Questions Great Board Treasurers Ask About the Annual Budget

by Rich Billings

Financial Health:

• What is the cash flow projection for the next 12 months? What key assumptions are you making (timing of facility equity contributions, timing of receipt of committed and uncommitted philanthropy, timing of receipt of public revenues)? What is your plan if receipt of funding is delayed or large outflows need to be accelerated?
• What is the projected ending balance sheet for the organization if we hit this budget? How will this balance sheet look to outside partners (authorizers, lenders, rating agencies)?
• What implications will this budget have on our financing/debt obligations? What are our current debt covenants and will we hit them if we execute effectively against this budget?

Financial Risk:

• What is your level of confidence in the enrollment, fundraising and facilities assumptions? What is your plan if those assumptions don’t hold?
• Do you have contingency built into the budget for unexpected expenses? If so, how much (1% of per pupil revenue is a recommended minimum)?

Key Assumptions:

• What are your key assumptions regarding fundraising, per pupil revenue, enrollment, staff compensation levels, and facilities expenses relative to last year? What is the year-over-year percentage change? Is enrollment increasing faster than expenses?
• In addition to operating need, does the annual fundraising target include working capital need (45–60 days of cash are our recommended minimums) and the need for facilities equity (as applicable)? If not, what is our plan to access commercial debt to meet these needs?

Strategy and Sustainability:

• How are the resources in this budget aligned with the organization’s strategic priorities? If additional headcount is being proposed at the central office, how do these positions align to the organization’s priorities for the coming year?
• How do the following change year-over-year and compare to the long-term plan: A. network-wide deficit per student before philanthropy (and public startup grants); B. home office staffing per student; C. home office expense per student
• Do the schools that have reached full build-out break even on public revenues? If not, why not?
• If the organization stopped opening new schools, could the proposed central office break even on management fees from those schools when they reach full enrollment?
• If there were changes to a school’s budget from the long-term school model (enrollment, staffing, per pupil revenue, etc), does this budget put the school on a path to breakeven when it reaches full enrollment? How much more (less) money will have to be raised and can the organization raise it?
• If this [expense] is being paid for by a one-time grant, what is the plan on paying for it after the grant ends?
• If a school is occupying a district building, what is the plan if the politics change and the school needs to secure a private building?

*SUBSCRIBE to Charter School Growth Fund’s Weekly Finance Newsletter*