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              MAY 27, 2010
   Federal Education Finance Program
   Federal & State Assistance
   Accounting & Auditing Overview
   Application Sections
       Budget
       Financial Management & Oversight
Federal Education Finance Program
How Charter Schools Are Funded
The main funding for charter schools comes from the
      Full Time Equivalent Students (FTE)

     Section 1011.62(2), F.S. required 180 days term

     720 Hours of Instructional Time for Prekindergarten through
      Grade 3 Students (180 days x 4 hours per day)

     900 hours of instructional time for Grades 4 through 12
      Students (180 days x 5 hours per day)
Florida Education Finance Program
 The purpose is to provide funding for the operational
                   expenses of schools.

 FTE                       Full Time Equivalent

  x                                 X

 PCF                       Program Cost Factor

  =                                 =

WFTE              Weighted Full Time Equivalent Students

                         BASE FUNDING
     ESE Guaranteed Allocation
Exceptional education services for students whose level
of services is less than Programs 254 (level 4) and 255
(Level 5) are funded through the ESE Guaranteed

The students generate FTE funding using the appropriate
Basic Program weight for their grade level. The ESE
guaranteed allocation provides for the additional services
Additional FEFP Components
     Supplemental      Discretionary         Instructional
       Academic                              Materials &
   Instruction (SAI)      Lottery            Science Lab

                       Safe Schools          Transportation

    Class Size         Discretionary
    Reduction          Local Effort

    Declining            Millage
    Enrollment          (.25 & .748 mills)
     Other Funding from FEFP

   Teacher Lead Program
   Merit Award Program
   School Recognition Funds
              FEFP Calculations
      FTE is recalculated 5 time each year.
   1st – May, created by the Legislature using projected FTE
    for all surveys.
   2nd – July, uses projected FTE from all surveys, has new
    certified School Taxable Values from Counties.
   3rd – December, first calculation of year to included actual
    FTE. Uses actual FTE for October, projected February.
   4th – April, uses actual FTE, October and February.
   5th or Final – October of following year. Includes FTE
    amendments & audits.
       FEFP – Palm Beach Contract
   First funding will be limited by the Charter School’s FTE initial projection.

   Payments shall be made to the Charter School no later than ten (10) days
    after the District received the funds from the State.

   Payments will be made once a month, starting in July.

   The payments are adjusted three (3) times a year based on actual reported
    FTE’s by the Charter Schools.

   A five (5) percent administrative fee will be charged by the Sponsor for the
    first 250 students.

   For charter school with more that 250 students, the administrative fee
    withheld may be only used for capital outlay purposes per F.S. 1013.62(2).
Where To Find The FEFP Worksheet Calculation To Prepare The Budget?
FEFP Calculation for New Applicants Using Final Conference for FY 2012
Florida Department of Education
Office of Independent & Parental Choice

The School District of Palm Beach County
Accounting Department
State and Federal Financial
State & Federal Financial Assistance
   Title I
   IDEA
   Transportation
   National School Lunch Program
   Capital Outlay
   Charter School Program (CSP) Grant
    Pursuant to provisions of 20 U.S.C. 8061 s. 10306, all charter schools shall receive all
    Federal funding for which the school is otherwise eligible, including Title I funding,
    not later than 5 months after the charter school first opens and within 5 months after
    subsequent expansion of enrollment.
    Planning, Program Design, and
        Implementation Grants

   Provides financial assistance for the
    planning, program design and initial
    implementation of new charter schools for
    a maximum program performance period
    of 24 or 36 months.
   Grant is competitive – Must not include
    funds in your budget projections.
    Planning, Program Design, and
    Implementation Grants (cont.)
   Funds are intended to sponsor the start-up cost
    associated with planning the design of, and
    opening, a charter school, or cost related to
    sharing best practices. They are not intended for
    ongoing expenses.
   This grant is competitive and a new applicant
    must have at least an approved application to
    apply for it.
Planning, Program Design, and Implementation Grants (cont.)
             Before School Open and Year One

