Issue7/April2012 Charter Focus 1

CHAR

TER Issue7/AprIl2012

AnnounCements

2012 Colorado Charter Schools Rally

April 19, 2012 11:30Am-1:00pm locAtion: colorAdo StAte cApitol, WeSt StepS

Information:www.coloradoleague.org/charterweek

Joinhundredsofcharterschoolstudents,parents,teachersandsupportersatthe2012ColoradoCharterschoolsrally.Hearfromstatelegislatorswhosupportchoiceandinnovationineducation,andmakeyourvoiceheardinsupportofequaltreatmentandfundingforcharterschoolstudents.

Chipping for Charters Golf Tournament

September 13, 2012 Golf: 1:30pm | dinner: 6:00pm locAtion: HeritAGe eAGle bend Golf courSe, AurorA

Information:www.coloradoleague.org/golf

proceedswillbenefittheColoradoleagueofCharterschools’advocacyfund,whichhelpsprovideColoradocharterschoolstudentsaccesstoprograms,facilities,andresourcesneededforhigh-qualityeducation.

For a full community calendar of events and professional development opportunities, visit www.coloradoleague.org

FinAnCiAl RepoRting issueThe Financial Reporting Issue . . . . . . . . . . . . 1

The Critical Business Manager/ Board Treasurer Relationship . . . . . . . . . . . . 1

Financial Oversight: Working Well with Your Board . . . . . . . . . . . . 2

The Board’s Role in Financial Stewardship . . . 4

Group Purchasing Program “Cost Savings through Collaboration” . . . . . . 5

Building the Board-Finance Relationship . . . . 6

Preparing Reports for Your Board . . . . . . . . . 8

Colorado League of Charter Schools Vendor Marketplace . . . . . . . . . . . . . . . . . . . 9

Effective Financial Reporting . . . . . . . . . . . . 10

WelcometotheApril2012editionofCharter

Focus, a quarterly journal for charter

school business managers published by

the Colorado league of Charter schools.

Thisquarter,wefeaturearticlesaboutbest

practices in financial reporting, including

building strong business manager/

board treasurer relationships and how to

effectively communicate financial matters

with your school’s board. These articles

werecontributedby thosewhoknow this

topicbest–yourpeersandcolleagues,as

wellasexpertsinthefield.

We think you will find the tips in these

articles extremely valuable and hope you

willkeepthisnewsletterandreferbackto

itthroughouttheschoolyear.

Inaddition,theleaguerecentlypostednew

videosonitswebsitethatfeatureinterviews

with our Group purchasing Vendors. You

canviewtheseshortvideostolearnmore

about theproductsandservicesavailable

to you at discounted, negotiated pricing.

Visitwww.coloradoleague.org/gppvideos.

If you have any comments about Charter

Focus,or ifyou’d like tosubmitanarticle

fora futureedition,pleasecontactTiffany

Kallevik at 303-989-5356, ext. 116 or

tkallevik@coloradoleague.org.

the financial reporting issue

With the rise of scrutiny as it pertains to

educational finances, the relationship

between the business manager and

the board treasurer could not be more

imperative.Therelationshipismanifested

by means of transparency laws, school

spending and a higher accountability to

thepublic.

All charter schools are set up differently

andthebusinessmanagerateachschool

holds various levels of responsibility,

accountability, and involvement as it

pertains to financial planning for day to

day activities and long term planning.

However,allshouldbefamiliarwithcertain

financial relationships. let’s review the

duties of a board treasurer, the duties of

abusinessmanagerandthenlookatbest

practicesbetweenthem.

The duties of the board treasurer for a

nonprofit organization are basically the

same across industries. They have many

obligationsthatinclude:oversightoffinancial

transactions, budgets, understanding

volume of debt, and assistance in

developingsystemsforkeepingcashflow

manageable.The treasurer isalsodirectly

involved in developing the annual budget

and watching the comparison of actual

vs.budgetonamonthlybasis.Treasurers

mustalsoassistwithfinancialpoliciesand

auditsandreport totheboard inaneffort

to maintain the school’s financial health.

Althoughfinancialmanagementisprimarily

thefocusofthetreasurer,theentireboard

sharesaccountabilityinthisarea.

Delegationfromtheboardtothetreasurer

and business manager for basic financial

freedom allows the board as a whole to

devote their time to other functions. At

the same time, given this freedom, it is

By DaviDah WalTon anD Kelli anDeRSon

the critical business manager/board treasurer relationship

continued on page 3

2 Charter Focus Issue7/April2012

Forecasting, managing budgets,

compliance, GAAp, knowing your

business, understanding the economy,

forecasting for the future, just to name a

few,areallfunctionscriticaltotheroleofa

financialmanagerandrequireagreatdeal

of research, knowledge, and expertise.

Communicatingthisknowledgesuccinctly

and effectively to others makes a huge

impactonthesuccessoftheorganization.

There are many different stakeholders in

charterschools.Thus,aplethoraof levels

of reportingandrelationshipsare required

forthefinancialmanager.Themostcrucial

is therelationshipwith theschool’sBoard

of Directors. The Board is responsible for

the governance of the school and helps

to or sets the goals and direction for the

school. If the Board does not adequately

understand the structure of the financials

andhowtheyrelatetomeetingtheschool’s

goals,theycannoteffectivelygovern,make

well-informeddecisions,or, inworse-case

scenarios, ensure protection from internal

fraudandfinancialmishap.

