could be illegality
• Motivated by something other than students’ best
  interests – likely problems ahead
• High level of parental / community support – success!
• Cloning / conversion of an existing, working program
  also indicates likely success
       Required Petition Elements
What are the Grounds for Denial of a Petition?

• Unsound educational program
• Demonstrably unlikely to successfully implement
  the educational program
• Insufficient signatures
• Missing affirmations / assurances
• Missing a reasonably comprehensive description of
  a required element of the petition
    Required Petition Elements (cont.)
          What About Affirmations?
The petition must include affirmations on all required
subjects, including:
• Nonsectarian in all operations
• No tuition
• Not deny enrollment to special needs pupils
• Meet statewide standards and assessments
• Declare who is the exclusive public employer
     Required Petition Elements (cont.)
        What About Affirmations? (cont.)
The petition must include affirmations on all required
subjects, including:
• No discrimination based on protected categories
• No discrimination based on residence
• Require appropriate credentials or other documents
• Others, as noted in materials
   Required Petition Elements (cont.)
           What About Signatures?
• The code requires signatures of various kinds in
  various situations
• The SBE counts signatures at the time of submission,
  not looking at anything else or any time else
• Some agencies validate each signature
• Some agencies reject the petition before review if
  signatures are believed to be invalid or insufficient
   Required Petition Elements (cont.)
  Reasonably Comprehensive Description

• There are no rules binding on school districts or
  county boards of education
• The only rules are only binding on the State Board of
• You get to decide what is reasonably comprehensive
• Must be factually-based to become a reason for
  petition denial
     Required Petition Elements (cont.)
            Description Issues and Results
• If there is an issue with a required element, the factual
  basis behind that issue may be a basis for denial.
• The same facts may also show that the petition
  presents an unsound educational program.
• The same facts may also show that the petitioners are
  unlikely to successfully implement their program.
• The same facts may be used to show that all the
  above matters are true
   List of Required Petition Elements

• A description of the educational program of the
  school, including the transferability of courses and
  meeting college entrance requirements
• Measurable pupil outcomes
• The method by which pupil progress is to be
• The governance structure of the school
List of Required Petition Elements (cont.)

• Employee qualifications
• Health and safety procedures, including a criminal
  record summary on employees
• Plan for achieving a pupil racial and ethnic balance
  reflective of the general population of the district
• Admission requirements, if any
List of Required Petition Elements (cont.)

• The manner in which independent financial audits
  shall be conducted
• Procedures by which pupils can be suspended or
• The application of STRS, PERS or federal social
• Public school attendance alternatives
List of Required Petition Elements (cont.)

• District employee rights upon leaving/returning to
  the district
• Dispute resolution procedures
• A declaration of whether or not the school is the
  exclusive public school employer
• A description of the school closure procedures
           What About Appeals?
     If Your Agency Has Denied A Petition
• There are no rules
• You do not have to do anything
• You can participate in the process at any point, if you
  want to.
• Your agency has no legal standing in the appeals
• Possible court action if no action taken on appeal
        What About Appeals? (cont.)
If Your Agency Has Received A Petition On Appeal

• There is a time line for action
• County boards of education are required by
  regulations to either grant or deny the appeal
• The State Board of Education is only required by
  regulations to schedule an agenda item for granting or
  denying, no apparent obligation to actually vote
• There is no appeal from denial of a countywide
  charter petition
What About Changes During Appeal?

• The law presumes some changes will have to be
• There is no rule preventing any changes beyond
  those necessary.
• The reviewing agency on appeal may do exactly what
  you could have done on initial review.
• The exact same petition that you denied may be found
  on appeal to be properly granted.
           Charter Renewal
• Any charter may be renewed, if it meets the
  requirements for renewal.
• All renewals are for a period of five years.
• Renewal petitions must be reviewed using the
  same standards as an original petition + new
• Denial of renewal may be appealed.
• Denial of a countywide charter renewal may be
           Charter Renewal (cont.)
     What are the Renewal Requirements?
• Met statutory API growth target
• Ranked in deciles 4-10 on the API
• Ranked in deciles 4-10 on the API for a comparable
• The granting agency determines that the academic
  performance of the school meets a set standard
• Has qualified for an alternative accountability system
           Charter Renewal (cont.)

Should not be automatic and should be timed so that
no one is inconvenienced by lack of time, including time
to appeal any denial of renewal
Financial Management and Solvency

Presented by:
 Jim Cerreta, Fiscal Intervention Specialist, FCMAT
Charter School Finance in California
Funding Mechanism - Direct or Local Funding

Direct funded = from the state
Locally funded = through chartering authority

Either way, funding should be equitable relative to
that received by traditional school districts
          General Purpose Entitlement

Largest source of unrestricted charter school revenue

Funded on enrollment or Average Daily Attendance (ADA)
   • protection for declining enrollment? Not in California

2010-11 funding reduced by 18.355% deficit, -.39% COLA
and an additional 3.85% reduction in California
    General Purpose Entitlement (cont.)

Funded by a combination of:
• state aid
• local property taxes (“in lieu of property tax”)
In lieu of property tax:
• property tax dollar amount per ADA of the sponsoring
• times the charter school’s total ADA
 General Purpose Entitlement (cont.)

The annual amount is the lesser of:
  • Property taxes per ADA
  • Multiplied by the charter school’s ADA
  • The charter school’s general purpose entitlement
           Categorical Block Grant

• Unrestricted funds
• Consolidated from individual restricted categorical
• Not eligible to apply separately for these programs
   • See CDE website for list
        Categorical Programs – State

To the extent they are eligible:

• Locally funded charter schools typically apply through
  their chartering agencies.
• Direct-funded charter schools apply directly to the
  appropriate state or federal agency.
       Categorical Program Flexibility

The 2009-10 California budget provided flexibility options
  for restricted categorical programs
   • Three tiers – I, II & III
      • I – no flex, no cuts
      • II = no flex, 19% cut (over two years ended
      • III = flex, 19% cut
   • See CDE website for more information
           Class Size Reduction Program

Funding for various grade levels
   • K-3, 9
   • Maintain class sizes at prescribed levels
   • Penalties for exceeding prescribed levels
       • Penalties:
           • Up to 20.44 = No penalty
           •   20.45 to 21.44 = 5% penalty
           •   21.45 to 22.44 = 10% penalty
           •   22.45 to 22.94 = 15% penalty
           •   22.95 to 24.94 = 20% penalty
           •   24.95 or more = 30% penalty
               Special Education Programs
Special Education programs mandated by federal legislation
   • Individuals with Disabilities Education Act (IDEA)
   • Seriously underfunded at the federal level
       • Federal government = 10%
       • State government = 40%
       • Local government = 50%
States have responsibility for developing funding allocation
   • SELPAs in California
      • Confederations of districts and counties joined together to more easily
        develop the programs and services needed to provide full educational
        opportunities to students with disabilities
   • Special education funding
      • Generated by the total ADA reported by districts
         and combined at the SELPA level
              Special Education

State laws typically require LEAs to provide charter
  schools with:
• An “equitable” share of funds or services or
  a combination of both
• Support for the educational needs of charter school
  students with disabilities
                   Lottery Funding

Lottery funds for public education
   •Including charter schools
      •In California, lottery funds are calculated
      independently for each charter school
      •Paid on an ADA basis
   •Must be used for educational purposes
      •Includes everything except facilities
      •Some of these funds are restricted
      No Child Left Behind (NCLB) Act

NCLB provides restricted federal funding to LEAs for a
variety of programs
 • Some charter schools must apply for NCLB funding on
   their own behalf (direct-funded).
 • Some charter schools may receive funding for NCLB
   programs through their sponsoring LEA (locally funded).
 • Significant compliance requirements
     No Child Left Behind (NCLB) Act (cont.)

