Charter School Funding Sources: Receivable Sales vs. Traditional Bank Loans

At Charter School Capital, we are 100% dedicated to the charter space and to enabling the success of charter schools. Schools often have difficulty finding charter school funding sources for operations and growth.
One method of financing widely used by many industries is receivable sales. This reliable and flexible transactional process, pioneered by Charter School Capital for charter schools, provides access to capital needed to support operations, facilities, programmatic expenses, or other obligations.
To make things a bit easier, we wanted to help clarify some of the differences between accessing capital with a traditional bank loan or line of credit versus our receivable sales product with regards to access to money, cost, and risk.
Read on to get answers to the most commonly asked questions around options for charter school funding sources.

Access to Money

Who qualifies for funding?

With a traditional bank loan or line of credit, it’s limited and depends on the school’s credit history.
With Charter School Capital’s receivable sales product there is universal access as greater than 90% are approved for funding.

How much can be approved?

With a traditional bank loan or line of credit, it really depends on your credit rating which can also restrict the amount awarded.
With Charter School Capital’s receivable sales product, the amount is only limited by your school’s budget and we can fund all qualified receivables.

Can a lender/purchaser increase amount of contract?

With a traditional bank loan or line of credit, it can be difficult, time-consuming, and also require credit committee approval.
With Charter School Capital’s receivable sales product, it can be increased quickly and easily and the amount available will be based on qualified receivables.

Can you get funds when needed?

With a traditional bank loan or line of credit, it depends and the amount awarded and access to the funds can be restricted.
With Charter School Capital’s receivable sales product, the answer is yes, we can fund all qualified receivables when you need the money.

Cost

How much will it cost?

With a traditional bank loan or line of credit, the cost is not known until the loan is paid. In addition, state delays can cause additional interest, late fees, and penalties.
With Charter School Capital’s receivable sales product, the cost is known upfront and fixed, even when state payments are delayed.

Budget Planning –Dollars per Student

With a traditional bank loan or line of credit, the cost is unknown and harder to plan because of the fact that the cost is uncertain.
With Charter School Capital’s receivable sales product, the cost is fixed and certain. Having more predictable costs makes planning more reliable.

Risk

Who is obligated to pay?

With a traditional bank loan or line of credit, the school is obligated to repay debt.
With Charter School Capital’s receivable sales product, it is a state obligation, not a school debt.

What is at risk if the state delays payment?

With a traditional bank loan or line of credit, the school is at risk for interest costs, late fees, and possibly even default if the payment is delayed because the state is late.
With Charter School Capital’s receivable sales product, if payments are delayed at the state level, there is no recourse to the school and Charter School Capital assumes the risk.

Click here to download the free one-page PDF datasheet on these two charter school funding sources!

The Charter School Growth Manual
Whether you’re just beginning the process of starting up a charter school, looking to expand or trying to prioritize your next steps, download this guide to get expert tips and pitfalls to avoid as you grow.
For this charter school resource guide, we turned to our wide network of charter school experts for best practices and strategies for success at every stage of maturity. All of the advice in this book comes from experienced charter school leaders who have been where you are now—they understand what you’re facing and the pitfalls to avoid.

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Walton Family Announces $100 Million for Charter School Investments

Editor’s Note: This post about the Walton Family grants towards charter school investments was originally published here, on June 19, 2018, by the Walton Family Foundation.

More than $100 million in new grants will support diverse and innovative school models and leaders

AUSTIN, Texas – Today, the Walton Family Foundation announced efforts to build and expand on two decades of school startup grants to fuel the growth of high-quality schools across the country. The strategy, detailed in Rooted in Opportunity: The Walton Family Foundation’s Approach to Starting and Growing High-Quality Schools, includes continued grants to proven organizations, like those that help create successful charter schools, with an expanded focus on innovative school models to meet the learning needs of all children. Foundation grants totaling more than $100 million will allow educators and leaders to launch hundreds of schools in the coming years.
“Thanks to courageous school founders – overwhelmingly teachers who have a vision for what school can be – we know that quality schools that put children on a path to college and career success at scale are possible,” said Walton Family Foundation K-12 Education Director Marc Sternberg. “But the simple truth is that a great school remains out of reach for too many families. So we’ve got to do more – more to support educators with a passion and plan for something better, more for families who look to schools as a pathway to opportunity. And in order to build on two decades of work, we need partners old and new in philanthropy and positions of civic leadership who share a vision for the day when all children have access to a school that is right for them.”

Areas of continued and new support are:

