REACH CHARTER ACADEMY

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1 REACH CHARTER ACADEMY AGENDA: Public school funding School financial reports Compliance reporting Board Workshop February 16,

2 Let s get started!!! 2

3 Q: How can we let school programs drive the budget versus the budget driving school programs? Schools: Cut Academic Programs Cut Extracurricular Programs Defer Maintenance Layoff Personnel Budget to the classroom first a good benchmark is for every $1.00 ensure that $0.46 gets to the classroom. Increase class size 0% 10% 20% 30% 40% 50% Source: The Charter Movement That Could: Budgeting for Success, NCSI March 2010 quoting from the American Association of School Administrators, March 2009, Looking Back, Looking Forward: How the Economic Downturn Continues to Impact School District. 3

4 Question: What is the role of the Reach Board relative to Academy finances? Answer: Reach Board is accountable for Stewardship of the public s trust (see Budget Appropriations Act) 4

5 Question: How can the Reach Board improve it s Governance, Management, Oversight and Stewardship of the school and the Board SCHOOL RESULTS BOARD ACCOUNTABILITY BOARD RESULTS Answer: Academics Finance Sustainability Compliance Board members Public meetings Decision making Compliance Other Other 5

6 4 Question: What do board members need to know about public charter school finance? School finance questions 6

7 School Aid Fund by Source of Revenue, Fiscal % IFT/CFT Tax 0.5% Other Funds 3.75% Tobacco Tax 0.67% Other Revenue 0.27% Liquor Tax 0.94% Other Tax Revenues 10.81% Federal Funds 15.91% State Education Tax 5.46% Lottery Profits 2.36% Real Estate Transfer Tax 16.19% Income Tax 42.02% Sales and Use Tax Source: A Michigan School Money Primer 2007 (p.37) 7

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9 Question: What should Reach Board members know about school finances? How to Interpret Reach financial reports Monitor school finances Manage and oversee financial processes Review and decipher an audit report Assess and manage long term financial risk Function as Chief Administrative Officer (CAO) 9

10 Answer: Question: Which financial reports and data should the Board focus on? Financial Statements Per-pupil funding Budget process Audit process Financial compliance 10

11 Balance Sheet Statement of Activity Cash Flow Budget As of June 30, 2011 April through June 2011 April through June 2011 Year ended June 30, 2011 Assets Income Receipts Estimate Liabilities Expense Expenditures Actual Fund Balance Change in Fund Balance Cash Available Year-to-Date budget variance SPECIFIC DATE PAST PERIOD FUTURE PROJECTION PAST PRESENT FUTURE 11

12 Question: What is the purpose of a school budget? 1. Understand underlying budget assumptions 2. Set conservative budget limits 3. Monitor school revenue and expenditures 4. Approve all budgets 5. Avoid a deficit budget Answer: Help the Board and School Leader provide governance, management, oversight and stewardship of school funds. 6. Approve budget amendments - prior to exceeding appropriated budget amount 7. Ensure budgets are conservative and reflect the structure, programs and mission of the school 8. Ensure Board financial goals are reflected in both the current and proposed school year budget 9. Monitor budget spending throughout the year 12

13 Question: How to read a charter school budget? Answer: Use an account mapping guide appropriate for your school to review each budget report by function and object category FUNCTION OBJECT Local sources Fundraising Parent lunch payments Interest Athletics State Sources State aid 31a State Grants REVENUE Federal Sources Title I et al Special education (IDEA) ARRA funding National School Lunch Program 13

14 EXPENDITURES Instruction Basic instructional salaries and benefits Substitutes Curriculum supplies Field trips Textbooks Added needs Special education expenditures Pupil services Pupil welfare Curriculum developments Special education testing consultants Social workers Instructional staff Professional development Conferences and workshops General administration Legal Audit Superintendent salaries and benefits College counseling Intern program salaries Marketing Dues and fees Office supplies School administration Principal salaries and benefits Receptionist salaries and benefits Family services salaries and benefits Business services Authorizer fees Management fees Back-office fees Debt service Operations and maintenance Utilities Grounds and maintenance Building maintenance Security People transportation Busing Intern program transportation Central support Computer support IT network support Software Hardware Other support Athletics Afterschool tutoring Community service Parental involvement Capital improvements 14

15 Question: How is a charter school budget developed? Budget Assumptions Consider Academy goals and objectives for next fiscal school year e.g., July 1, 2012 to June 30,2013 Estimate student enrollment Project Local, State and Federal revenue Review documented prior year historical revenue and expenditures February May Budget Hearing Six day posting of public hearing on proposed budget Public discussion of consolidated budget recommendations During the same or a subsequent meeting Board must pass their General Appropriations Act the proposed budget for fiscal year July 1, 2012-June 30, 2013 May- June Final Budget & Amendments Board approves final amended budget for the prior fiscal year Fiscal year per pupil funding based on blended student enrollment count: 10% February and 90% October All budget amendments must be approved by the Board May - February 15

16 Michigan.gov Home CEPI Home CEPI FAQ Contact CEPI Site Map Search About CEPI Related Sites CEPI Applications Administrators Data and Reports e-transcript Institutions of Higher Education MI School Data Michigan Longitudinal Data System The Center for Educational Performance and Information (CEPI) collects and reports data about Michigan's K-12 public schools. Our initiatives in data collection and reporting facilitate school districts' compliance with the federal No Child Left Behind Act of 2001 and the Michigan Department of Education's accreditation plan, Education Yes! CEPI is an office located within the State Budget Office. > More MI School Data Portal Now Open How Your Data Are Used District Financial Comparisons Cohort Graduation and Dropout Reports Race and Ethnicity Educational Entity Master (formerly School Code Master) Non-Resident Student Research Tool Michigan Student Data System (MSDS) Help Reduce Data Duplication School Year Collection and Submission Dates Official State Holidays Guide to the Privacy of Student Information: A Resource for Schools (FERPA Toolkit) Quick Links New Projects Web Site Tips Cohort Graduation and Dropout Reports Nonpublic School Personnel Report MI Merit Award State Budget Office MI Educational Assessment Program (MEAP) Need CEPI Data? About Pop-up Blockers and Opening CEPI Applications ISD Financial Reports 16