Federal categorically funded programs:
     Title I, Neglected or Delinquent
     Title I, Part A, Basic Grant
     Title II, Part A, Teacher & Principal Training & Recruiting
     Title III, LEP Students
     Title IV, Part A, Safe & Drug-Free Schools & Communities
     Title VI, Part B, Rural Education Achievement
     Tobacco-Use Prevention Education
   No Child Left Behind (NCLB) Act (cont.)
LEA Plans
• Charter schools must have an approved LEA plan
   • Submit a plan for review to the state
   • The LEA plan describes how the LEA will use NCLB
     program funds
   • Also accountability reporting re: student performance,
     fiscal compliance
 American Recovery and Reinvestment Act

The Federal American Recovery and Reinvestment Act of
2009 (ARRA) was signed into law in February 2009
 • This legislation has provided significant one-time funds
     • Save jobs
     • Stimulate the economy
     • Improve academic outcomes and support school
American Recovery and Reinvestment Act (cont.)
   Programs funded by ARRA included (bold indicates those with greatest funding impact):
   •   Education & Human Resources Directorate, National Science Foundation
   •   Child Nutrition Equipment Program
   •   Child Care and Development Block Grants
   •   Head Start and Early Head Start
   •   Elementary and Secondary Education Act
   •   Title I (Education for Disadvantaged Students)
   •   School Improvement Grants
   •   Impact Aid Construction
   •   Enhancing Education Through Technology (EETT)
   •   Education for Homeless Children and Youth
   •   Statewide Data Systems
   •   Teacher Incentive Fund
   •   Teacher Quality Enhancement, State Grants
   •   Individuals with Disabilities Education Act
   •   Special Education, Part B, 611 (Ages 3 – 21)
   •   Special Education, Part B, 619 (Ages 3 – 5)
   •   Special Education, Part C (Birth – 2)
   •   State Fiscal Stabilization Fund (SFSF)
   •   Qualified Zone Academy Bond Program (QZAB)
   •   Qualified School Construction Bonds (QSCB)
American Recovery and Reinvestment Act (cont.)
  Remaining funds must be spent by September 30, 2011
  • Quarterly reporting requirements apply
     • Must report before funds are released
  • New “School Improvement Grant” funds available in
     • For lowest achieving schools
     • Deadline to apply was June 1, 2010
      Non-Classroom-Based Instruction
Non-classroom-based instruction occurs when a student is not
scheduled for at least 80% of the instructional time in a
classroom. It includes, but is not limited to:
    • Independent Study
    • Home Study
    • Work Study
    • Distance and computer-based education
• Funding penalties invoked if not meeting criteria
• How do we structure our instructional methodologies?
• Do we align with any state requirements
    to maximize funding?
             Revenue Enhancement
Funding based on student attendance
• Consider student attendance incentives
• Increased attendance rates = increased funding
   • Offer rewards/prizes to students for:
       • Best attendance rate
       • Most improved attendance rate
   • Use donated funds to fund prizes/rewards
       • Avoid gift-of-public-funds issue
          Revenue Enhancement (cont.)

School calendars
• Evaluate daily student attendance patterns
   • Identify times when attendance is low
   • Adjust school calendar accordingly
   • Eliminate days that drag down ADA
        Revenue Enhancement (cont.)
• Apply….but:
   • Be wary of match requirements!
      • Can create financial burden if not properly
• Key Questions
   • What programs can we fund with this grant?
   • Can we fund this program once the grant expires?
   • Will this grant fund my cost increases over time
     and my indirect costs?
          Revenue Enhancement (cont.)
• Philanthropy/fundraising is an excellent source of
   supplementary funding for charter schools
  • Make sure it’s a donation, not a fee
  • Identify how the donation will be used when collected
      • Donor should always know how their donations are
  • Do not use one-time donations to fund ongoing programs
      • Allocate as though they are one-time funds
          Revenue Enhancement (cont.)

Indirect Costs
• That portion of costs associated with the overhead of
  operating a charter school
• Every resource contributes to the need for indirect costs
   • Thus, every resource should be charged
• Each resource has specific limitations on indirect cost
   • Refer to donor for more info
        New and Expanding Charter Schools

Special advance apportionments for new charter schools
• Start the flow of funds – new schools
   • General purpose funds
   • Categorically funded programs – federal and state
• Start the flow of funds – expanding schools
   • Significant growth
   • Grade level expansion
• Offset opening costs
                Declining Enrollment
School districts funded at greater of current or prior year ADA
• Not available to charter schools
• State won’t fund the same ADA for both the district and the
  charter school
   • The “sending entity” must deduct the ADA from the prior
     year ADA count for purposes of calculating fundable
   • Can’t fund same ADA twice in the same year
                         Facility Funding
The State requires sponsoring LEA’s to provide facility space to
 their charter schools
• Typical caveats include:
   • On space-available basis
   • Limitations on amounts LEA can charge for operating costs
• Finding adequate facility space can be difficult
   • Must be consistent with district standard for facilities for similar
       • Lab, gym, field, library spaces are difficult to share
• Must seek alternative housing if no
  space is available
                Facility Funding (cont.)
Variety of facility funding resources available to charter schools:
   • Site acquisition
   • Construction
   • Modernization/Deferred Maintenance
   • Lease assistance
• Must meet eligibility requirements
• Must meet variety of compliance requirements
• Typically requires matching funds
Visit CDE & OPSC websites for more information
               Facility Funding (cont.)
How does an LEA acquire matching funds for facility projects?
• Issue general obligation bonds or levy development fees
   • Not available to charter schools
• Issue certificates of participation
   • Can be risky & expensive
   • What funding would be dedicated to their repayment?
• Borrowing from lenders can be difficult
   • Not likely to loan beyond term of charter school
• Private and public sector grants may be available
   • Not common
Expenditure Control Strategies for
         Charter Schools
                   Internal Controls
A strong internal control structure is critical to controlling
•This includes:
    • Policies and procedures used by staff
    • Accounting and information systems
    • The work environment
    • The tone set by management
    • The professionalism of employees
       Internal Controls (cont.)

• Basic Components include:
   •   Segregation of duties
   •   System of checks and balances
   •   Staff cross training
   •   Use of prenumbered documents
   •   Asset security
   •   Timely reconciliations
   •   Inventory records
   •   Budget
   •   Position control
   •   Data management
                   Budget Controls
Position Control
• System of internal control that ensures all positions funded
  by the charter school are properly authorized
• Check and balance between:
   • Staff who authorize position changes (Business
   • Staff who manage vacancies (hire/adjust/terminate)
      (HR department)
             Budget Controls (cont.)

Economic Uncertainty Reserve
• Guidance should be provided in charter document or MOU
  with authorizing agency
• Consider building reserves in difficult fiscal times
   • Establish a base and add for:
       • enrollment fluctuation
       • staffing/program fluctuation
       • equipment/facility failure
             Budget Reductions

Plan for the Worst, Hope for the Best
• Review priorities & commitments
   • Update Multiyear Financial Projection
   • Make adjustments now; don’t wait
       • Savings have a multiplier effect
   • Match expenditures to projected funding levels
       • Eliminate structural deficit in budget
• Implement new plan ASAP
             Budget Reductions (cont.)