Starting and scaling more proven high-quality public charter schools.
Building Excellent Schools: Identify, recruit and train leaders to launch high-quality public charter schools across the country.
KIPP: Grants that support all of KIPP’s strategic priorities including growth, academics, talent and the KIPP Through College program.
Supporting district and private schools that are embracing accountability and autonomy.
Indianapolis Public Schools: Expansion of school-based autonomy and principal trainings.
Partnership Schools: To bring a proven turnaround model to struggling Catholic schools.
Implementing diverse pedagogical approaches.
Big Picture Learning: Open 15 new public schools focused on real-world learning through internships and other activities.
Wildflower: Support for opening new, teacher-led Montessori schools in this network of district, private and forthcoming micro-charter schools across the country.
Increasing early-stage support for leaders of color
Teaching Excellence: Train and support at least 620 educators, 70 percent of whom will identify as people of color, to teach across 15 charter organizations and school districts.
Camelback Ventures: Recruit, train and support leaders and entrepreneurs as they start schools or education-focused ventures across the country.
Navigating the student transition from secondary to post-secondary college and career
The Match Foundation: Grow the college-support program Duet, which provides flexible and affordable degree programs and start-to-finish college coaching.
YouthForce NOLA: Help hundreds of New Orleans students secure internships and earn industry-recognized credentials, putting them on a path to high-wage jobs.
Growing schools that are serving special student populations well
CHIME Institute: Grow the network of fully-inclusive schools where students with and without special needs outperform state averages.
Collegiate Academies: Expand Opportunities Academy, a rigorous full-day program that helps students with moderate to significant disabilities reach their highest potential.
Starting more schools that serve students of diverse backgrounds
Bricolage Academy: Support to help the New Orleans school grow to meet the needs of local families. Currently, six times as many students seek enrollment at Bricolage than the school has capacity to serve.
Diverse Charter Schools Coalition: Study, source and share best practices of intentionally diverse public charter schools. Work closely with a select number of future school leaders to incubate and launch new schools.
Early stage support for entrepreneurs
Reframe Labs: Recruit and support diverse leaders as they design and open innovative public schools in Los Angeles.
4.0 Schools: Recruit and support early stage entrepreneurs developing transformative schools, learning spaces and technology tools.
“Quality public schools are the bedrock of thriving communities and a strong democratic society. The investments that the Walton Family Foundation is making in innovation, accountability for serving students well, and diversity in American public education are heartening because of the difference they will make in the lives of students and families across the country,” said former U.S. Secretary of Education and CEO and President of The Education Trust John B. King, Jr. “More students, particularly those from low-income backgrounds and students of color, will be able to receive rich learning opportunities, successfully transition from P-12 into college and careers, and attend intentionally diverse public schools — with diverse, effective teachers and school leaders. I’m looking forward to the ways in which these important efforts will advance excellence and equity in public education.”
Some of the most impactful grants that span multiple focus areas include:

Charter School Growth Fund

Charter School Growth Fund invests in talented education entrepreneurs who are building networks of great charter schools. To date, CSGF has funded networks that operate more than 870 schools that serve over 370,000 students. Walton’s most recent support will help CSGF identify, develop and train school leaders of color with proven educational track records who have a high potential for success in starting and scaling high-performing charter management organizations.

NewSchools Venture Fund

NewSchools Venture Fund is a venture philanthropy that raises contributions from donors and uses them to find, fund and support teams of educators, and entrepreneurs who are reimagining public education and opening high-quality, innovative schools. New support from the Walton Family Foundation will allow NewSchools to support early-stage ventures that will increase the proportion of Black and Latino leaders in Prek-12 education, as well as incubate and support the launch of more than 30 schools.

Valor Collegiate Academies

Valor Collegiate Academies is a network of high-performing, intentionally diverse public charter schools in Nashville, TN. This support will allow Valor to codify its successful model that blends academic rigor and social-emotional learning and share best practices with schools in Nashville and across the nation.
“Every child deserves access to a great school, which is why it’s important to see a strong commitment to accountability,” said former U.S. Secretary of Education and Managing Partner at Emerson Collective Arne Duncan. “To continue our progress as a country, we need to aim higher for all children and all schools.”
“It requires a collective effort to have a transformative effect on the lives of students and teachers across our great nation,” said former U.S. Secretary of Education and University of North Carolina System President Margaret Spellings. “I applaud the Walton Family Foundation for undertaking this optimistic endeavor, and I am inspired to see their willingness to address issues in education through a varied and holistic approach.”
“As former Houston Superintendent and US Secretary of Education, I saw firsthand the power and importance of new school startup support provided by the Walton Family Foundation,” said former U.S. Secretary of Education Rod Paige. “These resources allowed thousands of passionate educators and other community members to open new schools that today prove what is possible in public education and how to change for the better the lives of children, families and communities across the nation.”
The Walton Family Foundation has supported the creation of more than 2,200 charter, district and private schools with $424 million in grants since 1997. These schools now serve about 840,000 children nationwide.

About the Walton Family Foundation

The Walton Family Foundation is, at its core, a family-led foundation. The children and grandchildren of our founders, Sam and Helen Walton, lead the foundation and create access to opportunity for people and communities. We work in three areas: improving K-12 education, protecting rivers and oceans and the communities they support, and investing in our home region of Northwest Arkansas and the Arkansas-Mississippi Delta. In 2016, the foundation awarded more than $454 million in grants in support of these initiatives. To learn more, visit waltonfamilyfoundation.org and follow us on Facebook and Twitter.

Since the company’s inception in 2007, Charter School Capital has been committed to the success of charter schools. We provide growth capital and facilities financing to charter schools nationwide. Our depth of experience working with charter school leaders and our knowledge of how to address charter school financial and operational needs have allowed us to provide over $1.6 billion in support of 600 charter schools that educate 800,000 students across the country. For more information on how we can support your charter school, contact us. We’d love to work with you!

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Charter School Financing: Myths vs. Facts

From funding your growth, managing deferrals, to investment in facilities, get ahead of the game knowing these five charter school financing myths & facts!

MYTH: Charter schools should use their reserves to finance growth instead of looking for outside financing options.
FACT: Using outside financing to facilitate growth can make a charter more financially secure in the long run and pay for continued growth without depleting cash reserves.

MYTH: Growth capital should only be used in the case of state funding delays or deferrals or as a last resort.
FACT: Growth capital is incredibly flexible and can be used for operational growth, program enhancements, technology upgrades, school expansion, etc.

MYTH: Running a charter school is not like running a business.
FACT: A charter school is a business and making smart, informed business decisions will benefit your school’s viability, financial health and overall growth.

MYTH: Bonds are the best way to fund a facility.
FACT: Only 12% of charter schools have accessed bond financing. The process of securing a bond is often time-consuming and can incur hidden fees from audits, trustees and rating agencies.
Source: LISC, Charter School Bond Issuance, 2015

MYTH: Charter schools should own their facilities.
FACT: You’re in the business of educating students, not owning and managing real estate. There are many other financing options that will give you control and security over your facility.

If you’d like to download the PDF version of this infographic, click here.