1. Knowing the Board:

Most boards are made up of people with

a wide array of gifts and talents. some

can and like to sit through 30 minutes of

looking at minute financial detail, and

others can take only about 3 minutes of

financial discussion before they are ready

for the next agenda item. providing the

right balance to address each member’s

level while still ensuring they know what

theyneedtoknowisessential.

2. targeted education:

scheduletimetoeducatetheBoardonthe

basicworkingsof theschool’s fundsand

financialstructuremakingsure to include

thefollowing:

• pointoutthebasicfunctionofeachfundanditsrelativeimportance

• explainthenatureofabalancesheetvs.anincomestatement

• Definewhatabudgetvariancemeansandhowitwillbeportrayedonreports

• reviewthebeginningandendingfundbalanceconceptexplainingthedifferencebetweenTABOr,restricted,andunrestrictedreserves

• explainhowabalancesheetmustalwaysbalanceandwhereonthereporttoverify

• pointouthowtheincomestatementflowstothebalancesheetandwheretheycanlookonthereportstomakesureitflowsaccurately

• explainthenatureandrestrictionsonpupilactivityfunds

provide more specific training to key

memberstoincludesubjectssuchas:

• Fundamentalworkingsandimpactsofspecialeducation,Title,andothergrantrevenuesandexpenditures

• Theaccountingrelationshipbetweenbuildingcorporationsandthegeneralfund

• Thelegislativeprocessandtimingofeducationfunding

• Theformulaprocessforppr,At-riskadjustments,andTitlefunding

• Anexplanationoftheschool’soutstandingdebt

• reviewoftheannualauditandwhatdiffersbetweentheauditandthefinancialreports

• Howtomakesuretheboard-approvedbudgetisrepresentedaccuratelyonthefinancialreports

3. Reports to the Board:

Therearemanydifferent formats thatcan

be used in reporting to the board. At the

minimum, the Board should receive a

balance sheet and an income statement

everymonth.Theincomestatementshould

include what has been spent to date;

the budget; and what is remaining in the

budget.Askthememberswhattheywould

liketoseeatthemeetings.Theymayaccept

onlysummaryinformationpresentedatthe

monthly meetings and detailed reports

e-mailedfortheirreviewatalatertime.

Other reports that may be helpful are

summaries and graphs that illustrate the

amountoffundsspentindifferentcategories.

Apiechartshowingthepercentagespent

on instruction, administration, student

support,staffdevelopment,transportation,

etc.canbeveryhelpfulinaligningfundsto

schoolgoals.

4. Discerning What to Highlight:

Discerning what information to provide

andwhentoprovideitisimportanttothe

health and well-being of the school. Too

much information can quickly overwhelm

an audience causing them to lose focus

and miss items of importance. providing

information on far-off potential threats

in a public forum can cause panic and

rumorthatwillquicklyspreadandprovide

unnecessary distractions for staff and

students.

Ifanissuearisesregardingtimelyfunding

from an agency or authorizer, it may be

prudent to follow all due diligence to

correctitbeforealarmingboardmembers.

The economy still remains in a lull and

therearealwaysrumorsofnewimpending

cuts.untilitistimetodevelopthebudget,

it may be wise to leave this discussion

untilthetimeiscloserandissuesbecome

moresolidified.Beproactivewithlooming

capital needs, and changes in current

revenue forecasts as soon as possible.

TheBoardshouldalwaysbekeptinformed

of current issues, allowing them time to

divert funds if necessary and still make

debtandreservecommitments.Alwaysbe

transparentwithknownissues.

Beforedeterminingwhat issues toshare,

thinkaboutwhattheresponseoftheBoard

members might be and what additional

questions or reactions they might elicit.

Thendetermine if it is the right timeora

worthwhileissuetodiscuss.

Carol Meininger is the Chief Financial Officer at The Pinnacle Charter School, a K-12 charter school in Federal Heights (www.pinnaclecsi.org).

By CaRol MeininGeR

financial oversight: Working Well with Your board

If the Board does not adequately understand the structure of the financials

and how they relate to meeting the school’s goals,

they cannot effectively govern.

Issue7/April2012 Charter Focus 3

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especiallyimportantandinthebestinterest

andprotectionofthebusinessmanager,to

haveacloseworkingrelationshipwiththe

treasurer.AtrockyMountainAcademyof

evergreen, the treasurerand thebusiness

manager meet at least once a month.

They review the month to month budget

anddiscussissuesorconcernsthateither

person has concerning the financial state

oftheschool.Whenreviewingthebudget,

theylookatincomeandexpensevariances

(someschoolsuse ratiosorpercentages).

Any drastic changes raise a red flag. For

instance, last year the school’s monthly

waterbillincreasedby$500fortwomonths

inarow.Thisredflagalertedthebusiness

managertocontactthefacilitiescommittee

about a possible plumbing issue. The

resultwasa$10,000plumbing repair that

had it not been corrected, would have

causeda$40,000billfromthecitytocover

an additional water tap. Instead, usage

wasreturnedtoitsnormallevel.

Duringboardmeetings, thetreasurerand

business manager work as a team to

presentinformationandcometomeetings

as a common front. For example, when

theboardoranothercommitteewantsto

allocatemoneythatisnotinthebudget,the

treasurer canbeanadvocate forplacing

theitemonholdforthefollowingyearand

explaininghowanextraexpenditureatthis

time directly affects the current budget.

This allows the business manager not to

beseenastheonlyentitywithcontrolover

financesandspending.