   The grant allows charter schools to use funds for
    governing board, financial, and teacher training,
    lease of facility prior to opening the school,
    marketing and other non operational cost
   Funding for Planning and Program Design
    (before school opens is approximately $25,000)
   First Year Implementation is approximately:
       1-200 students $225,000
       201 + students $275,000
Planning, Program Design, and Implementation Grants (cont.)
                       Second Year

   The projects financed by this grant should focus
    on implementation costs necessary to help
    continue the charter school during its second year
    of operation, and to increase the quality of
    educational services offered by the charter school
   Second Implementation is approximately $75,000
Planning, Program Design, and Implementation Grants (cont.)
US Department of Education Grant Information

Florida Department of Education
Grants Management

Florida Department of Education
Office of Independent & Parental Choice
         Capital Outlay Funding
   Capital Outlay funding is provided to those
    schools that are in their Fourth Year of operation
    and meet the following criteria:
       Has financial stability for future operations as a
        charter school
       Has satisfactory student achievement based on state
        accountability standards applicable to the school
       Has received final approval from it Sponsor
       Serves students in facilities not provided by the
        charter school’s sponsor
         Capital Outlay Funding
   How the school can use the funds?
       Purchase of real property;
       Construction of school facilities;
       Purchase, lease-purchase, or lease of permanent or relocatable school
       Purchase of vehicles to transport students to and from school;
       Renovation, repair and maintenance of school facilities that the charter
        school owns or is purchasing through a lease-purchase or long term lease of
        5 years or longer;
       Purchase, lease-purchase, or lease of new and replacement capital
        equipment, and enterprise resource software applications that are classified
        as capital assets in accordance with definitions of the Governmental
        Accounting Standards Board, have a useful life of at least 5 years, and are
        used to support school-wide administration or state-mandated reporting
        requirements (effective July 1, 2008);
       Payment of the cost of premiums for property and casualty insurance
        necessary to insure the school facilities;
       Purchase, lease-purchase, or lease of driver’s education vehicles; motor
        vehicles used for the maintenance or operation of educational plants and
        equipment; security vehicles; or vehicles used in storing or distributing
        materials and equipment.
   Capital Outlay Funding
2010-11 capital funding is as follows:
Elementary – grades K thru 5 - $395 per student station

  Middle - grades 6 thru 8 - $452 per student station

  High – grades 9 thru 12 - $598 per student station
Florida Department of Education