Develop a list of reductions that exceeds your reduction
  target …
   … and then prioritize
• Board authorization to implement list by priority
   • Avoids necessity of constant, never-ending budget cutting
• Revisit priority at budget reporting intervals and as
  information changes
   • Budget adoption, interim reports,
      year-end closing, audit report
                  Budget Monitoring
Enrollment and Staffing
• Update projections monthly as actual counts are taken
   • Budget adjustments should be implemented immediately
     if actual data indicates a material difference from the
     projected amounts
   • Mid-year staffing adjustments may also be necessary to
     prevent fiscal distress as a result of overstaffing
       • But not recommended, if it can be avoided
       • Disrupts instructional program
           Budget Monitoring (cont.)
Budget Overages (actual exceeds budget)
• Preventing overages
   • Use position control system
   • Use “hard stops” on purchase orders
• Responding to overages
   • Present budget modifications monthly
   • Resolve overage condition
      • Identify condition that led to overage
      • Correct the condition
             General Ledger Monitoring

Monitoring general ledger accounts is also critical to sound
fiscal monitoring
    • Cash reconcile items that are not cleared
    • Accounts receivable/payable differences between
       accruals and actual receipts/payments
    • Inventory that is over/understated
    • Payroll clearing accounts that are not reconciled
        • Payroll clearing is the most commonly
          under-scrutinized area
Largest portion of budget
• Average = 80% in school districts, 70% in charter schools
• Components of increased cost
   • Compensation increases (non-salary schedule)
   • Salary schedule increases/bonuses
   • Step and column salary schedule movement
   • Benefit rate increases (statutory)
   • Benefit program changes (contracted)
              Compensation (cont.)
Identify Available Dollars
• Available new revenue
   • COLA, growth
• Less increased fixed costs (previous commitments)
   • Step and column salary schedule movement
   • Statutory benefit rate increases, utilities, insurance
   • Increased staffing needs
• Less discretionary allocations
   • New/expanded/restored programs
   • Other priorities
• Equals amount available for compensation
              Compensation (cont.)
Desperate Fiscal Climate
• Traditional budget reduction approaches may not be
• Creative solutions may be needed to stay fiscally and
  cash solvent
   • May need to consider:
       • Compensation deferrals
           • Can’t pay now, but may be able to later
       • Compensation rollbacks
           • Across-the-board reductions
              • Salaries/Benefits/Both
         Compensation - Statutory Benefits
Statutory benefit rates likely to increase
• Retirement systems have suffered substantial losses in
  recent years
   • Rate adjustments have been implemented
   • Benefit reductions are under consideration
• Social Security, Medicare in need of significant fixes
   • Proposals are politically risky
       • Nothing concrete proposed to date
• Unemployment Insurance costs on the rise
   • More layoffs = higher rates
      Compensation - Contracted Benefits
Health & Welfare Benefit Programs
• Medical, dental, vision, life, etc.
• Health care reform may not provide timely solutions
   • May increase costs
• Increase purchasing power
       • Join a JPA
• Consider HMOs, Health Savings Accounts (HSAs)
• Review benefit caps on premiums, co-pays, deductibles
• Validate dependent enrollments
                Position Costs
Staff positions to meet charter school’s program needs
• But no more
• Overstaffing - and unfunded compensation agreements -
  are the largest components of financial failures!
• Consider options before creating permanent positions
   • Use substitutes/extra duty/overtime
   • Contract out (if legal)
       • Short-term cost < permanent cost
     Contributions to Restricted Programs
Some restricted programs require contributions from
unrestricted funding sources
• Some are mandated by law
• Some are discretionary
Manage contributions
   • Limit contributions to the amounts necessary
   • If unexpected contribution occurs, investigate
       • Educate the organization that the contribution
         occurred and why
       • Determine the level of commitment
          • One-time vs. ongoing
Budget Development Best Practices
        for Charter Schools
       Budget Development – Governance
Adopt charter school board policies and regulations
regarding budget management
• Guidance to staff regarding expectations
   for the budget
• Establish:
    • Goals and objectives for the charter school
        • Instructional/financial/other
    • Process by which budgets are aligned with goals
       and objectives
    • Process to identify budget assumptions
    • Process to develop budget
        Budget Development – Strategies
Develop budgets with a multiyear perspective
• Be thinking in a 3 to 5 year time frame
   • Primary focus on budget year
   • Additional focus on subsequent years
      • Not as detailed
• Organization needs a compass to see where it’s going
   • Action plan
      • What we need to do, and when
      • To achieve goals and objectives
    Budget Development – Strategies (cont.)

Use conservative assumptions
• Estimate low on revenues, high on expenditures
• But don’t overdo it!
   • Estimating too high or too low can create serious
      • Loss of credibility
      • Harm to programs
      • Negative effect on student performance
    Budget Development – Strategies (cont.)
Allocate new revenues (if any!) to needs, then wants
• Fund the base and related fixed cost increases first
    • Inflationary effect on supplies, etc.
    • Benefit increases
        • Statutory and contractual
    • Step and column movement across salary
      schedules (if any)
    • Contractual/debt service obligations
    Budget Development – Strategies (cont.)

Then, if funds are available, allocate new funds to wants

• Program development, expansion, restoration
• Compensation increases
• Building reserve levels

This process also works when funding decreases.
        Multiyear Financial Projections

State law identifies the duties of a charter
authorizing entity
• Charter authorizing entity must monitor the fiscal
  condition of charter schools

A budget and a multiyear financial projection (MYFP)
are integral information for the oversight function
• 2 to 5 years after budget year
   Multiyear Financial Projections (cont.)

MYFP Focus
   • meet required reserve for economic uncertainty
   • positive unappropriated fund balance
• Deficit spending trends? Must:
   • increase revenue
   • decrease expenditures
   • or both
                    Report Format

Budget Report Format - Narrative

   •   How the budget aligns with the goals of the board
   •   How it supports student learning
   •   Significant assumptions used to develop the budget
   •   Budget reduction detail
        • Response to reduced funding, declining enrollment
          or other factors
              Report Format (cont.)

Unaudited Actuals Report
 • Format may be prescribed by the State
 • Basis for independent financial audit
 • Last chance to affect the charter school’s financial
   status before the audit begins
                  Report Format (cont.)
Typical List of Supplemental Information
• Budget assumptions for revenues and expenditures
• Analysis of enrollment and average daily attendance (ADA)
• An organizational chart
• Statement of cash flow for the current and subsequent
  fiscal year
• Profit and loss statement
• Disclosure of all multiyear fiscal obligations, such as loans,
  lines of credit, etc., for the next three years
Cash Flow Management Techniques
        for Charter Schools
           The Importance of Cash Flow
• Cash flow is an important factor in determining the fiscal
  health of the charter school.
• Many schools are using their reserves to balance their
   • Using reserves affects future cash flow.
   • Less reserves means less cash.
• It is possible to maintain economic reserves in the budget,
  yet be out of cash.
• Cash shows no mercy – you either have it or you don’t/
         State Cash Flow Management
As the state continues to experience shortfalls in revenue,
they must have a means to improve their cash flow.
    • Deferrals have been the key to improving the state’s
      cash situation, but have become detrimental for
• Cash flow will continue to be challenging to manage for
   LEAs as deferrals are added, increased or lengthened.
            State Cash Flow Management, cont.