AtrockyMountainAcademyofevergreen,

although the business manager arranges

and leads the finance committee, the

board treasurer is very involved with all

aspects.Thefinancecommitteeconsistsof

parents,teachersandcommunity leaders

assistingandgivingguidanceintheareaof

schoolfinanceandthehealthinessof the

current and future budget. The business

manager and treasurer regularly attend

CDe(ColoradoDepartmentofeducation)

seminars, most recently the CDe Annual

CharterschoolFinanceseminar.

Continuingeducationforatreasurer (even

more so for a new treasurer) is extremely

valuable. learning charter school finance

lawsandfederalguidelinesisachallenge.

CsI (Charter school Institute), CDe

(Colorado Department of education) and

the Colorado league of Charter schools

offer conferences, online information and

webinars. CsI offers information online

for start-up charters, how charters are

funded and how capital needs are met.

CDe workshops and online information

coversschoolfinance,anoverviewof the

CDebudgetandannualfinancialreporting

requirements.ColoradoleagueofCharter

schools offers webinars for new school

budgeting and professional development

conferencesforcharterschoolgovernance.

New schools should also be sure their

financial policies are clear, decisive and

reviewedeveryfiveyearsorinconjunction

withcharterschoolrenewal.

Therelationshipbetweenthetreasurerand

businessmanager isextremely important

forthefinancialhealthoftheschool.They

bothneedtobeinformedaboutthecurrent

trends of the economic environment,

as well as be involved with the strategic

planning of the school. Working together

they will be able to make decisions and

recommendationstotheboardinthebest

interestoftheschool.

Davidah Walton is the Business Manager and Kelli Anderson is the Board Treasurer at Rocky Mountain Academy of Evergreen, a K-8 charter school in Evergreen (www.rmae.org).

Continuing education for a treasurer is

extremely valuable.

By DaviDah WalTon anD Kelli anDeRSon

the critical business manager/board treasurer relationship

4 Charter Focus Issue7/April2012

every board member must have basic

understanding of your charter school’s

finances, including how to read monthly

reports,howtoevaluateaproposedbudget,

andyourschool’sreportingrequirements.

ReVieWing montHlY FinAnCiAl RepoRts

The board should ensure that all

documents required by board policy are

beingpresentedaccordingtopolicy.Ata

minimum,thisshouldincludeabudgetvs.

actual,whichissometimescalledaprofit

and lossstatementor incomestatement,

andabalancesheet.NowthattheFinancial

TransparencyActrequiresschoolstopost

checkregistersandcreditcardstatements

on their websites, these should also be

reviewedbyboardmembers.

Balance sheet

• reviewtotalamountofmoneyinbankaccounts.Doesitseemadequatetocoverexpensesuntilthenextperpupilrevenuepaymentisreceived?understandaveragemonthlydisbursements,especiallylargeitemsandmakesurethereisenoughmoneyinthebankforsufficientcashflow.

• reviewaccountsreceivable.Thisshouldn’tbeahighamount,especiallyforaschool.Makesureyougenerallyunderstandwhatopenreceivablestheschoolhas.Istheadministrationreasonablyassuredofcollectingonallreceivablesbyyear-end?

• reviewassetsandmakesuretheschool’sassetsappearhere(e.g.leasedeposits,capitalizedfurniture/equipment).Theassetsshouldn’tchangemuchthroughouttheyear.

• reviewliabilityaccounts,particularlyanypayables.lookforanylargeamountsorsignificantchanges.

profit and loss statement for Budget vs. Actual

• ensurethattheprofitandlossstatementisbeingpresentedasabudgetvs.actualreport.

• reviewallmajorincomecategoriesandcomparewithbudgetedamounts.Arethereanysignificantshortfalls?Ifso,howistheadministrationpreparingtohandlethat?

• reviewallmajorexpensecategories

andcomparewithbudgetedamounts.Inareaswheretheschoolisoverbudget,besureyouunderstandwhytheschoolisspendingmorethananticipated.

• Makesuretheadministrationhasawayoftrackingandaccountingforsignificantbudgetdeviationstoensurethattheschoolwillendtheyearwithabalancedbudget.Thisdocumentshouldbesharedwiththeboard.

• Determinewhethertheschool’stotalexpenseswillexceedbudgetedexpenses.Ifthisisthecase,determinewhenarevisedbudgetwillbepresentedandapprovedbytheboard.

• requestreportsonrestrictedfundstoensurethatspendingrestrictionsarebeingmetandthatrequiredspendingwillbecompletedbyyear-end.

BuDgeting

Aschooltypicallybeginsbudgetinginthe

latewinterorearlyspring for thecoming

school year. The budget development

process should be driven primarily by

the school’s administration with input

and review by the board. The board is

ultimatelyresponsibleforensuringthatthe

budget is realistic and that it reflects the

school’s mission and priorities, and then

approvingit.

• Whenreviewingaproposedbudget,compareprojectedincomeandexpenseswithhistoricalfinancialdata.Dotheprojectionsreflecttherealityofthecurrentyear’sincomeandexpenses?Itishelpfultohavetheadministrationcreateaspreadsheetinwhichthreeyearsofdataarecomparedside-by-side(thepreviousfiscalyear,whichshouldalreadybeaudited;thecurrentfiscalyear,whichwouldbeyear-endprojections;andtheproposedbudget).Anysignificantincreasesordecreasesshouldbeunderstoodbyboardmembers.

• Theboardshouldhaveamechanisminplaceforensuringthatboardpriorities,strategicplanninggoalsforthecomingyear,unifiedImprovementplan(uIp)strategies,etc.aresupportedfinanciallyinthebudget.