17 Reach Charter Academy General Audit report for Year Ended June 30, 2011 Audit performed by Deloitte & Touche LLP. Submitted to GVSU CSO October 28, 2011 November 22, 2011 Board minutes included : Motion by Jared Dell supported by Lynne Morgan-Bernard to accept Regular & A-133 Audit Reports as presented. Motion approved unanimously. 17

18 Question: What are essential components, activities and outputs of a charter school financial audit? Audit planning Client planning conference Financial systems Internal operations District financial assistance Funds & programs to audit Confirm engagement scope Testing Assess internal controls Perform systems tests Conduct risk assessments Confirm assessments Answer: Opinion on school internal controls, financial reporting and compliance with contracts, laws, regulations, grant agreements and other matters. Analysis Perform substantive and analytical audit tests Propose adjustments to client for approval Conduct engagement exit conference with client Reporting Review audit report drafts Conduct client meeting to review draft audit reports Prepare final audit reports Present final audit reports to the client 18

19 Question: What is an audit finding? Answer: Auditor s independent assessment of internal financial controls and compliance Material Weakness A material weakness is a deficiency, or combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. Significant Deficiency A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Deficiency A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. No deficiencies or issues of noncompliance 19

20 Question: Does GVSU monitor and track Academy finances? Answer: Yes. Financial compliance reporting requirements. Month financial report due to GVSU J u L y A u g S e p O c t N o v D e c J a n F e b M a r A p r M a y J u n e Academy Budget - Public hearing notice - Prior annual budget Board member CAO Academy budget appropriation resolution Quarterly financial reports 4 th Quarter 1st Quarter 2 nd Quarter 3 rd Quarter Academy Audit -Management letter for fiscal year audit -General audit for fiscal year -A-133 audit for fiscal year Auditor engagement letter 20

21 Question: What can the Board do to monitor financial compliance? DUE DATE REPORT DESCRIPTION SUBMIT TO: July 1 Board Adopted School Calendar/School Day Schedule. CSO July 1 Board Adopted Annual Operating Budget for the General Fund and School Service Fund for July 1 Copy of Notice of Public Hearing for Annual Operating Budget for CSO July 1 Copy of Parent Satisfaction Survey and Results from , if applicable. CSO July 25 DS-4168 Report of Days and Clock Hours of Pupil Instruction for academic year, if applicable (See MDE website, for MDE due date and form). August 1 Annual Organizational Meeting Minutes for CSO August 1 Board Resolution appointing Chief Administrative Officer for CSO CSO CSO August 1 Board Resolution appointing Freedom of Information Act Coordinator for CSO Answer: August 1 Board Designated Legal Counsel for CSO August 1 Board adopted Annual Calendar of Regularly Scheduled Meetings for CSO See Article II Section 2.2 of Reach charter contract August 31 4 th Quarter Financial Statements quarter ending 06/30. CSO September 2 Organizational Chart for CSO September 2 Board approved Student Handbook CSO September 2 Board approved Employee Handbook CSO September 2 Copy of School Improvement Plan covering academic year. CSO and October 3 October 3 Completed PSA and ESP/MC Insurance Questionnaires. Required forms available at Annual Nonprofit Corporation Information Update for CSO will confirm filing via DLEG website. CSO CSO Review Public School Academy Master Calendar of Reporting Requirements July 1, 2011 June 30, 2012 October 14 October 14 October 14 Audited Financial Statements for fiscal year ending June 30, (See MDE Website, for MDE due date. Management Letter (comments and recommendations from independent financial auditor) for fiscal year ending June 30, 2011, if issued. If a management letter is not issued, a letter from the Academy stating a management letter was not issued is required to be submitted. Annual A-133 Single Audit for year ending June 30, 2011 is required if over $500K in federal funds have been expended. If a single audit is not necessary, a letter from the Academy stating as such is required to be submitted. CSO CSO CSO 21

22 Question 7: (continued) What steps should the Board take to ensure compliance? Answer: also read Article VIII of your current charter contract. ARTICLE VIII: COMPLIANCE WITH PART 6A OF THE CODE AND OTHER LAWS Compliance required with Section 8.1. Part 6a of the Code 8.2. State School Aid Act 8.3. Open Meetings Act 8.4. Freedom of Information Act 8.5. Public Employees Relations Act 8.6. Non-discrimination 8.7. Other State Laws 8.8. Federal Laws Added when contract updated by GVSU: Uniform Budgeting and Accounting Act Revised Municipal Finance Act of 2001 Prevailing Wage on State Contracts 22

23 GVSU Board Portal Password-accessed site Includes GVSU generated data for your school Main GVSU-CSO site: www. gvsucso.org Click upper right corner link Login using your school s short name Password is gvsucso Let s try it!!! 23

24 GVSU Data Access 24

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27 Thank you for serving on the Reach Academy Board of Directors. Individually and collectively you are making a difference. Thank you again! 27

MICHIGAN VIRTUAL CHARTER ACADEMY FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS REPORT JUNE 30, 2011

MICHIGAN VIRTUAL CHARTER ACADEMY FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS REPORT JUNE 30, 2011 FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS REPORT JUNE 30, 2011 FINANCIAL STATEMENTS JUNE 30, 2011 TABLE OF CONTENTS Page(s) Independent Auditors Report on Financial Statements 1-2 Management