Charter School Budgeting Best Practices: Don’t Just Survive–Thrive!
Since the opening of Charter School Capital 10 years ago, we’ve reviewed thousands of charter school budgets. Year after year, we see common mistakes many charter schools make when budgeting for their academic year. Hear from charter school finance experts as they give you a breakdown of budgeting best practices to help you have a financially successful academic year. Don’t just survive — thrive!

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Charter School Capital Funding Enables Skyline Education to Grow and Provide the Resources Needed for Their Students

Read this school spotlight to learn how Charter School Capital funding helped Skyline Education when they needed it most.

Providing a quality education to at-risk students often requires multiple resources. One-on-one instruction with teachers, access to good computers and customized lesson plans for students with special needs are just a few of the tools necessary to help children from underserved communities reach their potential. That is the formula behind the success of Skyline Education, a charter network in Arizona.
The multi-disciplined approach to education that Skyline’s six campuses provide “comes at a fairly high up-front expense,” says KJ Weihing, vice president of finance at Skyline Education. “We wanted to make purchases but didn’t have the up-front funding. That’s why we called Charter School Capital; they helped us get that short-term funding.”
Skyline opened its first campus in 2000, but it wasn’t until 2009 that the charter began to experience rapid growth. That year, the charter added two new campuses to its network, another in 2010 and two more in 2012. The network now serves more than 1,000 students in socially and economically diverse communities, including the Gila River Indian Community.
Such dramatic growth these past few years created a real need to access working capital, explains Weihing. The charter network knew that it would be receiving its funding, but given the uncertain payment schedule from the State of Arizona, they didn’t know when. School administrators knew that they needed some form of help to even out their budget throughout the year but were very wary of outside funders until they met Charter School Capital.

“We wanted to make purchases but didn’t have the up-front funding. That’s why we called Charter School Capital; they helped us get that short-term funding.”
~KJ Weighing, Vice President of Finance, Skyline Education

“I was impressed with the fee structure,” says Weihing. “A lot of times there are organizations that will lend for 20% interest because they know you can’t get funds anywhere else. Charter School Capital’s fee structure was not outrageous.”
But the relationship Skyline has developed with Charter School Capital is rooted in much more than just financial terms. Weihing would recommend to any charter school needing funds that they just “start the process,” stating that the two organizations have formed a real partnership dedicated to the success of Skyline Education.
“Last year, we wanted to make new computer purchases for one of our schools, but we didn’t have the current funding on hand to make that happen. So we used Charter School Capital to provide us with some short-term, immediate funds in order to get those computers into the classroom sooner than we would have been able to if we were waiting on funding,” concludes Weihing. The whole process has been “extremely seamless, quick and easy; I’m glad I did it.”

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Editor’s Note: With the anniversary of our nation’s independence next week, I thought that addressing the idea of freedom, and more specifically freedom of choice in education was a timely topic. We understand the flexibility in the educational curriculum that public charter schools offer needs to be balanced with accountability. But there has been much debate over the effect that public charter schools have on traditional public schools. This article takes a closer look at the benefits of school choice. It also shows that no evidence or study exists supporting the argument that public charter schools harm traditional public schools. But rather, evidence has been shown to the contrary: the existence of public charters has often improved traditional public school performance in those communities.
We think it’s vital to keep tabs on the pulse of all things related to charter schools, including informational resources, and how to support charter school growth. We hope you find this—and any other article we curate—both interesting and valuable. Please read on to learn more.

*This op-ed article on the benefits of school choice was originally posted here on February 28, 20118 by the Desert News and written by Teresa Mull (tmull@heartland.org), a research fellow in education policy at The Heartland Institute.

School Choice Doesn’t Destroy Traditional Public Schools; It Makes Them Better

The go-to mantra of many traditional government school advocates is that education-choice programs destroy neighborhood public schools. Their argument is flawed for a couple of reasons. The first is it shouldn’t matter if traditional public schools go the way of the dodo if children, despite public schools’ demise, are receiving a better education. And then there is the fact that their argument is simply not true.
The presence of education-choice options doesn’t “destroy” public education, but it does make existing government schools step up their game, as Sarah A. Cordes wrote in a recent EdNext study titled “ Charters and the Common Good.”
She wrote, “I find that students in district schools do better when charters open nearby: Students in these schools earn higher scores on reading and math tests and are less likely to repeat a grade. The closer the schools, the larger the effect: Co-location increases test scores by 0.08 standard deviations in math and 0.06 in reading.”
The effects are modest, as Cordes noted, but what’s equally important in the school-choice debate is that charters have “no significant negative effects on student performance at district schools nearby,” and “it may be beneficial (and certainly not harmful) to allow for further expansion in NYC.”
Cordes concluded that her findings “show that communities can expand charter schools to meet growing demand without putting district schools at risk of instability or failure. Far from an existential threat to their district-school neighbors, public charter schools can benefit not only their own students but also those in other programs down the street — or hallway.”
Cordes’ findings are a great boon to the education-choice debate. The more policymakers, and constituents who try to persuade them, are armed with evidence showing school choice works, the more likely it is good policy will come into being, right? To quote Ernest Hemingway, “Isn’t it pretty to think so?”
The reality is the free-market system of school choice has always had research on its side. EdChoice.org reported, for instance, “Thirty-one empirical studies (including all methods) have examined private school choice’s impact on academic outcomes in public schools. Within that body of research, 29 studies find that choice improved the performance of nearby public schools. One study finds no significant effects. To date, no empirical study has found that school choice harms students in public schools.”
What’s more, “The research shows that students in school-choice programs attend more integrated schools than their public school counterparts,” EdChoice reported.
There goes the false “School choice only benefits high-income, white families” narrative public school proponents have been peddling for decades. After all, how could a system that forces students to attend the school that corresponds with their ZIP code do anything but segregate by income level? The U.S. Government Accountability Office reported in 2016 that segregation in America’s public schools has actually increased in recent years.
Education choice is good for society. That’s not news to those of us who have been paying attention to the school-choice debate in recent years, and it’s no surprise that the educational elite, who remain committed to their plan to control education for everyone in America, would propagate myths about education choice to maintain their power, prestige and hefty incomes. But studies like Cordes’ are nevertheless vital for growing the school-choice movement.
The more school choice we have, the more evidence there will be supporting its value to society, and pretty soon, we’ll have so much overwhelming proof that even teachers unions and the politicians they control won’t be able to ignore it any longer.