• ensurethattheproposedbudgetincludesacontingencyfundincaseofunder-enrollment,otherrevenueshortfall,orunexpectedexpenses.

• Forlong-termplanning,ensurethatanyboard-dictatedyear-endreservegoalswillbemetwiththeproposedbudget.

• Ifthebudgetincludesanyvariableincome(e.g.grantsnotyetreceived,donations,capitalconstruction,etc.),makesuretheboardunderstandswhatcutswillbemadeintheeventthattheschooldoesnotreceivetheserevenues.

• Ifcashflowwillbetight,theboardshouldalsoreviewacashflowprojectionfortheyeartoensurethattherewon’tbeanyproblemspayingbillsorrunningpayrolleachmonth.

FinAnCiAl RepoRting

Becausetheboardispartytothecharter

school’scontractwith theauthorizer, it is

importantthatitunderstandstheschool’s

reporting requirements to the authorizer.

While the reports will likely be submitted

by theschool’sadministration, theboard

shouldreviewthereportsandensurethey

are submitted in a timely manner. The

board should understand its contractual

obligations as they pertain to financial

reporting.

Theotherimportantreportingrequirement

that charter school boards now face

is the requirements of the Financial

Transparency Act (C.r.s. § 22-44-301 et

seq).Tobeincompliancewiththisstatute,

yourboardisobligatedtoensurethatthe

following documents are posted on your

school’s website: annual budget, audited

financial statements, quarterly financial

reports, salary schedule or salary policy,

check register, credit card statements,

and,effectiveJuly1,2012,areportonthe

performanceoftheschool’sinvestments.

While financial oversight requires

considerable work, it is one of the

charter school board’s most important

responsibilities.Asthebodythatoversees

theuseofmillionsofpublicdollars,board

members cannot rely solely on the one

“financial expert” on the board; all are

obligated to educate themselves enough

to ask questions and ensure that the

schoolisfinanciallysound.

Jennifer Douglas is the Director of New School Development at the Colorado League of Charter Schools.

By JenniFeR DouGlaS

the board’s role in financial Stewardship

Issue7/April2012 Charter Focus 5

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6 Charter Focus Issue7/April2012

Of all the resources and technical

assistance available to charter schools

in need of help with financial oversight,

there is little that addresses the unique

challengespresentedby theexistenceof

avolunteergoverningboard.

Business managers have a wide range

of resources when seeking “how to”

informationforfinancialmanagementata

charterschool.Whatisn’treadilyavailable

isatoolkitfordevelopingandmaintaining

a strong working relationship with the

charterschoolgoverningboard.

Moreoftenthannot,charterschoolboard

members don’t have direct experience

withschoolfinance,thechartofaccounts,

public finance rules, education budget

restraints, etc. Occasionally, one or two

board members may have a particular

interest in the financial matters of the

school,andmayevenbequiteskilledwith

atenkeycalculator.

Thesebusiness-mindedprofessionalscan

beablessingoraburdenonanycharter

school governing board. Truth be told,

whether the board has little expertise

in finance or the board is a collection of

savvy entrepreneurs, challenges in the

relationshiparelikely.Tomitigateconflict,

business managers should invest in their

relationshipswiththeirboards,turnexisting

board skill-sets into an asset, and follow

up with sound structure and practices.

Consider the following behaviors as an

investmentintherelationship.

Be a relentless steward of the relationship

establishnormsthatdefinetherelationship

with respect to roles and responsibilities,

communication,transparency,andtraining.

each party must know the boundaries

of their role so as not to overstep lines

of authority, which is when most conflict

occurs. When defining the roles and

responsibilities, use a table or a chart to

discuss and document the expectations

for the business manager, the full board,

the board treasurer, and the finance

subcommittee.Foreachtask,frombudget

formationtoaudit,documenttheroleeach

partyplays.Gobeyond theorganizational

chart or diagram, and be explicit about

duties, clarifying accountability for each

individualandgroup.establishaprocessto

addressconflict,andbepreparedtosolicit

the help of consultants when relationship

tensionhaltsprogress.

As with all functional collaboration, the

relationshipwiththeboardwilltakework.

Be vigilant. Commit to clear and regular

communication, and expect it in return.

establish norms that are reasonable and

appropriate,andthatservetoimprovethe

financial health of the school. Financial

transparency laws exist to provide the

publicwith a clearpictureofpublic fund

distribution and use. Transparency will

also serve the board/business manager

relationship by providing an opportunity

to address areas of weakness before

problemsarise.

relationship norms should also

address training expectations for

ongoing improvement. participate in the

development of the collective knowledge

by seeking relevant high quality training,

andbyprovidingtrainingtotheboard.The

plan for continuous improvement should

include regularly scheduled presentations

to the board by the business manager

to review budget basics, understanding

reports,andthekeyindicatorsoffinancial

health. Work with the board to establish

these norms for continuous improvement

andbeprofessionallyavailable toprovide

expertise.Insodoing,theboard/business

manager relationship will be further

solidifiedandcodified.

Be a predictable and concise resource for decision-making

The board’s primary role is to review,

discuss, approve, and make decisions

basedontheschoolbudgetandavailable

funding. effective financial reporting is,

therefore, a path to strong decision-

makingpractices.Considerwhattheboard

willneedandwanttoknowinordertodo

theirjobswell.everycharterschoolhasa

unique collection of reports and budget-

to-actual comparisons. Whatever the

format, become predictable by providing

standardizedreports,andschedulingtime

to educate board members about the

content of those reports. Be proactive.

remember that theboardmaynot know

what to ask for, so make an effort to

understandtheissuesathandandprovide

the board with pertinent and relevant

data. provide concise information with

appropriate detail and be prepared to

answerquestions.

