1. Introduction to Charter School Budgeting
BMN - January 27, 2017
Business Managers’ Orientation Meeting

2. Why have a Budget? The annual budget is required by statute
The Board must formally appropriate the funds to fund the budget they approve
The Board has a fiduciary duty to oversee the school’s financial activities
Staff may not exceed the total appropriated annual expenses
Budgets provide a plan to finance planned programs and expenditures
Annual and multi-year budgets
Keep reality front and center
Provide an effective tool to manage the budget
The process of developing a balanced budget forces you to prioritize the school’s objectives
It is not possible to fund everything that everyone wants and/or believes to be essential
The annual time-line
Authorizers have statutory due dates that drive the due dates they impose on their charter schools
James Irwin’s is due to HSD2 by April 1st; (although CDE’s estimate of PPR is due by June 1st!)
Amended budget (January …..and July!?!)
PPR payments begin in July; the calculation for per pupil revenue includes many assumptions
PPR is revised after the October count
Usually takes until January for the ‘true-up’
Throughout the year, when/if the state revenue budget is amended, PPR can be amended
A few years ago, PPR was retroactively reduced after the fiscal year had ended!

3. Set Staff up for Success
Ownership of budget
Board
CEO/Executive Director
Business Manager
Principal
Any employee who has been delegated authority to pre-approve purchases
Budget Detail Sheets for budgeted line items
Salaries and benefits: Itemized list of employees, salaries and employee benefits
Textbooks: itemized list of title, quantity and cost of planned textbook purchases
Instructional equipment: list of planned classroom purchases and estimated costs
Professional Development: list the names of the attendees, and the conferences and trainings that are planned along with related costs (registrations, travel, hotel, food, etc.)
Extra Duty stipends: list the employee, project and amount of any anticipated extra pay
Technology: list of annual licenses; software; hardware requirements
Athletics: list of anticipated athletic expenses (entry fees; uniforms; payments for coaches, officials and referees; field and gym rentals, etc.)
Advertising/marketing; identify planned activities and associated costs
Special Education Expenses; list planned purchased services and related costs
Schedule of Insurance with annual premiums (Eric will speak more to the school’s insurance requirements)

4. Management of the Budget
Managing the schools financial activity
Use Purchase Orders for pre-approval of every single purchase!
Before a PO is approved, refer to the budget detail sheets
Was this a planned purchase?
If not, what expenses will be reduced to offset this unplanned event?
How much has been charged to this budgeted line item this year? Will this purchase still fit in this budget?
Blanket purchase order for routine purchases
Example: maintenance supplies
Example: $100 expense reimbursement for teachers’ classroom expenditures
Monthly financial reports
Actual vs Budget
Budget does not change until Board approves an amended budget
Insert a column for your year-end projections
Your projections can change all day long!
Constantly update the total revenue and expense you expect for each budgeted line item
Actual costs compared to estimates
Example: Utilities
Example: Heath premiums
Compare year to date expenses to outstanding purchase orders

5. Other Accounting Regular Review of Financial Reports
According to GAAP (Generally Accepted Accounting Principles)
Use CDE 21 digit Chart of accounts
Use CDE format for statements
Beginning Fund Balance
Budgeted ending Fund Balance
Enrollment #’s
Per pupil expenses (FTE divided by total expenses)
Regular Review of Financial Reports
Financial background??
Board of Directors
Finance Committee
School Administration
Financial Transparency
Encourage questions of staff and Board
CDE reporting requirements

6. Other
Best Practices
Salary and Benefits should be between 50% and 70% of PPR
Justifications for variances
MLO
Substantial donor support
Lease payments/debt service should be less than 12% of PPR
Variances should be justified
Well balanced staffing:
Administration salary is between 8%-15% of total expenses
Instructional salaries are between 50%-60 % of total expenses
The board should adopt an annual Budget Timeline
Codifies a deadline for the Board to approve the budget
Drives when staff begins working on the budget
Deadline for finance committee approval
Ensures the authorizer will get the budget on time
Ensures that the President will get budget approval on correct board meeting agenda
Establishes dates through out the year when it will be on a board agenda to confirm or amend the current budget
October count and other regular dates

7. Other Best Practices Use caution when projecting student enrollment
Error on the side of conservative!
It is VERY hard to cut an approved expense budget in response to a shortfall in enrollment
Does annual PPR cover your annual expenses?
Don’t rely on other sources of revenue to support normal operating expenses
Fund balance
Tabor
Other reserves:
60 days of operating expenses is best practice
James Irwin wants 90 days
The Auditor
Is a resource
Recommendations to improve checks and balances

8. Conclusion Resources: Questions ?
Business Managers’ Meetings (quarterly)
Financial Policies and Procedures
On line resource documents
Quarterly meetings
CDE
Department of School Choice
Department of School Finance
Your authorizer
Other Charter School Business Managers
Questions ?