Source: California State Controller’s Office
                    The Cash Concept
It is often difficult to conceptualize the specific nature of cash
     • Assets – liabilities = fund balance
But is the fund balance cash?
        • No:
            • Assets are not all cash
            • Liabilities are accrued debts
                • Therefore the fund balance is not all cash
         Managing Receivables and Payables

Clean up receivables and payables as soon as possible
during the fiscal year
    • Best practice indicates that the majority of receivables
      and payables should be finalized by October 31
       • Any outstanding balances should be investigated:
           • Is this still a valid receivable or payable?
           • When will it be received or paid?
                  Reconciling Cash
• Best practice is to reconcile cash each month for each
   –Not reconciling cash can result in significant surprises
    once the backlog is caught up
   –The charter school will be able to more accurately
    anticipate cash borrowing needs
• What needs to be reconciled?
   –The county treasurer’s records
   –The charter school’s financial system records
   –The bank’s records
• Remember to balance clearing accounts
                     General Ledger Accounts
Quick quiz: What effect do these transactions have on cash?
                    Transaction                         Inc/(Dec) in Cash
Generation of a billing for use of facilities               No effect

Payment to vendor for a textbook shipment
accrued as accounts payable
Accrual of accounts receivable for a grant                  No effect

Receipt of the amount previously posted as
accounts receivable for the grant

Transfer of a cash receipt posted as revenue to the
                                                            No effect
accounts receivable account

Increasing accounts payable for the utilities bill at
                                                            No effect
year end
      Cash Flow Projections - Example
  A. Beginning cash
  B. Receipts – includes incoming cash from non-revenue
  C. Disbursements – includes outgoing cash for non-
      expenditure items
  D. Prior year transactions
  E. Net increase/decrease
  F. Ending cash
      Sample Charter School Cash Flow
   • One for each month
   • Actuals through which month?
   • Accruals column is for what?
   • What function does the Totals column provide?
    Sample Charter School Cash Flow (cont.)

• Accruals column allows for noncash items that will be
  recorded on the books
   • Typically during year-end closing
• Totals column is the sum of all columns on the projection
   • Should balance to:
      • The latest version of the current year’s budget
      • The prior year’s receivables and payables
       Cash Flow Projection Tools
• Spreadsheets
• Financial management software
• FCMAT’s Budget Explorer software
   • Web-based product
   • Free to all users
   • Charter school version under development
   • Visit www.fcmat.org to review
           Apportionment Schedules
For the revenue or Receipts section of the cash flow
projection, apportionment schedules are available
    • These account for much of charter schools’
      incoming cash.
   • Education Code Section (E.C.) 14041 in California
     details the amount of apportionments for charter
       California Principal Apportionment Schedule
                                E.C. 14041(a)(2), (3), and (4)    2009-10 Deferrals           Share of 2010-11
               Month                   After SBX4 16             Received in 2010-11      Statutory Apportionment
July 2010                                              5.00%                    12.25%                      0.00%
August 2010                                            5.00%                       7.5%                     5.00%
September 2010                                         9.00%                      5.25%                    14.00%
October 2010                                           9.00%                      0.00%                     0.00%
November 2010                                          9.00%                      0.00%                     9.00%
December 2010                                          9.00%                      0.00%                     9.00%
January 2011                                           9.00%                      0.00%                    18.00%
February 2011                                          9.00%                      0.00%                     0.50%
March 2011                                             9.00%                      0.00%                     0.00%
April 2011                                             9.00%                      0.00%                    15.00%
May 2011                                               9.00%                      0.00%                     4.50%
June 2011                                              9.00%                      0.00%                     0.00%
July 2011                                                                                                  17.50%
August 2011                                                                                                 7.50%
Total Principal Apportionment                        100.00%                    25.00%                    100.00%
             Ongoing Deferrals - California
• $2 billion deferral from the Principal Apportionment from
   February to July
• $570 million in K-3 Class-Size Reduction funds from February
   to July
 • $679 million deferral from April to August
 • $1 billion deferral from May to August
    • Generally Accepted Accounting Principles (GAAP) caveat on
      the accounting treatment of any deferral that crosses fiscal
       • Verify with your audit firm before recording on your books
      2010-11 One-Time Deferrals - California
The advanced apportionment for July 2010 will be deferred by
60 days in the amount of $2.5 billion

The October 2010 advanced apportionment will be deferred by
90 days in the amount of $2.5 billion

The March 2011 principal apportionment will be deferred until
April 29, 2011, in the amount of $2.5 billion
                  Exemptions from
         Apportionment Deferrals - California

Charter schools have two opportunities to apply for an exemption
from the July 2010, October 2010, and March 2011 deferrals:
  • #1 - June 1, 2010 deadline – All 3 of above deferrals
  • #2 - January 5, 2011 deadline – only the March 2011 deferral
  • LEAs that receive exemptions from ABX8 14 (Chapter
    10/2010) will still be subject to the permanent deferrals that
    occur in February, April, May, and June.
                In-Lieu Property Taxes
Payments from the charter school’s sponsoring LEA
   • In lieu of the charter school’s share of the LEA’s local
     property taxes
    No deferrals available to sponsoring LEA
The annual amount is the lesser of:
     • Property taxes per ADA
     • Multiplied by the charter school’s ADA
     • The charter school’s general purpose entitlement
In-Lieu Property Taxes
      August 6%
    September 12%
      October 8%
     November 8%
     December 8%
      January 8%
     February 8%
       March 1/3
        April 1/6
        May 1/6
       June 1/6
       In-Lieu Property Taxes (cont.)

• July = settle-up month
   • Actual property taxes of prior year
   • Actual P2 ADA of prior year
   • Less amounts transferred August through June
• February
   • Final adjustments to the prior year
   • In conjunction with the final reconciliation of annual
     apportionments to schools
             Categorical Apportionments
• Federal Apportionments are considered Tier I
   • No flexibility
   • No transfers, except as allowed for No Child Left Behind
     (NCLB) programs.
   • Funds will be apportioned according to established
• California Tier III categorical programs have experienced a
  change in cash flow.
   • The 41 programs transferred from restricted to unrestricted
     will now follow the regular apportionment schedule (i.e., 5,
     5, 9 . . . ) for cash flow purposes
   • See the CDE’s worksheet
                 Local Revenues
Other local revenues
   • The charter school is the best estimator of other
     local revenues
      • Use historical percentages and information on
        which to base the school’s current projection
      • Update the projections frequently to reflect
        actuals to date
• Estimating the timing of expenditures is critical for cash flow purposes
  • Dividing the budgeted amount by 12 months is not a good strategy
     • It most likely will not give you an accurate picture of the LEA’s
       cash needs to meet obligations
• As the fiscal year progresses, analyze projected spending amounts
  • Use the projected budget as a basis for the cash flow
     • Make sure all reductions or increases are accounted for in the
       cash projection
     • For example, if spending freezes have been enacted, have the
       anticipated savings been accounted for in the cash flow
                    Double Checking
Once the details of the cash flow projection are complete,
compare the “Total” column figures as specified:
   • Receipts and Disbursements sections should equal the
     revenue and expenditure line items in the budget
      • Exception: Other Receipts/Non-Revenue and Other
        Disbursements/Non-Expenditures should equal year-
        end balances for current-year asset and liability
   • Prior-Year Transactions section should equal the prior-
     year asset and liability account balances
             Projecting Cash Flow

Now, ask these questions:
Based on the 2010-11 cash projection:
   • Is cash negative at any time?
   • If so, what borrowing options are most
          Projecting Cash Flow (cont.)