When allocation changes are required or

whenbudgetcutsareimminent,consider

thecontentthatwillguidegooddecision-

making.show ties to theschool’svision,

mission,andgoals.provideacost/benefit

analysiswherepossible.Indicatethelevel

of sustainability when embarking on new

projects,anddemonstratehowresources

areleveragedformaximumimpact.

The business manager is pivotal to the

board’s ability to set a sound course for

the school. The business manager must

beanexperton the topicof theschool’s

finances and should be seen by the

board as a resource for information and

guidance. provide your expertise and

By Jen DauzvaRDiS

building the board-finance relationship

do’S

3Documentrolesandresponsibilities

3Committoclearcommunication

3participateincontinuousimprovement

3provideyourexpertise

3Beapartofthesolution

3Askhowyoucanhelp

The business manager must be an expert on

the topic of the school’s finances and should be seen by the board as a resource for information

and guidance.

Issue7/April2012 Charter Focus 7

explain your thinking or process. Help

the board to identify the key indicators

(measures, metrics, and targets) of

financial stability, progress, and success,

andwhentheboardisfacedwithacritical

decision,outline thefinancial impacts for

eachoption.

Be an engaging ally

Formostboardmembers,schoolfinanceis

intimidatingandoverwhelming.Challenge

yourself to provide informative and

interesting information.Highlightareasof

accomplishment and areas of concern,

and look to the board for joint decision-

making.unite the intentionsof theboard

with the challenges of a tight budget,

and be a part of the solution. The more

interesting the reportsandpresentations,

the more engaged board members will

become.

practice tolerance and understanding. At

the other end of the spectrum, there are

board members who may be enthralled

with the school budget, reporting

processes,andfinancialpolicies.Aboard

memberwhoshowsupoutsideyouroffice

doorwithalistofcreativesolutions,thrives

onlineitembudgetdetails,draftsfinancial

policy,andenthusiastically volunteers for

thepositionoftreasurer,isnotnecessarily

a bad thing. Consider the benefits of

makingthisboardmemberanally.provide

opportunity forappropriate input into the

process, and use norms and boundaries

asguidelines.

Be an inquisitive catalyst for improvement

Business managers have the right and

responsibilitytoaskquestionsoftheboard

in order to ensure a job well-done. As a

catalyst for improvement, the business

manager must be a strong advocate for

thefinancialhealthoftheinstitution.Being

inquisitive and asking questions will help

foster an environment of understanding.

While it is appropriate for the business

manager to have strong opinions about

the path to improving the school, the

board carries ultimate responsibility for

the financial and academic success of

the school. Therewill be instanceswhen

the board takes action that is contrary

to recommendations. Don’t allow

divergent thinking to inhibit professional

conduct. Instead, ask questions to

clarify accountability, to set realistic

expectations,andtoestablishboundaries

forperformance.

Theboardshouldprovideshortand long

term financial goals, and should adopt

sound financial policy to support those

goals. When goals are unrealistic or ill-

defined,askforadditionalinformationand

support.Beinginquisitivewilllendclarityto

theintentionandwilllowerthedividewhen

there isambiguity.Askforclearreporting

expectations,askforparticipationfromthe

board, ask for clear communication, and

askforfeedback.seektounderstandyour

degree of autonomy in decision-making,

and,aboveall,askhowyoucanhelp.

Working well with the charter school

governing board is a necessary skill and

an essential duty. The business manager

is a pivotal player in the board’s ability

to lead theschoolandchartafinancially

viablecourseforsuccess.

Jen Dauzvardis is the Program Coordinator at The Center for Professional Development at Peak to Peak Charter School (www.cpdcolorado.org).

dont’S

3stopworkingontherelationship

3Overstepdefinedlinesofauthority

3Overwhelmwithdetail

3Waitforquestionswhenyoucanpredictwhattheymaybe

3Dismissgoodintentions

3Allowdivergentthinkingtoinhibitprofessionalconduct

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continued from page 6

8 Charter Focus Issue7/April2012

Asyourplateoverflowswiththeconstant

to-do’s of running the operations of a

charter school, there’s one essential

responsibility that tops the list –financial

reporting for your Board of Directors.

While it can often feel burdensome and

time consuming, keep in mind that you

are the link responsible for educating

and informing those who are fiscally

responsible for the school. Oh, the

pressure! Not to worry, there are some

strategies that can help minimize the

reportpreparationanxiety.

1 Keep reporting formats simple

remember that Board members bring

different skill sets to the table so their

comfort levelswillvarywhen itcomes to

understanding financial reports. I provide

tworeportstotheBoardeachmonth.The

firstreportisaone-pagebudgetvs.actual

dashboard (dashboard=the new buzz

word) and the second is the supporting,

detailedversion.Thedashboard includes

high-level revenue categories of state

revenue, Federal revenue, Fundraising,

andstudentActivitiesinadditiontohigh-

level expense categories of salaries &

Benefits, purchased services, Facility

Costs,Books,supplies,&equipment,and

Other.BasedonBoardmemberfeedback,

providing the two options satisfies both

thenoviceandthe“numbercrunchers.”