The School District of Palm Beach County
Accounting Department
Accounting & Auditing Overview
Section 1002.33(9)(g), F.S.:
    In order to provide financial information that is comparable to that
    reported for other public schools, charter schools are to maintain all
    financial records that constitute their accounting system:
         1. In accordance with the accounts and codes prescribed in the
         most recent issuance of the publication titled "Financial and
         Program Cost Accounting and Reporting for Florida
         Schools"; or
         2. At the discretion of the charter school governing board, a
         charter school may elect to follow generally accepted accounting
         standards for not-for-profit organizations, but must reformat
         this information for reporting according to this paragraph.
                      “Red Book”
   Uniform Chart of Account for budgeting and financial reporting.
   Adapted from the United States Department of Education Publication.
   Generally Accepted Accounting Principles required the use of the
    modified accrual basis of accounting for governmental funds.
   Florida school districts operate the following types of budgetary
         General
         Special Revenue
         Capital Project
         Debt Service
                             “Red Book”
   Fund – Fiscal and accounting entity         Revenues – Categorized by fund,
    with a self balancing set of accounts.       source, and appropriation
    Segregates specific activities in           Expenditures – Categorized by the
    accordance with special regulations,         following elements:
    restriction, or limitations.                      Fund
          General Funds                              Function
          Debt Service Funds                         Object
                                                      Facility
          Capital Projects Funds
                                                      Program
          Special Revenue Funds
                                                      Fiscal Year
          Internal Service Funds                     Grant
          Fiduciary Funds                            Projects
          Enterprise Funds
             “Red Book” (cont.)
   Functions – refers to the         Object – means the goods
    objective or purpose of            purchased or the services
    an expenditure.                    obtain
   Function is the “Where”           Object is the “what”
       Instruction (5000)                Salaries (100)
                                          Employee Benefits (200)
       Instructional Support
                                          Purchased Services (300)
        Services (6000)
                                          Energy Services (400)
       General Support Services          Materials & Supplies (500)
        (7000-9700)                       Capital Outlay (600)
                                          Other Expenses (700)
                                          Transfer (900)
How to Access the “Red Book”?
Florida Department of Education
    Statutory Audit Requirements
   1002.33(9)(j)(1), F.S. -
          Ensure that the charter school has retained a certified public accountant or
           auditor for the annual financial audit…
   Section 218.39 (1)(e), F.S. –
          Charter schools have to perform an annual financial audit of its accounts and
           records at the end of the fiscal period
   Section 218.391, F.S. –
          Each charter school prior to enter into a written contract shall use auditor
           selection procedures when selecting an auditor.
   Section 218.503, F.S. –
          Determination of financial emergencies
   1002.345, F.S. –
          Expedited review and requirements for charter schools with determination of
           deteriorating financial conditions and financial emergency
   Rule 6a-1.0081 –
          Monthly Financial Statements and requirements for financial Corrective action
Auditor General
Florida Legislature – Statute Search
Charter School Application

   Section 18 - Budget
    Application – Budget Section
   Start-up budget should include revenue and
    expenses the school will incur prior to the
    opening of the school.
   The operating, five (5) year budget must contain
    enough detail to analyze revenues and expenses.
   The budget narrative must provide sufficient
    information to understand how budgetary figures
    were determined.
   You must include detailed FEFP Revenue
    Worksheet to support your revenues for each
                Budget – (cont.)
   Budget should be based on projected student enrollment
    from the cover page of the application.
   No budgets will be approved with a negative fund balance
    for any projected year.
   Please be conservative in the school’s revenue &
    expenditure projections
   Provide a separate sheet with payroll information
    including positions, salaries and benefits needed to run the
    school (Staffing Plan).
   Make sure that your budgets are align with the school’s
    mission, educational program, staffing plan and facility
   Explain which are the school’s spending priorities
   Monthly cash flows projections should be realistic with
    the inflow of funds and outflow of expenditures.
   Cash flows only required for the start up and first year of
   Provide the school’s fundraising plans. If you are
    including fundraising funds in your budget, please
    provide verification (i.e. letters of commitment).
             Budget – (cont.)
   Rule #1 - Keep out of the Red…
   Stay in the BLACK.
   Start with smart planning and sound
   Develop a realistic budget.
   Implement a financial plan for long-term
    fiscal stability.
               Developing a Budget
   Estimate the revenue (FEFP & others)
   Obtain factual information regarding your potential student enrollment
    crating a:
          Market analysis- Identifying potential students and determine their
           locations and numbers
          Competitive analysis – examine area schools
          Statistical analysis – search online for statistical data and trends within
           the district
   Get to know your District’s Finance Department
   Use the Revenue Worksheet to calculate revenue
   Use the Budget Worksheet provided by the District
   Estimate your expenditures (i.e., fixed costs, rent, utilities, phone/internet,
    salaries, insurance, interest on debt (if any)
    Create a Set of Assumptions
   Classroom Instruction (5000)