If borrowing is necessary at year end, the most frequently
   used option is a temporary transfer from another fund
    • Are there sufficient balances in other funds?
    • How long will the borrowing be needed?

A midyear TRANs may be an option as well
   • See following section on cash borrowing options
                Cash Borrowing Options
External borrowing – three options:
  • Tax and Revenue Anticipation Notes (TRANs/RANs)
  • Private financial institutions
  • Accounts receivable factoring
Now, with state deferrals, even more agencies require
Some LEA’s – typically in a fiscal crisis – have borrowed
from the COE or the county treasurer
   • This option not available to charter schools in California
         Cash Borrowing Options (cont.)
Outside experts are needed for legal and financial matters
related to the issuance
    • A financial advisor can save you time and money
    • Legal counsel can ensure that the transaction complies
      with all laws and regulations
Most agencies issue TRANs by pooling their needs with
other agencies
    • Saves on costs of issuance
    • Coordinated through various public
      agencies/nonprofit organizations
            Cash Borrowing Options (cont.)

Agreeing to a third-party intercept would help secure a
TRANs/RANs loan
   • The county treasurer or county office of education could
     intercept TRANs/RANs-pledged charter school
       • Pay them directly to the lender
       • Provides lender added security
       • May be necessary to obtain financing
           Cash Borrowing Options (cont.)
Borrowing from a financial institution is an option
• Line of credit
   • Secured or unsecured
   • Issuance costs and interest rates tend to be higher than
     for a TRAN
• Private financing tends to be more difficult to acquire
   • May find qualification requirements onerous
   • Particularly for new or start-up charter schools
         Cash Borrowing Options (cont.)
Accounts Receivable factoring is another option
• Less common
• Involves selling accounts receivable to a financial
  institution at a discount
   • Need significant receivables for this option to generate
     meaningful cash flow
   • Relatively expensive
   • TRAN/RAN is likely less expensive
          Other Cash Flow Options
The State of California provides cash flow loans to charter
• Used for start-up costs
• Relatively short-term (3-5 years)
• Reasonable interest rates and issuance costs
• Check with CDE; visit their website
              Cash Borrowing Options

Loans require the charter school to repay the lender
• What happens if the charter school can’t?
   • It’s GAME OVER
       • Charter schools are not eligible for an emergency
         state loan in California.
• Fund balance can be low or negative, but cash cannot
Developing a relationship with your lender and other parties
involved is critical to successful borrowing
    • Financial institution
    • County office of education
    • County treasurer
    • Management company (if applicable)
    • Sponsoring LEA
    • Financial advisor/legal counsel
 Effective Monitoring Processes and

Presented by:
Bill Hornback, Counsel, Schools Legal Service
Michelle Plumbtree, Chief Management Analyst, FCMAT
         What is Effective Oversight
The Law Requires:
• Identify at least one staff member as a contact person.
• Visit each charter school at least annually.
• Ensure that each charter school files all required
• Monitor the school’s fiscal condition.
• Notify the CDE if a renewal is granted or denied, the
  charter is revoked, or the school closes.
    What is Effective Oversight (cont.)
         What are the Best Practices

•   Always be aware of what is going on.
•   Document efforts to have issues resolved.
•   Form at least a neutral relationship.
•   Build trust; foster open communications.
•   Review the audit.
 What is Effective Oversight (cont.)
   What are the Best Practices (cont.)

• Ensure audit findings are resolved.
• Track experiences over time to see if
  policies, practices, and preferences are
• Suggest revisions if they are not working.
• What will keep my agency out of court?
• What would a jury think I should have done?
 Memorandum of Understanding (MOU)
• It’s important to develop a comprehensive MOU as a
  framework for the relationship and to supplement the
  charter provisions.
   • The purpose is to clarify financial and operational issues.
• An MOU is an agreement between the authorizing agency
  and the charter school.
• Allows the chartering agency to identify expectations.
• Not required by charter law but highly recommended.
• Is a binding legal agreement once approved.
Memorandum of Understanding (MOU) (cont.)

  • The MOU should define specific expectations and
    responsibilities of the two parties, such as:
     • student performance
     • expectations for educational programs
     • special education
     • frequency of school site visits
     • financial reporting requirements
     • services provided by the sponsoring agency.
Memorandum of Understanding (MOU) (cont.)
Elements of a comprehensive MOU outline expectations
regarding oversight roles and responsibilities and a well defined
periodic review process through:
           1. An expanded business plan
           2. A facilities plan regarding the use and payment for
               space that also reflects the terms and conditions
               for use of district property.
           3. An administrative and support services plan
Memorandum of Understanding (MOU) (cont.)
• It is critical to clearly spell out the relationship between charter
  schools and their chartering agencies.

• The MOU is traditionally enforced as part of the charter, and
  replaces any inconsistent language in the charter.

• The State Board of Education and Department of Education
  have a form of MOU available.
               County Office Authority
• To monitor or conduct an investigation into the operations of
  the charter school based on written complaints by parents or
  other information that justifies such actions.
• To review or audit the expenditures and internal controls of a
  charter school at any time during the fiscal year if there is
  reason to believe that fraud, misappropriation of funds, or other
  illegal fiscal practices have occurred.
• May request the County Office or Fiscal Crisis and
  Management Assistance Team (FCMAT) to review the fiscal or
  administrative condition of a charter school.
                      Annual Audits
Must contract for an audit by April 1 of each year
• Contract with an auditor from the Certified Public Accountants
  Directory published by the State Controller’s Office
Must submit an annual independent financial audit by
December 15 of each year to the following:
•   State Controller’s Office
•   CDE’s Charter Schools Division
•   CDE Audit Resolution Office
•   Authorizing agency
•   County office of education where the school is located
               Annual Audits (cont.)
The audit shall be conducted in accordance with General
Accounting Office (GAO) standards for financial and
compliance audits and in accordance with the audit
guide adopted by the Education Audit Appeals Panel

Delays: There is no provision in the law for an extension
on a charter school audit.
             Annual Audits (cont.)

Audit findings
• To ensure a favorable recommendation for renewal,
  each audit must be free of material findings and
  exceptions, or corrective action plans must have
  been implemented in a timely manner.
• The auditor is required to review the correction, or
  plan of correction, to determine if the exceptions
  have been resolved in the subsequent year audit
            Charter Revocation
     What Are Grounds For Revocation?
• Committed a material violation of any of the
  charter (or MOU)
• Failed to meet/pursue any of the pupil outcomes
• Failed to meet GAAP, or engaged in fiscal
• Violated any provision of law
          Charter Revocation (cont.)
      What Is The Process For Revocation?
• The Code sets forth the process to follow.
• The revocation process only applies when the
  grounds for revocation also require a chance to cure
  the violation.
• There is no statutory right to cure any revocation
  based on grounds that constitute a severe and
  imminent threat to the health or safety of the pupils,
  and there is no right to appeal these kinds of
          Charter Revocation (cont.)
       Can Any Revocation Be Appealed?
• Any violation that does not constitute an imminent
  threat may be appealed.
• Denial of a revocation appeal may be appealed.
• The test on appeal is whether the revocation is based
  on substantial evidence.
• If overturned on appeal, the agency that granted the
  charter remains the oversight agency
            Common Issues

Presented by:
Bill Hornback, Counsel, Schools Legal Service
Michelle Plumbtree, Chief Management Analyst, FCMAT
    Governance Issues: What Laws Apply

• There is an unresolved dispute in the state over the
  application of Government Code Section 1090
• Govt. Code Section 1099 – Incompatible Offices
• Govt. Code Section 1226 – Incompatible Activities
• Govt. Code Section 53227 – Employees on the Board
• You get to decide the answer, each time you look at a
  charter petition, an original petition, or on appeal, or
  on renewal
            What Laws Apply (cont.)