Charter School Capital is committed to the success of charter schools and has solely focused on funding charter schools since the company’s inception in 2007. Our depth of experience working with charter school leaders and our knowledge of how to address charter school financial and operational needs have allowed us to provide over $1.6 billion in support of 600 charter schools that educate 800,000 students across the country. For more information on how we can support your charter school, contact us!

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CHARTER EDtalk: A Charter Leader’s Advice on Immigration Policy and Families

With all the news of children being torn from their families, we have a story from one of our charter leaders that is more important today than ever. We realize that politics and immigration laws touch charter families in many ways, and want to share this video because hearing the stories of students we serve moved us so deeply.
Editor’s Note: On the day that the separation of children from their parents has apparently ended, we are posting this charter leader’s experience with immigration laws and policies, and their ramifications on charter school students and their families. Find the CHARTER EDtalk video and transcript below.

Janet Johnson: Hi there and welcome to CHARTER EDtalk. I’m Janet Johnson with Charter School Capital and we are delighted today to have Ricardo Morales, who is the Founder and Executive Director of Academia Avance here to speak with us along with Marci Phee, who is our Director of Client Services. We are very grateful to have you come and talk about a very important topic today. Marcie, take it away.
Marci Phee: Thanks Ricardo. Ricardo and I worked together for years, so this is a great conversation among friends.
Janet Johnson: That’s great.
Marci Phee: Would you give us a overview of the debate regarding the collaboration between school staff and immigration policy enforcement?
Ricardo Mireles: Oh yes. Obviously right now there’s a lot of attention on it, but it’s important to know that this is not new. The attempt to use public service employees to try to enforce federal immigration laws goes, goes way back. And in fact, the current attempts are building on something that was successful. So, some historians estimate that as many as file million Mexicans left the United States in the thirties in 30’s and the 40’s not because they were deported, but because they got scared and left from other efforts and so getting other people involved to try to push people out is not a new thing.
And, if we think back to, the Plyler Decision that comes out of Texas, a constitutional position, it found that public education is a right for everybody, regardless of immigration status—that is a constitutional obligation. And so schools need to do that. And that they keep trying to get around this. This is was what prop 187 in California was, the attempts in Arizona, and Alabama, and now in Texas. And they keep trying to come back to an issue that has already been established. And so what I try to convey to school leaders is this isn’t about trying to change a law and make things better. It is the law and we need to do it to protect families and that our attempts to reinterpret law – and in fact that’s kind of what’s happening right now, reinterpreting the rules – and now it seems it’s okay to take kids away from families. That was never okay. And so let’s not allow it. We didn’t allow it in the past, let’s not allow it now.
Marci Phee: How does this impact charter schools, specifically?
Ricardo Mireles: Well, we have an opportunity, our school, a small school—the independence, the autonomy that we have now, it’s an autonomy for how you operate the school, to the autonomy for how you designed the curriculum. But I think it’s also an autonomy for how we can interact with our families and we have to use this. Now, the traditional schools are also trying very hard on this very issue and we were very happy to – Avance together with other schools– put together a collaborative called CASAS, which is California Schools Are Sanctuaries. And we adopted the ACLU Sanctuary Toolkit early on and not as a resolution but as a specific set of operating policies and procedures. Then we advocated with schools in California and LA Unified, which has always been a champion for immigrants and all families. They adopted this statement as well. Then, we kept pushing it and now it became law. So the new AB 699 law, California law, which specifically outlines the provisions that schools must follow terms of protecting immigrants and their families, like all the other protected classes.
So, what is it that charter schools can do, is use your autonomy to be able to move quickly to address these issues. And I would add that what is the whole fundamental core, in my opinion, for education, it’s the trust that frames education, that the trust that parents have, they’re taking their most treasured – their kids – and take them to your school. So, obviously it’s based on trust. It can’t be a passive trust. You have to do something with that. It’s our responsibility as school leaders to do something with metrics and in this context with immigrant families, it’s not this kind of hands off approach that was essentially what most schools were doing and we all kind of felt, well, we’re going to be fine.The new president’s going to fix everything and we’re going to be okay.
We’re not okay. And so the tactic can be a more benign, along the sides. It has to be very active and proactive in and work with families. Are you ready? Have you had the hard conversation with your kids? The epiphany that I had when our parent, who was detained by ICE in February 2017, was ‘what could we have done before?’ If we already know, as a college prep school, what people’s immigration status is as part of their financial aid preparations. It’s going to come out, we’re gonna know senior year, then why are we waiting until the senior year? Why can’t we work with these families? Maybe not the second graders or third graders, but eighth graders, ninth graders, let’s get these kids involved. Let’s find these solutions and get people prepared way earlier not at the last minute when it’s too late. And I believe schools need to do that and the way to do that is to use the trust that you have to work with families because they won’t tell you anything if they don’t trust.
Janet Johnson: It’s almost like different kinds of security prevention, you know, protection, isn’t it?
Ricardo Mireles: Yes. And that word is used in so many different contexts. This context about security, and I know you don’t mean it that way, but also the first thing that people were responding to with this crisis is the physical security of the campus and how do we keep ICE away from campus. Well, as it turns out the Plyler decision already does that for you. Right? And the, the Department of Homeland Security already has a policy that specifically states that they’re not going to take action, for the most part, on schools. That’s already there. It’s already policy and law. So there’s a lot of concern about what do we do if ICE shows up. They’re not supposed to show up. Now, if they do show up then you’ve got other issues that we’re going to have to deal with and these AB 699 procedures are going to help you with that. But, this is about emotional security, a security which we need so that kids can stay focused on learning. We had this huge incident, right after our situation in February 2017 and all these kids saying, “I need to use the phone”, they come into the office “I need to use the phone.” And then in donned on us… [they were checking] “Is my mom still home?”
Marci Phee: Has that gotten better? Take a moment.
Ricardo Mireles: Yes, it has gotten better.
Janet Johnson: Mercy.
Editor’s Note: Our team all took a moment here to gather ourselves after Ricardo shared that poignant story.
Janet Johnson: Thank you for sharing that. Seriously. Many of us are parents and no one should be put in this kind of place and no child should be put in this kind of place.
Ricardo Mireles: You asked me if it’s gotten better. It’s gotten better in one particular way. Many ways, but let me focus on one. especially with this family. My favorite headline was on September 2nd, right after he got released and it said that he went from a taquero [someone who makes or sells tacos] to activist. And so, this was a gentleman who was put in your most difficult situation—to be away from his family. And he comes out like I’m ready to go. I’m ready to advocate for all those other guys that are still in there … and quite strongly. And he was a big push for SB 54 in the California Senate to push for more protections. He’s the first one now at the school when we need something. So he’s super, super activated to make change and now all his kids are as well. So, it’s gotten better for him, it’s gotten better for his family, for his kids. It is kind of better for our school to realize, wait a second, we can beat this. That struggle translates in the sense of now you have a Parkland situation. Our kids were out there, they did a walkout. And we took kids to the march in DC, the march in LA, one of our students was a speaker at it, to come out on this issue. So, in Spanish, “No hay mal que por bien no venga”, or “Every cloud has a silver lining,”right? So that something happens and it should trigger a bigger response. And we’re seeing that happen.
Marci Phee: Charter schools in my experience and those I’ve been fortunate enough to get to know and visit, but that they they’re not just a community but that they strengthen communities and everything you just said reinforces that for me.
Ricardo Mireles: I would present this early on at Avance, that we’re a three-legged stool. Students, parents, and school/teachers. Not a four-legged stool, it’s a three-legged stool. And what happens is if one gets wobbly, it forces the other two to immediately reinforce. We’ve got to hang together or else the school’s going to fall over. And so it’s much more immediate, the need to to everybody be together in a charter school.
Janet Johnson: What a great way to sum it up. Seriously. I want to thank you so much for being here and sharing your, your, your wisdom with us in this day and age. Both of you.