2 provide specific notes on financial reports

The purpose of footnoting the financials

is to minimize the number of questions

asked during a meeting. I find that if I

make notes to explain why specific lines

may be off target, Board members have

a better understanding of revenue &

expense patterns and don’t tend to over

analyze the information. examples of

notesinclude,“Districtpaymentschedule

of 25% YTD” for ppr or “front loaded

spending”forbooks/supplies.Also,don’t

forget to include a benchmark for the %

analysis (i.e. October = 4 months into

the fiscal year (33%)). When it comes to

footnoting and financial reports, there is

nosuchthingastoomuchinformation!

3 separate your compliance reports from your managerial reports

Board members are not concerned with

22-string state accounting codes nor

should they be. The format that your

authorizer requires may not be practical

for Board members to comprehend or

analyze. Instead, it may prompt more

questions about the codes being used

insteadof thefinancial information. Inan

effort to not be redundant, go back to

strategy#1.

4 spend more time analyzing your financial reports than preparing them

If you are responsible for preparing

financialreportsandarenotaspreadsheet

whiz,quicklysignupforthenearestexcel

class. setting up a detailed reporting

template that includes columns for the

annualbudget,YTDactuals,variance,and

“%ofbudget,”andthenlinkingthosetoa

summarizeddashboardpagewillminimize

your processes each round. It simply

requires exporting a profit & loss from

your accounting software and copying/

pasting YTD numbers in the actual

column. After updating the benchmark

and reporting month, your Board reports

shouldbecomplete.Youcanthenspend

moretimeanalyzingnumbersandmaking

notesonindividuallinesasyoupreparefor

theupcomingmeeting.

5 train Board members annually

It’s helpful to provide a training session

at the beginning of each school year to

educate the Board members on charter

school financing and on the reporting

formats they will see each meeting.

A 20-30 minute presentation is a

worthwhile investment that can help set

a precedent for the school year. As part

of the presentation, I suggest providing

a supporting list of accounts that makes

up the one page dashboard and that

essentiallylinksthetworeportingformats.

Moving forward, the members can

reference that document when analyzing

the reports. This training accomplishes

twogoals:(1)-ithelpstoeducatethenew

Board members and (2)-it provides an

annualrefreshercourseforthosewhoare

notascomfortableanalyzingthenumbers.

Irecommendyoufindaformatthatworks

well for you and that minimizes your

preparation time. It’s important to get

feedback from your Board members on

whatworksordoesn’twork,butbecareful

that youdon’t getburdenedwith several

formats to satisfy individual requests. At

a timewhenschoolsarestretchingevery

dollar,remindthosemembersthatweare

all working hard to keep funding in the

classrooms by minimizing administrative

processes. That just might be the

argument needed to help support your

reportingformatsevenmore!

Lori Deacon is a Consultant/Owner of Abstract Insights, Inc. (www.ineedai.com).

By loRi DeaCon

preparing reports for Your board

Issue7/April2012 Charter Focus 9

ACCounting / mAnAgement Consulting

Charter school management Corporation, inc. (CsmC) dhering@csmci .com(719) 429-7665www .csmci .com

Assessment / CompliAnCe / sis

Wireless generationsjgansmann@wgen .net(303) 870-7078www .wirelessgeneration .com

College touRs & eDuCAtionAl tRAVel

All Aboard tours and travelwweinzoff@allaboardtours .com(800) 896-0046www .allaboardtours .com

eF educational toursJustin .kryszan@ef .com(303) 214-8250www .ef .com

CuRRiCulum / textBooKs / supplementAls

BossReaderschris@bossreaders .com(720) 295-7323www .bossreaders .com

CharacterFirstkfahrenbruck@characterfirst .com(877) 357-0001www .characterfirst .com

learning Allysjonsen@learningally .org(303) 906-6061www .learningally .org

math in Focus: singapore mathjill .weber@hmhpub .com(303) 946-8465www .hmheducation .com/mi/sdg-singapore-marth .php

sportxcelcgreif@sportxcel .com (720)437-0316sportxcel .org

equipment AnD FuRnisHings

Creative learning systemsjtimmons@creativelearningsystems .com(303) 772-6400creativelearningsystems .com

tandus Flooring (formerly Collins and Aikman) jkimble@tandus .com(303) 741-0051www .tandus .com

FACilities

Architectural innovations, llCkmiller@arch-innov .com(719) 260-9990www .arch-innov .com

Consilium partners, llCjbills@consiliumpartnersllc .com(720) 201-6373www .consiliumpartnersllc .com

Design Conceptsshanen@dcla .net(303) 664-5301dcla .net

eagle Creek modular solutionseaglecreekmod@gmail .com(303) 987-0700www .eaglecreekmodular .com

Haselden Construction, llCdalefurnell@haselden .com(720) 810-6805www .haselden .com

Haynes mechanical systemssclough@haynesmechsys .com(303)779-0781www .haynesmechsys .com

Hutton Architecture studio p.C.phutton@huttonarch .com(303) 861-1600www .huttonarch .com

JHl Constructors, inc.mbodah@jhlconstructors .com(303) 741-6116www .jhlconstructors .com

nAC Architecturendohrn@nacarchitecture .com(303) 837-8811www .nacarchitecture .com

Roche Constructors, inc.crust@rocheconstructors .com(970) 356-3611www .rocheconstructors .com

satellite sheltersjamiec@satelliteco .com(303) 288-7111www .satelliteco .com

servicemaster Cleanjoes@cleanmyfacility .com(303) 761-0122www .cleanmyfacility .com

siemens industrytravis .fletcher@siemens .com(303) 568-7305www .buildingtechnologies .siemens .com

slAteRpAull Architectsawillson@slaterpaull .com(303)607-0977www .slaterpaull .com