• Some laws are accepted to apply, such as:
   • Political Reform Act – Government Code
   • Brown Act – Government Code
• Another grey area is the granting agency’s right
  to a seat on the board of directors of any not-for-
  profit corporation operating a charter school.
• The answer is: Whatever you want it to be.
Class Fees, Deposits and Other Charges
                   Free School System
• California Constitution provides for a free school system
• Since 1874, the California Supreme Court has interpreted this
  to mean students are entitled to be educated at the public’s
• Title 5, California Code of Regulations, Section 350,
  specifically states:
  “A pupil enrolled in a school shall not be required to pay any fee,
   deposit, or other charge not specifically authorized by law.”
                  Non-Allowable Fees
• Public schools, including charter schools, cannot levy fees
  as a condition for participation in any class, whether
  elective or compulsory. This includes:
   • Security deposits for locks, lockers, books, class
     apparatus, musical instruments, uniforms or other
   • Fees for participation in either curricular or extra-
     curricular activities.
   • All supplies, both necessary and supplemental, must be
     provided free of charge whenever a particular curricular or
     extracurricular program is adopted.
          Non-Allowable Fees (cont.)

• Gym or Physical Education Clothes
   • EC Section 49066 states, “No grade of a pupil
     participating in a physical education class may be
     adversely affected due to the fact that the pupil does
     not wear standardized physical education apparel
     where the failure to wear such apparel arises from
     circumstances beyond the control of the pupil,” such as
     lack of sufficient funds.
           Non-Allowable Fees (cont.)
• The CDE has stated the position that schools may
  require students to purchase their own gym clothes of
  a district specified design and color so long as the
  design and color are of a type sold for general wear
  outside of school. Once the required gym uniforms
  become specialized in terms of logos, school name or
  other similar characteristics not found on clothing for
  general use outside of school, they are considered
  school supplies and the district must provide the
  uniforms free of charge.
                    Allowable Fees
• Fees for the following can be levied based on the
  Education Code:
   • Transportation to and from school
   • Transportation to places of summer employment
   • Charges for food, limited by the free and reduced price
     meal program
   • Insurance for field trips
   • Lost or damaged books or other district supplies
   • Direct cost of materials for property the student has
     fabricated in class for their own use (if board policy in
               Allowable Fees (cont.)
• Fees for school camp programs (i.e. outdoor science camp).
  The fee cannot be mandatory.
• Fees for field trips and excursions may be charged in connection
  with courses of instruction or school-related social, educational,
  cultural, athletic, or school band activities. The fee cannot be
• Optional fingerprinting program for kindergarten or newly enrolled
  students, if offered.
• Actual cost of duplication of public records or student records.
• Charges for medical and accident insurance for athletic team
  members, except for those members who cannot afford to pay.
               Gift of Public Funds
• California Constitution, Article 16, section 6 addresses
  the subject:
   • Prohibits making any gift of public money to any
     individual (including public employees), corporation, or
     other government agency.
   • “ ... the Legislature shall have no ... power to make any
     gift, or authorize the making of any gift, of any public
     money or thing of value to any individual … whatever
              Gift of Public Funds (cont.)
•   Expenditures of school funds must be for a direct and primary public
    purpose to avoid being a gift.
      • Expenditures that most directly and tangibly benefit students’ education
         are more likely justified.
•   Must be within the scope of a school entity’s jurisdiction and purpose.
•   To justify the expenditure of public funds, the governing board must
    determine that the expenditure will benefit the education of students within
    its schools
•   Expenditures driven by personal motive are not justified even if they have a
    long-standing custom or are based on benevolent feelings
          Gift of Public Funds (cont.)

• If the governing board has determined that a particular
  type of expenditure serves a public purpose, courts will
  almost always defer to that finding.
    • Put in board policy
• The following can be considered a gift of public funds
  unless in board policy:
    • Flowers
    • Candy
    • Donations to charity
          Gift of Public Funds (cont.)

• Expenses CANNOT be considered a gift of public
   • Must have a direct or substantial purpose
   • Misappropriation of public funds is considered a
     criminal act, with no monetary limit specified.
   • Better to be safe than sorry
               Are gifts allowable?
• Not allowable, even if small in amount
   • Many think that “de minimus” gifts, those of trivial or
     little value, would be okay (under $20/person).
   • Most courts would disagree.
              Are Awards Allowed?
• Authorized by E.C. 44015
• To employees for exceptional contributions; to students
  for excellence
• The board is required to adopt rules and regulations
  about awards
   • if there is no policy or regulations, no awards are allowed
• Can’t exceed $200 unless in board policy
• Awards to community members are not considered
• Birthdays, weddings, funerals and holidays are not
  considered an award.
         Are Awards Allowed? (cont.)
• Awards to employees are allowed if the employee:
   • Propose procedures or ideas that are adopted and
     result in eliminating or reducing district expenditures
     or improving operations
   • Perform special acts or special services in the public
   • Make exceptional contributions to the efficiency,
     economy or other improvement in operations of the
    Is Employee Clothing/Attire Allowed?

• No specific statute or case authorizing such expense
   • Could definitely be considered a gift of public funds
• Not allowable unless required to perform his or her duties
  as a coach, club advisor, etc. or if considered an “award”
  under E.C. 44015
Are Employee Appreciation Meals Allowed?
• Appreciation meals do not qualify as awards
• Attorney General says they are not “actual and
  necessary” per E.C. 44032
• They don’t provide a direct and/or substantial purpose,
  so would be a gift of public funds
            Good Business Practices

• Establish board policy and administrative regulations
  regarding what is considered allowable/unallowable
• Establish procedures to follow if questions arise
• Set parameters for determining appropriateness
• Assign a specific employee in the business office to
  provide assistance
• Provide annual training
  Proposition 39 - Charter School Facilities
• You have facilities obligations to all in-district
  students, whether or not they are enrolled in your
• You have facilities obligations to charter schools
  granted by someone else, if your students are
• Adverse impacts on your agency do not give you an
  excuse for refusing to provide facilities . . . Maybe.
• Lots of regulations exist on this subject
    Charter School Facility Regulations
• Are detailed
• Are confusing
• Cost formulas are not easy to understand
• Contain a provision stating that any facilities agreed to
  by the agency and the charter school can meet the
  requirements of the law
• Dispute resolution requires non-binding mediation
            Charter School Facilities
• May be requested if the school has projected having
  at least 80 units of ADA consisting of district pupils
• Are not required to be provided for non-district pupils
• Must be “reasonably equivalent” to district facilities
• Must be “contiguous”
• Must be located reasonably near where requested
• Must be maintained by the charter school, except for
  capital improvements
Data Management and Key CALPADS
   Concepts for Charter Schools

Presented by:
Gary Quiring, CSIS Implementation Specialist, FCMAT
            Data Management Topics