       • Salaries Classroom teachers ($35k - $45k)
       • ESE & ESOL teacher
       • Classroom assistants ($13/hr for x 7.5 hrs/182
         days = $ 17,745.00
       • Other instructional staff (PE, Music, Art,
         Technology, Foreign Language)
Create a Set of Assumptions (cont.)
   Other Cost for Instructional Personnel
       Social Security @ 7.65 %
       Retirement: FRS contribution – 7.77% or 401K company match
       Health Insurance (medical, dental, life) - Average contribution
        of $485 per employee per month
       Workers’ Compensation (premium is based on job duties and
        classification) - Total instructional salaries x rate. Average rate
        = 1.25%
       Unemployment Compensation (state and federal) minimum for
        new company = 2.7% of first $7,000 for each employee
    Other Cost for Instructional Personnel
   Professional Services (contracted) - Speech
    Therapy, OT/PT, School Psychologist = $65/hr
   Instructional materials - average of $125 per
   Classroom supplies - average of $70 per student
   Computer equipment - average cost $750 per
   Software - variable, based on need
   Substitute teachers - average 5 days per teacher x
    Instructional Support Services (6000)
   Pupil Personnel Services

         Guidance Counselor: $ 40k year
         Health Assistant: average = $12/hr for 7 hrs/
          182 days = $ 15,288 year
         Calculate social security, health insurance,
          worker’s comp, unemployment compensation,
Media Services and Curriculum
 Development (6200 & 6300)
 • Media Specialist ($38k)
 • Library Aide ($12/hr for 6 hrs/182 days = $13k
 • Curriculum Specialist ($40k - $45 k)
 • Calculate social security, retirement, health
   insurance, workers’ comp and unemployment
         Professional Development
          & Staff Training (6400)

   Professional development activities
   Consultant fees
   Workshop stipends
   Materials
   Travel (workshop registration, lodging, per
    diem, transportation)
General Support Services – Board (7100)

   Professional Services - Legal $250/hr
   Independent Financial Audit - $15k +
   Officers & Directors Insurance;
    Liability/Errors & Omissions/Crime -
    Range: $14- $22 per student
   Governance board training (required)
   Travel for board members to conferences,
    General Administration (7200)

   Professional Management Services, if
    applicable (average is 12% or $495 per
   Administrative fee - 5% based on total
    revenue (including transportation)
    School Administration (7300)
   School Administrator                   Lease - copy machine: $300/month
   Assistant Administrator                Postage: $6.00 per student
   School Secretary: $25 - $30k           Printing (includes advertising): $2,500
                                            - $5,000/year
   Data Entry Operator/Office             Office supplies: $4,000 per year
    Assistant ($14/hr x
                                           Office equipment (cost will be based
    8 hrs x 196 days= $22k)                 on new or existing school): $1,000 per
   Calculate social security, health       year
    insurance, workers’ comp,              Computer equipment: $750 per
    unemployment compensation,              computer plus printer
    retirement                             Dues and fees (professional
                                            association dues)
                                           Travel - $2,500 per year per
                                           Conference registration - $500 per
Facility Acquisition and Construction (7400)

   Building lease: average 60 - 80 sq ft/student @ $12/sq ft
    and up
   Repairs and maintenance: based on age of building and
   Buildings and fixed equipment: purchase of building
   Land: purchase of land
   Improvements other than building: fencing, playground
    equipment, landscaping, paving
   Remodeling and renovations: AC replacement, fire alarm,
    security system, carpet/flooring, painting
         Fiscal Services (7500)