Zieglermomeara@ziegler .com(303) 794-6045www .ziegler .com

FACilities FoR sAle oR leAse

education Facility solutionsdjones@efsk12 .com(720) 897-6607www .efsk12 .com

education site selectionmarshall .savage@na .ugllimited .com(720) 971-9000www .ugl-equis .com

FinAnCiAl mAnAgement & inVestment

ColotRustbruce .ely@mbia .com(303) 864-7474www .colotrust .com

CsAFebob@csafe .org(303) 296-6340www .csafe .org

Heartland institute of Financial education (HiFe)natalie .neaton@hife-usa .org(303) 547-6604www .heartlandfinancialeducation .org

FooD & nutRition seRViCes

CharterCHoiCelfriedman@coloradoleague .org(303) 953-4170

michael’s of Denvermsudak@hotlunchonline .com(303) 778-0916www .denverschoollunch .com

FunDRAising AnD gRAnt Consulting

Right Responserana .squires@gmail .com(512) 368-3848www .rightresponse .com

insuRAnCe

HuB international insuranceGary .clark@hubinternational .com(303) 893-0300www .hubinternational .com

mARKeting & Design seRViCes

Fiest Designkirk@fiestdesign .com(303) 250-6336www .fiestdesign .com

Clay pot Creativekurt@claypotcreative .com(970) 495-6855www .claypotcreative .com

pRoFessionAl DeVelopment

Colorado Christian university: Alternative licensure programbbwhite@ccu .edu(303) 963-3120www .ccu .edu

educators for social Responsibilitydwolk@esrnational .org(617) 492-1764www .esrnational .org

professional Association of Colorado educators (pACe)mleatham@coloradoteachers .org(720) 895-1980www .coloradoteachers .org

teacher institute at la Academiarebekah@teachandlead .org(303) 455-1444www .teachandlead .org

thinking mapsjherm@actmindful .com(303) 881-2018www .actmindful .com

speCiAl eD seRViCes

therapy source, inc.davidr@txsource .net(866)783-5301www .txsource .net

teCHnologY

the Funded Consulting groupJohn .egan@getfunded .net(480) 473-5785www .getfunded .net

logical Choice technologiesmike .hare@logicalchoice .com(720)261-3330www .logicalchoice .com

mobile Citizencustomerservice@mobilecitizen .org(303) 477-6278www .mobilecitizen .org

sprintmichelle .wright@sprint .com(303) 520-0086www .sprint .com

synergy telecommunications, inc.kimb@synergytelecom .net(303)339-8536www .synergytelecom .net/

system Communicationssteve@systemcommunications .com(303) 688-6191www .systemcommunications .com

tutoRing/mAtH impRoVement

After school universitymzrust@afterschooluniversity .com(719) 648-6673www .afterschooluniversity .com

ColoRADo leAgue oF CHARteR sCHools VenDoR mARKetplACe

ThisdirectoryisnotanendorsementbytheColoradoleagueofCharterschoolsofanyparticularvendor,butratheraneasilyaccessible

sourceof vendorswhosupportColoradocharter schools andwant tohelp themsucceed.Weencourage you to support all of our

participatingvendorsasyousearchforproductsandservices.Inchoosinganyvendor,theleaguerecommendsthatschoolsreferto

applicablepoliciesoncompetitivebidding,checkreferences,andcontacttheleagueifadditionalinformationisneeded.ViewtheVendor

Marketplaceonlineatwww.coloradoleague.org.

10 Charter Focus Issue7/April2012

effective financial reporting can make – or break – a charter school’s operation.Are you taking the right steps?

Asconsultantstocharterschoolgoverning

boards,wehaveenduredmanyponderous

or even grueling financial presentations.

Too often, such presentations are “text-

generators”; the deadening summaries

illustratedbycrypticchartsthatsoonhave

everyspectator(andsomeboardmembers)

distracting themselves by texting or

checking social media. Yet, especially in

today’s recessionary environment, crisp

and informative financial reports are

criticaltotheeffectivenessoftheschool’s

operation.

How often should a financial report be

presented toa school’sboard?Andhow

much information should it contain? Too

often, we err on the side of limiting the

reports in terms of both frequency and

scope. Not surprisingly, these are the

two issues that tend topresent themost

problemsbetweentheseniorstaffandthe

board.

WhatcanabusinessmanagerorCFOdo

to avoid offering overwhelming financial

informationdumpswhileatthesametime

delivering the critical financial data that

will offer the board a way to effectively

stewardtheschool’sresources?

Needless to say, drawing up financial

reportsonaregularbasisisthefirststep

toward healthy reporting, which results

in a well-run association and solid trust

betweentheBoardandtheadministration.

someeffectiveboardsuseadashboardof

data indicators, including financial data

points, inordertogetasnapshotofhow

welltheschoolisdoing.regardlessofthe

format,itiscrucialthatbothgroupsagree

on the frequency of the reporting and

understand the merits of the system. In

otherwords,theyneedtobeonthesame

pagewhenmoneymattersareatstake.

We have seen business managers bristle

at requests by board treasurers for

monthly updates. Denise Mund, while

leading the schools of Choice unit at

CDerecalls receivingcalls frombusiness

managerswantingtoverifythattheydidn’t

“have to”supply reportsmoreoften than

required under law. The idea that routine

updatesareunnecessarymissesthepoint

altogether. No matter what reason you

mayhave for resistingmonthly reporting,

the fact is that such resistance will be

interpreted as though administration is

hidingsomethingfromtheboard.Instead,

thisshouldbeviewedasanopportunityto

educateandtopersuade.