• Data management and charter schools
• CALPADS purpose, benefits and timeline
• CALPADS security requirements
• CALPADS implementation
• Data management services provided by FCMAT/CSIS
         Importance of Data Management

• All local education agencies (LEAs) are required to assign
  and maintain Statewide Student Identifiers (SSIDs).
• Official reporting of enrollment, dropout, graduate and
  other data is now based on CALPADS data.
• Funding and public views on the efficacy of your school
  are affected by local data management practices.
     Importance of Data Management (cont.)
• Data management practices affect the quality of local and
  CALPADS data.
• CALPADS data is used in the AYP and API calculations.
• CALPADS data feeds into the CDE DataQuest system and
  the Ed-Data (Education Data Partnership) system.
• Fiscal data also feeds into the Ed-Data system.
• CALPADS data is being sought by researchers to evaluate
  program effectiveness and draw
     Importance of Data Management (cont.)
• Data management practices affect the public’s view of
  school data.
• Reports on your charter are available to the public via
  DataQuest and Ed-Data.
• News media use DataQuest and Ed-Data when
  researching and reporting education issues.
• Parents use Ed-Data to identify quality schools for their
   Charter School Reporting Responsibilities

• There are two types of charter schools for CALPADS
   • Charters that report data independently from their
     authorizing agency
   • Charters that report data through their authorizing
Charter School Reporting Responsibilities (cont.)
• Charter schools may elect to report through their
  authorizing agency (LEA) or independently.

• The CALPADS reporting method can be changed each
  May for the following reporting year.

• Changing the charter school CALPADS reporting method is
  a charter school decision.

• Decision should be made in consultation
  with the authorizing LEA.
Charter School Reporting Responsibilities (cont.)
• The decision should be based on local capacity to maintain
  and report student data.

• The charter school reporting method is the same for

• See CDE’s CALPADS Website:
Charter School Reporting Responsibilities (cont.)
• Not meeting CALPADS reporting requirements may result in
  zero enrollment counts.

• Zero enrollment counts will result in a loss of any funding
  based on official enrollment.

• All students must be exited correctly in CALPADS when a
  school closes.
California Longitudinal Pupil
 Achievement Data System
    (CALPADS) Purpose,
   Benefits and Timeline
                    CALPADS Purpose
• Provide LEAs and the CDE with access to data necessary to
  comply with NCLB reporting requirements.
• Provide a better means of evaluating educational progress
  and investments over time.
• Provide LEAs with information that can be used to improve
  pupil achievement.
• Provide an efficient, flexible and secure means of
  maintaining longitudinal statewide pupil level data.
                  CALPADS Benefits

• Uniform statewide data collection and maintenance.
• Immediate access to information on new students, entered
  by LEAs where the students were previously enrolled.
• Visibility of data to support school performance
              CALPADS Benefits (cont.)
• Download of data from CALPADS to conduct analyses
  using local tools
   • Print and download reports
   • Filter report data based on user-selected filters (e.g.
     district, school site, grade level, demographics, program
   • View summary and detail reports (e.g. Student
     Demographic, Program Participation, Enrollment
     History, Enrollment Exit History, Assessment History)
   • View assessment test results
     (e.g. CAHSEE, CELDT)
             CALPADS Benefits (cont.)
• Provides CDE program staff the ability to access and
  extract data for state and federal reporting and analysis
• Provides authorized CDE staff the ability to create ad hoc
• Provides the ability to maintain at least 20 years of data in
  a production environment
• Is designed to enable expanded capabilities over time
                CALPADS Collections Timeline
Which Data are Expected?
                        Snapshot Collection Windows
Fall 1               Annual Enrollment
                     Graduates and Dropouts
                     Enrollment Subgroups

Fall 2               Course Enrollment
                     Certificated Staff Assignments
                     English Learner (EL) Services

Spring 1             English Language Acquisition Status
                     Title III Eligible Immigrants

End of Year 1        Course Completion
                     Career Technical Education (CTE)

End of Year 2          Program Participation
End of Year 3          Discipline and Truancy
End of Year 4          Waivers
               CALPADS Collections Timeline (cont.)
Snapshots Certification & Amendment Calendar
   CALPADS       Census       Snapshot Collection      Certification         Amendment Window
  Submission      Day              Window               Deadline
Fall 1         October 6   October 6 – December 16   December 16       December 17 - January 20

Fall 2         October 6   November 8 – January 27   January 27        January 28 – February 24

Spring 1       March 1     March 1 - March 25        March 25          March 26 - April 22

EOY 1          none
EOY 2          none                                          TBD
EOY 3          none
EOY 4          none
CALPADS Security
                 CALPADS Security
• If your charter school is independently reporting to
  CALPADS, your charter school LEA CALPADS
  administrator is responsible for assigning CALPADS
  accounts for charter school staff.
• If you report CALPADS data through your authorizing
  agency, you should coordinate with your authorizing
  agency to establish:
   • Charter school staff accounts in CALPADS
   • User roles and access levels for your charter’s data
             CALPADS Security (cont.)
• Administrators of independently reporting charter schools
  need to complete and submit an LEA CALPADS
  administrator application form to the CALPADS operations
• Once the application is approved, the named LEA
  CALPADS administrator will be provided access (username
  and password) to the CALPADS system.
• The LEA CALPADS administrator is responsible for creating
  and assigning CALPADS accounts for charter school staff.
             CALPADS Security (cont.)
• Important to establish local business practices that limit
  access to CALPADS data, and prevent unauthorized
  access to CALPADS data
• Charter school administrators are accountable for all staff
  who access CALPADS data.
• The LEA CALPADS administrator account is NOT for daily
• The LEA CALPADS administrator MUST create an LEA
  account for daily use.
             CALPADS Security (cont.)
The LEA CALPADS administrator creates and maintains
CALPADS accounts for staff users. This includes password
resets and account revocation.
The account controls access to data based on the following:
  • User Security Level - determines the level of data that
    the user can see in CALPADS
      • School
      • LEA
  • User Roles - give the users access to specific data and
    functions in CALPADS
             CALPADS Security (cont.)
• Charter management organizations sometimes administer
  and report data for more than one charter school.

• The CALPADS operations office can create a multiple
  charter school account for a single user, upon approval by
  individual charter school administrators.
                    Lessons Learned
• Staff training is required when the following occurs:
   • Change of status to independently reporting
   • Staff turnover
   • Change of student information system
• Batch file submissions for independently reporting charters:
   • Reporting LEA field must contain the school code
   • School of Attendance must contain the school code
               Lessons Learned (cont.)
• Some student information systems are not completely
  CALPADS compatible.

• CALPADS batch file templates are the best way to fix this
   • https://www.calpads.ca.gov
   • Login, then click on the Help menu
               Lessons Learned (cont.)
• LEA admin account cannot be used for:
   • Anomaly contact
   • Submission or access to NSLP data
   • Data certification (Level 1 and Level 2)
   • Daily use
• These roles must be assigned to a different user account
• Plan ahead for certification deadlines
   • CALPADS Calendar:
CALPADS Implementation
          Leadership for Data Management

• Know the requirements, rules and deadlines, and work to
  meet them
   • CALPADS file specifications, code sets, data guide and
     enrollment procedures:
       • http://www.cde.ca.gov/ds/sp/cl/systemdocs.asp
• Provide staff sufficient time to complete the work
• Allocate resources for staff training and SIS maintenance
    Leadership for Data Management (cont.)

