Charter School Petition Training Financial Services 1Financial Services

What Makes a 4 th Generation Charter School “High-Quality”? Strong Academic Results Well-Trained and high- functioning Governing Board Financial Sustainability Legal and Regulatory Compliance 2From GaDOE Presentation

3Financial Services Section H: Financial Plan Does the petition provide a comprehensive and realistic financial plan for the charter school? The question is asking if the petitioner’s overall financial plan is thorough and their assumptions sound and reasonable. This financial plan should include at a minimum: Revenue projections supported by realistic enrollment and reasonable student funding calculations. Expenditures cannot exceed revenue in any year. Start -up costs (initial expenditures such as leasehold improvements, furniture, equipment, LAN hardware and wiring, computers, software, textbooks, etc.) Facility plans (detailed lease or purchase information for a specific location) Cash or cash equivalents equal to one month’s operating expenses. Financial Plan Does the petition describe the charter school’s plans for securing other sources of funding, including funding from corporations, individuals, foundations, philanthropic groups, or any other sources? Any budgeted funds must be committed (i.e. letter of intent, grant award letter).

4Financial Services Section H: Financial Plan Does the petition provide a realistic and balanced budget that includes realistic revenue projections based on the Georgia Department of Education Quality Basic Education formula and the District’s local revenue projections? The question is asking if the petitioner’s budget is thorough and their assumptions sound and reasonable, including a balanced budget. The assumptions must be disclosed. Budget Forecasted budget must be provided for each year of proposed charter Budgeted expenditures cannot exceed budgeted revenues in any year Each significant revenue source should be shown as a separate line item Each significant expenditure (e.g. salaries, taxes, benefits, retirement, rent, textbooks, management fees, utilities, etc.) should be shown as a separate line item The budget should be provided in an Excel spreadsheet file, in addition to the paper reports.

5Financial Services Section H: Financial Plan Supporting assumptions used to estimate revenues should be disclosed. Projected enrollment by year, by grade Explain how per student funding calculated Provide supporting calculations for any other revenues (grants, fundraising, etc.) Supporting assumptions used to estimate expenditures should be disclosed. For example, explain how teacher salaries were calculated based on enrollment, class size, average salary, etc. For example, explain how rent expense was calculated (e.g. square footage multiplied by average rental price for commercial buildings in projected locality) Provide supporting calculation for any other significant expenditure Ancillary services such as food services and after-school-programs (ASP) need to be fully documented and integrated into the budget.

6Financial Services Section H: Financial Plan Does the petition list a balanced budget for the term of the charter, including: 1.Projections from the Georgia Department of Education FTE earnings. 2.Detailed budget and cash-flow projections, with supporting documentation showing the basis for all revenue and expenditure projections, to be available per FTE and the basis for the estimates as well as approximate dates of availability of funds. 3.Evidence that the proposed budget is financially sound for the charter school and the District and that the petitioner is creditworthy. 4.A financial statement to the CCSD that discloses the projected cost of administration, instruction, and all other spending categories for the charter school that is understandable to the general public and that will allow comparison of such cost to other schools or other comparable organizations in a format acceptable to the District. 5.A description of how the charter school facility will be funded, and maintained (including all current and/or potential leases, debt services, construction costs, and leasehold improvements).

7Financial Services Section H: Financial Plan Actual QBE revenue is based on several variables, including FTE count, grade level, courses offered, special needs, etc. However, based on our two existing charter schools, an average revenue-per-student could be $6,187 as calculated below: QBE & Local Revenue Estimate Kennesaw Charter School Smyrna Charter School Fiscal Year 2015 Estimate(K-6) (K-8) Total State Revenue Estimate $ 3,387,950 $ 4,248,568 $ 7,635,518 Local Revenue Estimate 1,994,365 2,233,595 4,227,960 Subtotal $ 5,382,315 $ 6,482,163 $ 11,864,478 Less: 3% Fee (161,469) (194,465) (355,934) Revenue Allocation to Charter School $ 5,220,846 $ 6,287,698 $ 11,508,544 FTE Student Enrollment ,860 Revenue per Student $ 6,015 $ 6,338 $ 6,187

8Financial Services Section H: Financial Plan Does the petition describe the financial policies and procedures that the charter school will implement to assure sound fiscal management and that the policies and procedures will be available on site? These Financial Policies & Procedures might include: Description of All Funds Basis of Accounting, Revenue Recognition, Accrual of Expenditures Account Number Structure and Level of Legal Budgetary Control Preparation and Approval Process for Annual School Budget Fixed Asset Capitalization Thresholds by Asset Type Processes and Internal Controls for General Ledger, Cash Receipts and Disbursements, Fixed Assets, Purchasing, Payroll Investment Policy Annual Inventory and Reporting of Fixed Assets Annual Independent Audit of Financial Statements Financial Policies & Procedures