   Accounting services: payroll, monthly
    financials, bill paying - $14k/yr. (average)
   Contract accounting services with a
    qualified professional.
      Pupil Transportation (7800)
   Salaries - Bus Drivers $14.00/hr (part-time position)
   Social Security: 7.65%
   Workers’ Comp: total salary x rate of 8.6% (rate varies)
   Unemployment Compensation: $245 per year
   Insurance - Auto/Bus: $1,500 per year (rate varies)
   Repairs and maintenance: $1,500 per year/bus
   Cell phone: $720 per year/bus
   Bus inspections: $300 per year/bus
   Dues & Fees: drug testing & license fees = $125 per driver
   Gasoline: Per bus/per year (variable, based on distance and fuel prices
    = $5,000/yr
           Operation of Plant (7900)
   Salaries                                 Telephone, fax, Internet:
        Custodial/maintenance - $12/hr       $1,000/month
         (part-time)                         Utilities (electricity, water, sewer,
        Include social security,             trash service) $2200/month
         workers’ comp (total salary x
         average rate of 8.6%),
                                             Pest control service: $750/year
         unemployment compensation           Equipment: variable, based on
         at $245 per employee per year        need
   Cleaning and maintenance                 Fire Alarm/Security Monitoring:
    supplies: $4,000/yr                       $200/month
   Cleaning Service: $2,000/month -         Fire Inspections: average -
    variable, based on size of school
   Property Insurance: variable,
    based on location/type of                Carpet cleaning: variable, based
    building/lease or own - range             on need
    $2,500/yr - $8,000/yr +                  Grounds maintenance: $6,000/yr
             Food Services (7600)
   Lunchroom workers (part-time) at $9/hr (two for 250
   Include social security, workers’ comp (average rate
    = 8.6%) and unemployment compensation
   Materials and supplies: $1,000/yr
   Equipment
            Lease warmer: $30/month
            Purchase a warmer: $2500 per unit
            Purchase a milk cooler: $2000 per unit
       Have a Contingency Plan
   Keep 3% - 5% in reserve.
   Apply for grants.
   Share services with other charter schools.
   Two equals ONE: Fold two positions into one.
   Shop…shop…shop for services and
   Be prepared to make the hard choices.
   Have a line of credit
  Estimate Conservatively

  Underestimate   Revenue

 Overestimate   Expenditures
Florida Department of Education
Florida Department of Education
Office of Independent & Parental Choice
The School District of Palm Beach County
Accounting Department
Financial Management &
 Oversight – Section 19
    Who will Manage the School’s
   Hire a responsible, honest, smart accountant.
   Recruit board members with strong financial experience.
    (Beware: parents will have strong emotional attachments)
   The Board:
         is the ultimate responsible for the school’s finances;
        is obligated to ensure the school’s finances are properly
        is in charge to establish financial procedures that follows
         governmental accounting practices;
        is in charge to hire an Independent Auditor to perform the
         annual audit.
Financial Controls & Monitoring
   Prevent fraud by establish sensible policies.
   Put policies in writing and have board approval.
   Create “segregation of duties.”
   Regularly monitor compliance.

   Monitoring is a function of the board:
        1. The Administrator should certify, in writing the segregation of
        2. Use external reports created by an auditor or other expert to examine
        documents and fiscal compliance practices
        3. Direct inspection by a board member
        4. Review monthly financial reports regularly
        5. Developing and Amending the budgets accurately
                Please Remember...
   The application must include a fiscal management system that
    is appropriate, follows generally accepted accounting principles
    and properly safeguard assets.

   Please be very descriptive of your financial procedures to be
    follow per governmental accounting practices

   Describe the financial controls, including the annual audit,
    board review of financial statements and procedures to
    safeguard finances and projected enrollment trends

   Describe how the school will store student and financial

   Describe which insurance policies the school should budget for
Recognizing Red Flags – One of these has occurred in
     a Charter School Embezzlement Scheme
   “Don’t you trust me?”                Financial contributors to the
   Irregularity in receiving             school who are anonymous to
    financial reports.                    the board.
   Non-existence or violation of        Peculiar practices, such as the
    segregation of duties policies.       administrator requiring that
   The administrator can’t               bank statements not to be open
    explain every aspect of the           by staff or administrator trying
    school’s finances.                    to handle all aspects of
                                          financial management without
   The auditor is not completely         segregation
    independent from
    management. (Example: An             Lack of attendance of Board
    auditor who audits multiple           members and parents to board
    schools for a management              meetings
    company.)                            Lack of performance review
                                          by board to administrator
   Contact information:
    Jeannette M Merced
    Accounting Specialist
    Financial Management
    561 434-7368

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