Did you miss our live session at the National Charter Schools Conference; Budget Best Practices for Charter Schools? Not to worry! We wanted to make sure to share the highlights from this session right here on the Charter School Capital blog. We were honored to have two charter school finance experts whose depth of experience brought so much value to this presentation.
Spencer Styles, President & CEO, Charter Impact

Matt Percin, Manager of Financial Analysis and Risk, Charter School Capital

Since the opening of Charter School Capital 10 years ago, we’ve reviewed thousands of charter school budgets. Year after year, we see common mistakes many charter schools make when budgeting for their academic year. So, we’re sharing some budgeting best practices to help you have a financially successful academic year—whether your school is growing student enrollment, expanding facilities, or implementing new educational programs. Don’t just survive – thrive!

Below is an outline of our presentation, but scroll to the bottom to download the handy datasheet and you’ll also find a link to the video of the live presentation.

BUDGET BEST PRACTICES FOR CHARTER SCHOOLS

BUDGET PLANNING FOR STARTUP SCHOOLS

Start with petition budget
Pay close attention to your budget and then map out your priorities for the year
Have a plan and show how costs frame the budget to show how parts make up the whole
Build a budget that includes everything on your wishlist, then prioritize (with your stakeholders)
Plan for surprises by having a budget surplus to cover unexpected costs
Lay the foundation for your annual budget, but plan for regular updates along the way

BUDGET PLANNING FOR GROWTH/MATURE SCHOOLS

Start with a baseline budget based on the previous year
Pay attention to how enrollment projections directly affect revenue
Actively manage your cash flow: financing, receivables, payables, etc.
Understand your accounts payable and vendor relationships
Strategically partner with external service providers and keep them in the loop

CASH FLOW PLANNING

What attendance metric drives your revenue?
What revenue is monthly, quarterly, or more variable?
What happened in prior years with regards to the timing of payments?
What costs are fixed monthly and which vary?
Communicate with your vendors to plan your accounts payable according to your budget ebbs and flows
Financing: Note timing of inflow from your financer and outflow timing for payments
Receivables: Map out the timing of state payments and how that affects your cash flow

REVENUE FACTORS TO CONSIDER

Note the correlations of free and reduced-price lunch to your need for fundraising
Track and understand your fundraising families and need for per-student fundraising goals
Understand your restricted grants: how it was intended to be spent, programs reliant on the grant, etc.
Have a plan for the sustainability of institutional fundraising and the programs supported by it

EXPENDITURE TRENDS

Salary scale changes: your area’s unemployment rate, demand for teachers, increasing salaries, etc.
Retirement benefits: Compare a defined contribution plan verus a defined benefit plan
Do you need new textbooks or to renew or change your school’s technology to stay current?
Be mindful of facility cost increases (interest rates, exemption laws, etc.) Plan on how to fund any needed updates or additions

BUDGET SAFEGUARDS

Review salary scale changes with the future in mind
Consider non-financial perks for your employees: recognition, flexibility, career path and professional opportunities, etc.
Have an equipment/technology plan to budget for upgrading or replacing your tech infrastructure
Facilities: Plan new construction, your maximum enrollment, and set a facilities reserve fund
Have an annual Board of Directors discussion on your school’s long-term initiatives, with a focus on your mission
Set target fund balance and target cash balance

To watch the video of the live presentation, you can find it on our Facebook page.
To download the printable one-page PDF datasheet, click here.
We hope that this has been helpful and valuable information! We’d love to read your comments and suggestions, so please add them in below.