9Financial Services Section H: Financial Plan Does the petition state, in addition to any other financial provisions that the petitioner chooses to include, that: (a)the charter school will provide the CCSD with a monthly Budget versus Actual Statement, and Balance Sheet in a format acceptable to the District within 45 days after the end of each month? The budget included in the above statements must be balanced, i.e. expenditures cannot exceed revenues. All monthly budget versus actual statements should clearly indicate monthly debt repayment. The charter school should also provide a detailed schedule of all loans and associated interest. (b)any surplus funds remaining at the close of one fiscal year will be used to enhance the charter school's academic program the following year? The charter school/corporation will be responsible for disclosing all uses of surplus funds to the District at the end of the fiscal year.

10Financial Services Section H: Financial Plan (c) any deficit occurring during or at the end of a fiscal year will be eliminated within the next fiscal year? A detailed, realistic plan and budget for the next fiscal year must be provided to and approved by CCSD. No CCSD funds will be allocated to the charter school for the next fiscal year until the Superintendent or designee approves such plan and budget. (d) the charter school will be solely responsible for all debts it incurs and will acknowledge that it shall not contractually bind the CCSD with any third party contracts it makes? (e) the board of the charter school will notify the CCSD immediately if the charter school is contemplating the cessation of operations, and will cooperate with the CCSD to the extent necessary to provide an orderly return of the students to their local school?

11Financial Services Section H: Financial Plan (f) if the charter school/corporation ceases operations for any reason, the charter school/corporation personnel and its governing board will cooperate fully and be responsible for appropriately safeguarding and distributing the school’s assets and winding up the school’s business and affairs? Articles of Incorporation should reflect returning the assets to CCSD upon dissolution. (g) if the charter school does not have sufficient funds to pay its entire bill at the time it ceases operation, the CCSD will not be responsible for the charter school’s unpaid bills? (h) the charter school will be audited annually by the state auditor or, if specified in the charter, by an independent certified public accounting firm, licensed in the State, according to the same guidelines (O.C.G.A (b)(7) applicable to public school systems in Georgia and that copies of the audit will be submitted to the Cobb County Board of Education within 90 days of the end of the charter school’s fiscal year, with the cost of the independent audit borne by the charter school? The District requires all charter school audits to express an unqualified opinion.

12Financial Services Section H: Financial Plan (i)the CCSD's Internal Audit Department will be permitted to audit the charter school as the CCSD deems appropriate? Be specific in your statements. Does the petition state that the nonprofit corporation will: (a)Operate and support the charter school as the sole function of the corporation; (b)Not raise funds for any other purpose; (c)Submit a copy of the IRS application for tax exempt status or the letter of determination confirming the nonprofit’s tax-exempt status; (d)Obtain tax exempt status with the first 18 months of incorporation to retain the nonprofit corporation’s charter. (e)Submit copies of the IRS Form 990, Return of Organization Exempt from Income Tax for each year of operation? Be specific in your statements.

13Financial Services Section H: Financial Plan Does the petition state that the charter school will designate a chief financial officer possessing credentials in accordance with the Guidance accompanying this Rule (O.C.G.A § (b)(7) for the purpose of developing and adhering to generally accepted accounting principles? Be specific in your statement. Does the petition describe the level of autonomy the charter school will have over budgets and expenditures? Fully describe the school’s autonomy, especially when a management company is involved. Required Statements, Descriptions, and Lists

14Financial Services Section H: Financial Plan Does the petition list the nonprofit corporation’s current board members by name, address and occupation? The petition must list all members and all requested information. Are copies of the corporation’s Articles of Incorporation, all amendments to the Articles of Incorporation, the By-laws and all amendments to the By- laws attached to the petition? Do these documents support the petition, State law, and CCSD requirements? These need to be complete, fully- executed versions. Does the petition state the charter school understands that the charter may be revoked or not renewed by the Cobb County Board of Education if the Board determines that the Charter School failed to meet generally accepted standards of fiscal management as described by the CCSD Financial Services Division? Be specific in your statement.

15Financial Services Section H: Financial Plan Does the petition state that all equipment with an original acquisition cost of $1,000 or more (as well as all computers, printers, LCD projectors, and interactive whiteboards, regardless of cost) will be identified and reported to CCSD each year? Be specific in your statement.

Thank You Financial Services 16Financial Services