For some schools, this may mean

reportingateachboardmeeting,forothers

quarterlyupdatessuffice.Ifreportingless

frequently, a board may insist on earlier

reportsrelatedtoeventssuchasOctober

count or other matters that change the

numbers. If not, you should nonetheless

take the initiative to communicate major

changes to them. Don’t wait until March

totelltheboardifyourprojectionsarethat

the school needs to eliminate tutors to

makeitthroughtheyear.

Keep tHe sCHeDule

Onceanappropriateandregularreporting

schedule has been decided upon, it

is your job to keep it. While this may

seem obvious, it is surprising how many

schools are behind in reporting to their

board, and too often, to their authorizer.

Then,inahurrytocatchup,theyrunthe

risk of providing inaccurate information,

which results in all sorts of problems. In

our experience working with boards, the

unfortunateby-productofthisscenariois

anerosionoftrustbetweentheboardand

administration.

useR-FRienDlY RepoRts

Whileitiscrucialtoincludekeyinformation

inthefinancialreports,itisequallyimportant

toavoid listingall theminordetails.Your

board may be comprised entirely of

sophisticated financial professionals. But

that would be unusual. Assuming your

board is made up of people with a wide

spectrum of gifts and backgrounds, you

will want to prepare reports with simple

visuals, strategically highlighted points,

andconcisesummaries.piechartstrump

Effective financial reporting can make – or break – a charter school’s operation.

Are you taking the right steps?

By Dave MaRTin, BRaD MilleR anD DeniSe MunD

effective financial reporting

Issue7/April2012 Charter Focus 11

School accounting categories can appear daunting to boards and patrons. Do your best to clearly identify the

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spreadsheetswhenpresentingverballyto

agroup.Toooften,businessmanagersor

CFOs view their role as providing highly

detailed reports. Feel free to offer such

reports to the board treasurer in writing,

butwork tobesuccinctwhenpresenting

ataboardmeeting.

It is precisely this type of exhaustive,

comprehensive information that can

actuallyderailthingsandjeopardizegood

governance.The‘details’canleadaBoard

tobecomemore involvedthantheyneed

tobe.providing toomuchgranulardetail

isadirectinvitationtomicro-management.

AllyouwanttodoisensurethattheBoard

gets enough information to see if there

are trends and areas of concern. Our

experienceatCssisthatifyouprovidea

financialstatementthatishighlydetailed,

the Board generally will not have the

disciplinetokeepadistance.

Offer a self-serving report that leads the

board to inquire about the items that

warrant their involvement and decisions.

At the same time, don’t gloss over the

areasofknownconcernasitwillgenerate

an aura of distrust. It all comes down to

a fine balance, and this balance is not

constantfromboardtoboard.Itdepends

onanindividualschool’sgovernancestyle.

stRAigHt tAlK

schoolaccountingcategoriescanappear

daunting toboardsandpatrons.Doyour

besttoclearlyidentifythedifferentsubject

areas in a straightforward manner. You

will avoid all sorts of problems if you

take the time to re-cast thecategories in

terms that make sense rather than using

cryptic language or finance terms. The

report should be so straightforward that

theBoarddoesn’thavetoaskallsortsof

questions.

It’s helpful to begin the new school year

with a Board workshop on financial

matters,presentedbytheBoardTreasurer

and CFO. This should cover state public

education funding, typical expenses for

thecharterschoolandthevaluesforhow

financialdecisionsaremade.

Financial statements should correlate

the expenses against the revenue, and

show all the necessary comparisons, in

particular how everything is performing

against the budget, the current year-to-

date,thelastyear-to-date,andtheoverall

budgetforecast.

Whatismostimportantistoprovidecontext

for Board members so that everything is

understandable at first glance. If you are

rightonbudgettargets,youprobablydon’t

needdetailedinformation.Butifyou’reoff

target,youneedtoexplainwhy.

It is this typeofskillfulfinancial reporting

that results in effective communication

between the administration and the

Board. When the information is timely,

accurate and filled with relevant - and

straightforward-content,youwilldevelop

a partnership of trust with your board.

It is a constant commitment. until you

are able to constantly and consistently

provideyourboardwiththetoolsitneeds

togovern,youwilljustkeeprunningfrom

onecrisistothenext.

Dave Martin, Brad Miller and Denise Mund are consultants for Charter School Solutions, LLC (www.charterschoolsolutions.org).

continued from page 10

725southBroadway,suite7Denver,CO80209

ColoRADo leAgue oF CHARteR sCHools

725 S. broAdWAY, Suite 7 denVer co 80209

pHone 303-989-5356 fAx 303-984-9345 emAil info@colorAdoleAGue.orG

WWW.colorAdoleAGue.orG

marco rafanelli, director of member business Services

tiffany Kallevik, Assistant director of member business Services

Charter Focus advisory CommitteeThankyoutothefollowingindividualsfordonatingtheirtimeandexpertise.

•DianeBorre,TheVanguardschool

•Dansherrill,CaprockAcademy

•DinaWalton,rockyMountainAcademyofevergreen

advertise in Charter FocusputyourbusinessinfrontofdecisionmakersatColoradocharterschoolsbyadvertisinginCharter Focus!ContactTiffanyKallevikattkallevik@coloradoleague.orgforratesanddeadlines.

Charter Focus archiveVisitwww.coloradoleague.org/newsletterstoaccessarchivedissuesofCharter Focus.

CHAR

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