•   Monitor implementation.
•   Help resolve problems.
•   Encourage collaboration, both internal and external.
•   Before certifying data, have appropriate staff review
    certification reports:
     • Program directors
     • Food services
     • Human resources
     Leadership for Data Management (cont.)
• Use the CDE/CSIS certification reports:

   • Superintendent’s Data Inconsistency Alert Summary

   • Superintendent’s Data Inconsistency Alert Detail Report

   • Data Inconsistency Alert Guide
             CALPADS Training
Online Self-Paced Trainings:
• Training 1: Overview of CALPADS Objectives and

• Training 2: CALPADS Key Features, Key Concepts
  and System Administration
           CALPADS Training (cont.)
WebEx and Online Self-Paced Trainings:
• Training 3: CALPADS SSID Enrollment
• Training 4a & 4b: CALPADS State Reporting and
• Training Fall 1: Fall 1 Reporting and Certification
• Other TBD (Fall 2, Spring, End of Year)
Regional Trainings at County Offices of Education
• Training Fall 2 – Two hour regional training
            Requirements References
• Review CALPADS Documentation:
   • File Specifications
   • Code Sets
   • Extract Specifications
   • SSID and Enrollment Procedures
   • Data Guide
   • Valid Code Combinations
   • Error List
   • Technical Update
   • Located at: http://www.cde.ca.gov/ds/sp/cl/systemdocs.asp
        Requirements References (cont.)

• Online CALPADS documentation (Login and click on the
  Help menu):
   • User Manual
   • LEA Operations Manual
   • Quick Start Guide
   • Batch File Templates Instructions and Tips
             Federal Requirements for
                Race and Ethnicity
• A two-part question will be required to collect race and
  ethnicity information from students and staff
• There is no category for “Unknown” or “Decline to State”
• Requirements apply ONLY to 2009-2010 and later
  student enrollments and staff hires
• Frequently asked questions posted at:
   • http://www.cde.ca.gov/ds/td/lo/refaq.asp
• Other resources posted on CSIS website:
   • http://www.csis.k12.ca.us/library/calpads/
      • Sample student and staff forms
      • NCES document
            Data Auditing Procedures
Elements of a Data Audit:
• Analysis of findings
• Error determination or exception
• Error replication
• Sources of errors and sources of correct data
• Notify appropriate staff of errors detected and how they
   will be corrected
• Correction of problems
• Determine if local processes need improvements
       Best Practices for Data Quality
Establish Standards
• Evaluate local and state requirements
• Correlate state codes
• Identify system of record
Implement Standards and Expectations
• Document standards
• Conduct training
• Provide support
Designate data stewards
        CSIS CALPADS Support Tools

Found in the CALPADS menu under
CALPADS Documents on the CSIS
homepage (http://www.csis.k12.ca.us)
     CSIS CALPADS Support Tools (cont.)

• CFS Aligned Gap Analysis Tool

• CFS Gap Analysis and Planning Tool

• Preparing to Submit Elementary Course Data

• Preparing to Submit Scheduled Course Data
        Data Reporting Responsibilities and
• Coordinate with your district if you report with them.
• Create or expand your data management team.
• Define clear roles and responsibilities with respect to
• Encourage communication and collaboration.
                 Local Staff Training

• CSIS CALPADS Trainings 2-4 are “train the trainer” based
• Online self-paced trainings allow focus on selected topics
• Establish local policies for CALPADS enrollment updates
  and anomaly resolution
• Train staff on CALPADS and local policies
• Train staff on new CALPADS functionality in local SIS
Management Services
        Data Management Services
•   Academic records transfer (ART)
•   Address validation (AV)
•   Direct certification (DC)
•   Eligibility in local context (ELC)
•   Data management coordinator training
•   Onsite technical assistance (fee based)
            Academic Records Transfer

• Service for sending student records from secondary to
  postsecondary institutions
• For more information and to register for training, visit
                 Address Validation
• Free FCMAT/CSIS service to correct student addresses or
  notify the LEA of addresses that need to be corrected
• Corrected addresses improve communication to parents
• If sent to CALPADS, corrected addresses can increase
  matching for direct certification
• Address validation is not currently part of CALPADS
• For more information and to register for training, visit
              Eligibility in Local Context

• Free service to automate transmitting the top 12.5% of 11th
  grade student records to the University of California – Office
  of the President (UCOP)
   • Top 4% of students in each California high school class will
     be designated UC-eligible
• For more information and to register for training, visit
      Data Management Coordinator Training
• Free training for staff who are new to education and/or new
  to data management. The class is in two parts:
   • Part 1 focuses on key data management concepts, data
     constituencies and ways to build organizational leadership
     and support for data management
   • Part 2 focuses on factors affecting data quality, data security,
     data use and reporting considerations.
• For more information and to register for training, visit
     FCMAT Onsite Technical Assistance

• Fee-based service
• Interested LEAs can obtain individual assistance in:
   • Local data management practices
   • CALPADS implementation
                 Contact Information

CSIS Support (ART, AV, DC, & ELC)

Gary Quiring
                CALPADS Resources
   • http://www.cde.ca.gov/calpads
• CALPADS file specifications, code sets, data guide and
  enrollment procedures:
   • http://www.cde.ca.gov/ds/sp/cl/systemdocs.asp
• Sign up for CALPADS listserv:
   • http://www.cde.ca.gov/ds/sp/cl/listservs.asp
   • http://www.csis.k12.ca.us/library/calpads/
            CALPADS Resources (cont.)
• Charter school CALPADS and CBEDS-OPUS data
  reporting policy:
   • http://www.cde.ca.gov/ds/sp/cl/charterschools.asp
• CALPADS training registration page:
   • http://www.csis.k12.ca.us/e-learning/calpads-
• CALPADS self-paced training:
   • http://www.csis.k12.ca.us/e-learning/sp-
       CALPADS Resources (cont.)
• DataQuest
   • http://dq.cde.ca.gov/dataquest/
• Ed-Data
   • http://www.ed-data.k12.ca.us/welcome.asp
• CALPADS file upload templates
   • https://www.calpads.ca.gov
   • Login, then click on the Help menu
• CALPADS User Manual
   • https://www.calpads.ca.gov
   • Login, then click on the ? menu
          CALPADS Resources (cont.)
   • http://www.cde.ca.gov/ds/sp/cl/communications.asp

• CALPADS known issues updates
   • http://www.cde.ca.gov/ds/sp/cl/knownissues.asp

• Education data newsletter
   • http://www.cde.ca.gov/ds/sd/cs/
Foretelling The Future
             Foretelling The Future
        This Is What’s Happening Already

• School districts are converting schools to charters to
  get start-up grant money.
• Education in the virtual real-time classroom is already
• A movement is under way to relieve virtual classroom
  programs from independent study rules/restrictions.
• Statewide/countywide charters dead?
Where to Go for Help
Fiscal Crisis and Management Assistance Team
  Website: www.fcmat.org

  •   Management Assistance
  •   On-site Technical Assistance
  •   AB139 Extraordinary Audit
  •   Fiscal Crisis
  •   Fiscal Advisor/Fiscal Expert
  •   Online Help Desk
  •   Professional Development
Charter School Division Contact Information
Charter Schools Division
    California Department of Education,
    1430 N Street, Suite 5401, Sacramento, CA 95814
    Phone: 916-322-6029 Fax: 916-322-1465
    email: charters@cde.ca.gov
    Website: www.cde.ca.gov/sp/cs
Questions and Answers
Thank you for attending!