The Fiscal Responsibility Method™ encourages your school to operate within your means. That’s good advice for charters because they typically receive less funding than traditional public schools, on average at seventy-five cents on the dollar. If you find that you don’t have enough funding allocated for contingencies, then you can either enroll more students, fundraise to increase revenues, and/or cut costs to balance your budget.
At the heart of the Fiscal Responsibility Method™ lies a strong financial infrastructure that leverages the true power of accounting. This infrastructure includes accounting software, which protects your valuable time, reduces the possibility of fraud, and produces financial statements that tell you where the numbers stand. It is also made up of an effective chart of accounts that not only allows leaders to manage and board members to govern the school, but satisfies the authorizer, auditor, funders, lenders, and other stakeholders as well. This is because each stakeholder may either prefer or require a particular format or level of detail for transparency, reporting, and compliance purposes.
The infrastructure relies on understanding the differences between accrual and cash basis accounting to comply with GAAP. It also relies on crystal-clear, systematic ways to file electronic and hard copy source documentation because “if there’s no proof, it never happened,” accounting-wise. Your financial infrastructure provides empowerment through solid accounting for your school and financial information to related parties. Those parties include institutional partners or charter management organizations, “friends of” organizations, parent associations, entities created due to new markets tax credit or bond financing programs, or any other related parties.
Our ten CUREs and fifty Remedies provide yet another view into your school’s practices. Evaluate which ones have been mastered, which must be tweaked, which need to be overhauled, and which should be implemented from scratch.