CHARTER SCHOOLS NEW APPLICANTS WORKSHOP

1. CHARTER SCHOOLS NEW APPLICANTS WORKSHOP MAY 27, 2010

2. Topics • Federal Education Finance Program (FEFP) • Federal & State Assistance • Accounting & Auditing Overview • Application Sections • Budget • Financial Management & Oversight

3. Federal Education Finance Program (FEFP)

4. 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)

5. Florida Education Finance Program = BASE FUNDING The purpose is to provide funding for the operational expenses of schools.

6. 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 Allocation. The students generate FTE funding using the appropriate Basic Program weight for their grade level. The ESE guaranteed allocation provides for the additional services needed.

7. Additional FEFP Components

8. Other Funding from FEFP Teacher Lead Program Merit Award Program School Recognition Funds

9. 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.

10. 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).

18. Resources Florida Department of Education Office of Independent & Parental Choice www.fldoe.org/fefp/chartinst.asp The School District of Palm Beach County Accounting Department www.palmbeachschools.org/accounting/CharterSchoolAccounting.asp

19. State and Federal Financial Assistance

20. 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.

21. 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.

22. 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.

23. 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

24. 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

25. Planning, Program Design, and Implementation Grants (cont.)

26. Resources US Department of Education Grant Information www.ed.gov/fund/landing.jhtml Florida Department of Education Grants Management www.fldoe.org/grants/grantslinks.asp#links Florida Department of Education Office of Independent & Parental Choice https://www.floridaschoolchoice.org/information/charter_schools/charter_general_Info_and_forms.asp

27. 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

28. 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 facilities; • 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.

29. 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

30. Resources Florida Department of Education www.fldoe.org/edfacil/oef/cs2010.asp The School District of Palm Beach County Accounting Department www.palmbeachschools.org/accounting/CharterSchoolAccounting.asp

31. Accounting & Auditing Overview

32. Accounting 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.

33. “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 funds: • General • Special Revenue • Capital Project • Debt Service

34. “Red Book” • Fund – Fiscal and accounting entity with a self balancing set of accounts. Segregates specific activities in accordance with special regulations, restriction, or limitations. • General Funds • Debt Service Funds • Capital Projects Funds • Special Revenue Funds • Internal Service Funds • Fiduciary Funds • Enterprise Funds • Revenues – Categorized by fund, source, and appropriation • Expenditures – Categorized by the following elements: • Fund • Function • Object • Facility • Program • Fiscal Year • Grant • Projects

35. “Red Book” (cont.) • Functions – refers to the objective or purpose of an expenditure. • Function is the “Where” • Instruction (5000) • Instructional Support Services (6000) • General Support Services (7000-9700) • Object – means the goods purchased or the services obtain • Object is the “what” • Salaries (100) • Employee Benefits (200) • Purchased Services (300) • Energy Services (400) • Materials & Supplies (500) • Capital Outlay (600) • Other Expenses (700) • Transfer (900)

36. How to Access the “Red Book”? Florida Department of Education www.fldoe.org/fefp/redtoc.asp

38. Audits

39. 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 plans

40. Resources Auditor General www.myflorida.com/audgen/ Florida Legislature – Statute Search www.leg.state.fl.us/Statutes/index.cfm?Mode=View%20Statutes&Submenu=1&Tab=statutes&CFID=72725658&CFTOKEN=42781737

41. Charter School ApplicationSection 18 - Budget

42. 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 year.

43. 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 needs

44. Budget • 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 operations. • Provide the school’s fundraising plans. If you are including fundraising funds in your budget, please provide verification (i.e. letters of commitment).

45. Budget – (cont.) • Rule #1 - Keep out of the Red… • Stay in the BLACK. • Start with smart planning and sound budgeting. • Develop a realistic budget. • Implement a financial plan for long-term fiscal stability.

46. 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)

47. 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)

48. 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

49. Other Cost for Instructional Personnel Professional Services (contracted) - Speech Therapy, OT/PT, School Psychologist = $65/hr Instructional materials - average of $125 per student Classroom supplies - average of $70 per student Computer equipment - average cost $750 per machine Software - variable, based on need Substitute teachers - average 5 days per teacher x $85/day

50. 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, retirement