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The Top Five Financial Mistakes Charter Schools Make: And How to Avoid Them

Did you miss our live session at the National Charter Schools Conference; The Top Five Financial Mistakes Charter Schools Make: And How to Avoid Them? Not to worry! We wanted to make sure to share the highlights from this session right here on the Charter School Capital blog. We were honored to have an outstanding panel of charter school experts whose depth of experience brought so much value to this presentation.

Tricia Blum Head of Business Consulting, Charter School Capital

Margie Montgomery Founder, Desert Star Academy

Sharon Thompson, Chairman of the Board, Wayne Academy

Michael LaRoche Founder/Executive Director, SALTech

The Five Mistakes

The panelists began by outlining the top five mistakes:
1. Not Recognizing Your Schools is a Businesses
2. Being Unprepared for the Unexpected
3. Underestimating the Importance of Finances
4. Losing Sight of Your Mission
5. Not Maintaining Strong Relationships

How to Avoid the Top Five Financial Mistakes Charter Schools Make

Here’s a bit more detail on each mistake and the action items you can take to avoid them:

MISTAKE #1: Not recognizing that your school is a business

ACTION STEPS
1. Be the superintendent (not a principal)

Not just curriculum and teachers
Its endless hard work
You will be challenged in ways you never thought possible

2. Know your customer

All your stakeholders are customers:
- Parents
- Students
- Community
- Authorizer
- Staff

3. Be the boss—the buck stops with you (literally)

Everything impacts your financials (especially mistakes)
You are responsible for it all
Find a mentor

SOLUTION: REMEMBER, YOUR SCHOOL IS A BUSINESS

MISTAKE #2: Being Unprepared for the Unexpected

ACTION STEPS
1. Beware the lawsuit and bad actors
2. Keep a strong, updated wait list

Sometimes your enrollment stream dries up or decreases substantially
- Military bases/large employers, new schools, bad PR

3. Facilities have tripped up more than one great charter schools

Landlords aren’t always your friend: Know and understand your lease and the numbers behind them
Start looking for larger or better facilities now

4. Beware the tenacity of angry employees and parents

Create and maintain good public perception
- Marketing/PR

SOLUTION: PREPARE FOR THE UNEXPECTED

MISTAKE #3: Underestimating the Importance of Finances

ACTION STEPS
1. Make a plan, work the plan:

Budget forecast
- Don’t underbudget
- Don’t overspend
  *When in doubt do without
Cash flow
Budget to actuals
Have a contingency plan

2. Beware the claw-back

Forecast enrollment realistically
- Nobody will correct you but they will take your money

3. Hire a charter school financial expert

Internally & externally

SOLUTION: REMEMBER, SUCCESS REQUIRES MONEY

MISTAKE #4: Losing Sight of Your Mission

ACTION STEPS
1. Know your end game—its’ your mission and vision

Tie all financials and operations back to your goal or consciously make new goals (redo mission/vision)

2. FAB (be Ferocious About your Boundaries)

Said differently, Trust but verify
- Experts

3. Enrollment, enrollment, enrollment

SOLUTION: KEEP YOUR EYE ON THE PRIZE: YOUR MISSION

MISTAKE #5: Not Maintaining Strong Relationships

ACTION STEPS
1. Authorizers: Aren’t always your friend

A “fine” relationship with your Authorizer suggests no relationship with your Authorizer
- Calendar regular contact with staff, ED/superintendent, Charter Board
- Toot your own horn
- Show up to Authorizer events

2. Your Board of Directors: know your governance

You report to them–cultivate them
Lean on them for good and bad—they should be involved not just aware
Organized and agenda-d monthly public meetings

3. Experts: find them, pay them-keep the good ones

Consultants, thought leaders, business partners

SOLUTION: HAVE FRIENDS IN ALL THE RIGHT PLACES

To watch the video of the live presentation, you can find it on our Facebook page.
To download a printable PDF datasheet, click here.
We hope that this has been helpful and valuable information! We’d love to read your comments and suggestions, so please add them in below.

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CHARTER EDtalk: Charter School Budget Best Practices

Check out this CHARTER EDtalk for tips and tricks on charter school budget best practices! Janet Johnson sits down with Matt Percin, both from Charter School Capital, to learn about the importance of being flexible and adaptable as a startup school and the increased budget-planning power you have as a more mature school. You’ll also get key insights on vendor management as you work through budget ebbs and flows. See the short video below.

Read the complete transcript here:
Janet Johnson (JJ): Welcome everyone to our next CHARTER EDtalk with Matt Percin, who is the manager of Charter School Capital’s financial analysis and risk. Can you tell me a little bit about what you do?
Matt Percin (MP): Sure. Simply put, what our team is responsible for is mainly understanding how much funding our clients could need and then trying to actually map out a plan of what they need or what we can provide so it’s a cohesive relationship for us. And then the other thing we’re doing is actually valuing what we’re going to buy. So we’re valuing the future revenue streams. We’re looking at purchasing for the school for financing as well as for real estate business. Figuring out what schools can afford … helping schools map that out.
JJ: So, you do actually work with the schools a little bit. Oh, that’s cool. Because I have a feeling a lot of schools don’t have people with your experience on staff. Is that correct?
MP: Sometimes it’s nice if they have some kind of back-office provider (BOP) who has someone we can dialogue with. But sometimes we take a more active approach with our schools that don’t [have a BOP]. So, it’s helpful.
JJ: There’s a couple of different types of schools that we work with here: startup schools, and then a little bit more mature – or growth-oriented – schools. Can you tell me a little bit about the differences between the approach for financial support for each?
MP: For sure. I would say probably the three things that we could emphasize for a startup school versus a growth or mature school is flexibility, variability, and then the power and efficiency you have as a school.
JJ: So can you tell me a little bit about what is flexibility versus variability?
MP: So, if we say variability for a startup school, you’re actually a lot more variable in the sense of you don’t have any history yet, so you have no backlog to figure out how last year worked out. You have to be a lot more adaptive to what happens … because you might say, hey, we think on our petition budget, we’re going to open up with 100 kids. But you may open up with 125 or 75. So then figuring out how to quickly adapt to your budget and adjust accordingly, you just have to be a lot more reactive as a startup school.
JJ: So all the planning in the world, you still have to kind of be nimble and you help with that.
MP: Exactly. You know, if you’re a growing school or a school that’s been mature or been around for five years, three years, somewhere in that realm, you have a baseline and you knew how things happened last year and you have less variability in your student count because you’ve established yourself in the market. You have, the students that already come to your school. And they may continue on in your school so you have a lot more understanding of what your baseline is going to look like for future years.
JJ: So you’re more predictable.
MP: Yes. So, then the other, the other thing I talked about was the flexibility. So the flexibility or sometimes you can think of it as the power you have as a school, if we can use that word.
JJ: I like that word!
MP: So, if you’re a startup school, once again, you just have to be more flexible. You aren’t flexible yourself yet, [but] you just have to become more flexible. So, that could mean adjustments up front, changes down the line. It’s really all about reaction like we said before.
JJ: So are we managing expenses more than we’re managing revenues at this point?
MP: It’s definitely both, but I think everything starts with your student count, which is what leads to your revenue, and then you have to adjust expenses accordingly.
JJ: So it’s as important to keep happy students and as it is to bring them in.
MP: Exactly. Then, obviously, if you’re mature or growing school, the power you have is that you have established relationships with your vendors: the people that supply your technology, or your books or your landlord. You have a relationship with them. If you have any challenging months or times of the year, you have the ability to use that relationship and utilize it for your advantage and maybe say, “Hey, in the first three months of the year, my revenue and my cash is tight, can I push out maybe some expenses to later in the year?” Then, you have that type of power upfront for your vendor management.
JJ: Love that idea of power around vendor management. Do you find that vendors oftentimes will respond to that?
MP: Definitely. I think the key is always communication upfront. It’s like anything in life, right? If you give someone the forewarning with enough time, the relationship is a lot easier to maintain and establish.
JJ: So, flexibility when you start, then you become more dependable and your variable expenses are more predictable, and you establish yourself as a reliable partner to others, and you have more power as you grow up. And the key to all that is your student revenue should exceed your expenses.
MP: Exactly. Awesome. Very well said.
JJ: Thank you. I know cashflow planning is a big consideration for a lot of schools. Can you talk about how that affects your budget? You talked a little bit about it before, but can you dig into a little bit about what should charter leaders look out for when they’re planning their cash flow?
MP: I think the key is that sometimes cashflow planning gets overlooked. Everyone knows that for any business—which a charter school is—you have to have a budget, right? But sometimes people forget to look at things from the actual “ins and outs” perspective, which is what a cash flow is. A cash flow is essentially your budget, but it’s broken out usually looking 12 months ahead. So, you can figure out how everything looks monthly or sometimes even weekly. So then you can start to figure out really the questions you want to ask yourself are … What are my challenging times of the year? Because if you figure out where you’re challenging times the years are, then you can use everything we just spoke about – your vendor management and all your accounts payable management – and you can forecast that upfront. And then it starts the conversations with your vendors. And if you have to look for financing, you know when you might need it. So basically, thecash floww is helpful because it gets you looking and becoming more proactive in the future.
JJ: And tools for managing cashflow or or resources for managing cash flow. Those are people like your back office provider?
MP: Yes.
JJ: But what if you don’t have one? Does that mean Charter School Capital helps you, if you’re working with us?
MP: Yes, we do that all the time. Even if they do have a back office provider, sometimes it’s a relationship we work in tandem with the back office. It’s usually a partnership is how we always work on that type of thing.
JJ: Yeah, because I don’t know that a lot of schools have [one]. Maybe they do, but it’s been our experience, I think, that they don’t have as much visibility as they should into cashflow.
MP: I agree. Sometimes it just gets overlooked, but the fact is that it’s a very important tool for many reasons. It’s important to look at.
JJ: Good. So if a charter leader is looking for new financial support for a school, what should they be looking at? Who should they be looking at? What are the steps that they should be taking?
MP: That’s a good question. I think what you want to start with, is figuring out how much you need. Right? So, in order to do that, I would say you probably need the same document we just referred to, which is the cashflow. Because then you can start to figure out if there’s some type of gap in your cash flow or you don’t have enough actual cash in the system to pay something important, rent or some big bill that’s coming up. Then you actually know. So, I would say you first want to establish how much you need and then with that, when you need it.
JJ: And, do we help with that? Is Charter school capital help with that? Even if you’re not doing business with us yet?
MP: We do. I think schools generally know if they think they’re going to have problems with cash, but they might not be as honed in on exactly how much they need and when—and then in the future, how whatever financing they do get is going to affect them. So, we try and help show them the path. Always, in advance. We like to look at things, pretty far in advance – six months, 12 months – to help schools map out where they can go, and what they want to achieve.
JJ: Any, any last recommendations or advice for charter leaders from where you sit?
MP: That’s a good question. I would say if it kind of relates to what we just spoke about, but it can be applied to anything. I think the biggest baseline driver for everything is the student count. But it’s very easy to know student count and how much you get paid for the year. But it’s more important to understand—when those students come on board—when does the actual receipt of the revenue come for those students. Because, oftentimes (and all across the United States where there are charters) there’s some lag from when new students come versus when the actual payment for them comes. It could be three months, it could be nine months. So, then you have to figure out as you add new students, how you pay all the onboarding costs for new teachers and new books for those students. So, if you have that mapped out, it sets everything else off much better.
JJ: Matt, thank you so much. We really appreciate your help today. And for more information on charter school budget planning and tips, Charter School Capital has a whole bunch of resources on the website at www.charterschoolp.wpengine.com/resources . So, come visit us and find out more. And if you have a real question about budgets, Matt might help you out.

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Find Out How to Avoid the Top Five Financial Mistakes Charter Schools Make

Our upcoming session at the National Charter Schools Conference is going to answer one really important question, “How do we avoid the top financial mistakes that charter schools make?” We are so honored to have an outstanding panel of charter school experts join us to share insights from their years of charter school experience.

Tricia Blum Head of Business Consulting, Charter School Capital

Margie Montgomery Founder, Desert Star Academy

Sharon Thompson, Chairman of the Board, Wayne Academy

Michael LaRoche Founder/Executive Director, SALTech

So, what are the five mistakes?

1. Not Recognizing Your Schools is a Businesses
2. Being Unprepared for the Unexpected
3. Underestimating the Importance of Finances
4. Losing Sight of Your Mission
5. Not Maintaining Strong Relationships

We chatted briefly with two of our panelists, Michael LaRoche, the Founder and Executive Director at SALTech and Margie Montgomery, Founder of Desert Star Academy, asked them a few questions in advance of their participation on our panel.

Q: Can you briefly describe your history with Charter School Capital (CSC) and why you are excited to participate with Charter School Capital at the National Conference?
Michael LaRoche: CSC was always there to support SALTech’s mission for facility financing from day one. We developed relationships with the CSC staff in early 2013, during our separation from the Education Management Company. SALTech experienced significant cash flow problems soon after construction which would have closed most schools. CSC stood by SALTech during the good times and challenging encounters along the way. I am very excited to share our journey and the support CSC provided to enable success.
Margie Montgomery: As the founder of Desert Star Academy, I have been a client of CSC for four years. First, with working capital. CSC provided funding for Desert Star Academy to open the charter to purchase furniture and the initial curriculum. After two years, CSC’s Facility team purchased land from Desert Star to build an 11,000 square foot building that housed our new middle school
I am extremely excited to participate with CSC at the conference because this company provides resources and opportunities for charter schools to grow and expand. They also provide support to each of the schools to improve and maintain financial stability. It is truly an honor and privilege to be a speaker with them at the conference.

Q: What do you hope people take away from our session “Top Five Financial Mistakes Charter Schools Make . . . And How to Avoid Them”?
Michael LaRoche:

1. Not Recognizing Charter Schools are Businesses
Ensure the school leadership and the Board have a shared vision for the school and are on the same page. They need to collaborate and agree on legal, financial, marketing, staffing, budgeting, construction and growth opportunities that matter to the school. They must also have a contingency plan in place for when things do not go as expected. Moreover, they must seek innovative ways to outperform the competition continuously.
2. Poor Enrollment Forecasting
Work with a financial expert to carefully understand how expected enrollments affects the entire school operations. Nothing is 100% guaranteed and the perfect time is always now. You must take the financial walk!
3. Sales & Marketing
Most charter schools do not have the resources to hire a sales or marketing team to support their enrollments efforts. You are the chief salesperson for your school. Therefore, you must scaffold your sales and marketing thinking to your staff quickly. Help your staff to understand that everyone is a salesperson for the school. Help your staff to look for trends and opportunities in the education marketplace.
4. Build Strong Relationships
You can not do it alone. Innovation is not the leader or Board responsibility. Make the connection with businesses and organizations that share your vision and mission that will add relevance to your school. Keep your parents and students informed of your goals, they are your first line of support and sometimes your only line of support.
5. Ferocious Around the Boundry
The school leadership and the Board must plan for and respond quickly to any threats made against the school, which includes the following: The school district, state, parents, students, staff, other organizations and social media to mention a few.
Margie Montgomery:
1. It is not enough to open a charter school as a building principal you MUST have superintendent experience.
Running a charter school is a business. If you are the lone person at the top running the school and directing your board you must have business experience. As the school leader, you are managing cash flow every week and making financial decisions daily. Be prepared.
2. Plan for the unexpected.
Talk to many charter leaders about the first year of business in respect to the hills and valleys. Understand the mishaps that can occur and be prepared to handle them from a financial standpoint to staff and curriculum issues. Over plan in every aspect from sound policies to financial planning, as once the doors open you are putting out fires.
3. Have financial reserves from day one.
Plan to have cash reserves from day one and budget for a set amount to go to the reserves every month. This will get you through the unexpected and have a build up for growth. Your incomes come in monthly and growth expenses occur in the few months before school starts. Reach out to charter school capital during your planning phases to partner with them for financial stability. Once funded, immediately set up a cash reserve account.

Q: What are you most looking forward to at the conference?
Michael LaRoche: SALTech Charter High School has a great story of resilience, belief and an impressive academic and financial track record in helping and supporting at-risk youths for over 15 years. I was privileged to have a front-row seat to bear witness to SALTech journey so that others can benefit.
Margie Montgomery: I am looking forward to seeing the team and sharing my experiences with charter holders outside of my local and state area. Running a charter school is such an exciting, yet challenging opportunity for everyone involved and if I can assist and encourage others to be successful I will have achieved another professional goal.

And, this is just a sneak peek at the wealth of knowledge our panelists will be sharing! We want to sincerely thank Micheal, Margie, and our other esteemed panelists for their partnership, leadership, and willingness to share their experiences to help support other charter leaders.

W e’ll be streaming this session on Facebook Live from the National Charter School Conference on Monday, June 18th at 2 pm CT or (12 pm PT). Don’t miss it!

And check back on our blog late on June 18th to download a handy one-page PDF of the five mistakes.

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