Based on expected enrollments, mix of grades, special education participation, and ELL students, plus non-residential facilities allowance, the School expects in year 1 to receive per pupil funding of $12,194. This number will adjust dependent on actual results and average daily attendance. A schedule of funding sources is provided in the table identified as Exhibit A in Section E of our application.
The cost of all operations, start-up, and capital expenses will be funded through a combination of these funds and loans from the management company, K12. Where there is a shortfall in cash needs, such as capital expenditures to open the facility or operating expenses needed before school begins, K12 will provide a loan to be reimbursed over time. No additional funding arrangements will need to be made; the management company is providing a back-stop for financial investments.
The goals of the five year budget are to first achieve a balanced budget, and subsequently pay off any loans needed for the start-up investments. As shown in the profit and loss statement provided, outside of start-up costs, the school is expected to be break-even in Year 1 of operation. This is in part achieved by the partnership with K12, as K12 will be discounting its fee schedule in the early years to assist the financial position of the school. A schedule providing detail of the sliding fee structure is provided below. As indicated in the draft Services Agreement, the educational services fee includes the salaries of all administrative positions provided by K12; there is no additional cost for those positions for the school. It is therefore not comparable to other management company charges (e.g. those of Charter Management Or ganizations which just charge a central office fee) which usually do not include those school site services or costs for the fee charged.
Dollar Value of K12 Fees Charged to the School
Educational Services $16,684 0.6% $334,350 7.6% $884,956 15.0% $1,115,785 15.0% $1,354,332 15.0% Technology Services - 0.0% - 0.0% 79,841 1.4% 441,797 5.9% 632,022 7.0%
Total $16,684 0.6% $334,350 7.6% $964,797 16.4% $1,557,582 20.9% $1,986,353 22.0%
Dollar Value of K12 Fees Contributed to the School
Educational Services $443,041 15.0% $660,776 15.0% $884,956 15.0% $1,115,785 15.0% $1,354,332 15.0% Technology Services 206,752 7.0% 308,362 7.0% 412,980 7.0% 520,700 7.0% 632,022 7.0%
Total $649,793 22.0% $969,138 22.0% $1,297,936 22.0% $1,636,485 22.0% $1,986,353 22.0% Year 1 Year 2 Year 3 Year 4 Year 5
Year 1 Year 2 Year 3 Year 4 Year 5
As the School increases in enrollment and expands its facility and infrastructure to match the needs, continued capital expenditures will be made. We have broken down these investments into two components: (1) Facility, Fixtures, and Equipment, and (2) Technology. A schedule of these investments is provided in Section E Budget (5) Capital Budget. If in the future, the School’s attendance did not match original expectations, the School will reduce its capital expenditure investments to match the need. The total amount of Capital Expenditures could increase greatly if the negotiations with the Landlord result in investments required by the School to improve the Space; we are currently assuming that the Landlord will provide a turn-key (at their cost) build- out of the facility.
DC Flex plans to enroll 250 students during its first year of operation; 150 students in grades K-8 and 100 students in grades 9-12. DC Flex has budgeted for increased enrollments over the five year term. In Year 5, we anticipate students in K-8 to remain at 150, with 500 students enrolled in grades 9-12. DC Flex will apply for a three year USDOE Public Charter School Grant Program Planning and Implementation (startup) Grant. It is our understanding that, if funded, we would be
eligible for approximately $205,000 during the first year for planning and program design, and $510,000 over the next two years ($255,000 each year) for the purposes of implementation. In our proposed budget we have not included this grant funding as a source of revenue. We do plan to apply, but have not assumed receipt of the funding in our budgeting. Likewise, K12 has not assumed that the school will receive this grant funding and will cover all costs associated with the school start-up. If grant funds are secured, grant money will be used for the purchase of equipment, furniture and supplies for the facility, equipment and licenses for instructional technology, teacher pre-service training and monthly teacher professional development, and consulting fees. During the second and third years of operation, grant money will be used to purchase additional equipment for instructional technology, provide test preparation resources including Study Island and Scantron, purchase curriculum and instructional materials, and contract for an external evaluation of the effectiveness of the Academy’s instructional program. DC Flex will also apply for private and state grants, as appropriate, to support activities and services above and beyond the primary instructional program. DC Flex is eligible to apply for a Walton Family Foundation Grant. During Phase 1, DC Flex hopes to secure up to $30,000 to begin school startup activities while awaiting final approval for authorization from DCPCSB.
During Phase 2, and following authorizer approval of DC Flex’s charter, the WFF grant will provide an additional $220,000 during the first year of operation to help with additional startup costs.
DC Flex will be an LEA for the purposes of Part B of IDEA and Section 504 of the Rehabilitation Act of 1973 and therefore that funding will be directed to DC Flex on behalf of eligible DC Flex students.
In the event that the school does not receive pupil allocations or grant monies as expected, the EMO will provide financing to ensure that the school can continue to operate effectively and according to the terms of the charter. The DC Flex board will continue to pursue any and all other financing to ensure sufficient cash flow.
To implement the curriculum of the school, DC Flex will ensure that teachers have access to the learning management system anywhere, including at the school or at offsite locations. Each teacher will be issued a laptop for this purpose. In addition to training provided through the start- up grant, the budget includes an additional allowance per teacher per year for travel for offsite professional development and other school related business. Teachers will receive the same complete set of curriculum materials that students receive. The budget includes sufficient funds to ensure that teachers have online accounts within the learning management system in order to access a complete set of curriculum, student information system, test preparation tools, and all reporting tools. At the K-6 level, the budget allows for 2 desktop computers per 3-6 classroom and 20 per computer lab. At the 7-12 grade level, each student will receive course materials and have the use of a laptop computer in order to access the learning management system.
The budget assumes expenses during the planning and first year to cover policy review and procurement advice as DC Flex contracts with vendors for goods and services. DC Flex plans to provide and/or contract for services, including student recruitment, technology management, a student information system management system, health, food and janitorial services, and security. In looking to secure an appropriate facility to house the charter school, DC Flex has analyzed property rental and utility rates across D.C. and has contracted with a reputable real estate broker to ensure that lease and build-out costs do not exceed the budgeted amount(based primarily on the
residential facilities allotment of $2,800/pupil). Please refer to Section E Budget for detailed information about anticipated sources of funds.
Virtual Schools Program Addenda: Our response is the same for our blended onsite and virtual
programs.
b. Planned Fundraising Efforts
In order to be fiscally conservative in our planning, DC Flex’s budget does not include additional fundraising beyond applying for the grants above during the term of the charter.
c. Financial Management and Accounting
DC Flex will, at all times, maintain its financial records in compliance generally accepted accounting principles as defined by the American Institute of Certified Public Accountants. DC Flex will engage in financial planning in the short and long term to provide for the financial viability of the school. We will establish school fiscal policies as needed to provide the education program in our charter, including staff salaries and benefits and procurement. We will establish financial policies and procedures including identifying those responsible for making and receiving regular financial reports and audits. The DC Flex administrative staff, under the guidance of the Board will be accountable for compliance with all local, state and federal laws and regulations pertaining to public schools, including budgets and financial records. The Business Manager will be adept at using financial software to manage fiscal responsibilities, safeguard assets, provide reliable financial information, and promote operational efficiency that will ensure compliance with all regulatory guidelines. The Business Manager and the Head Administrator will be responsible for planning, preparing and presenting an annual school budget to the Governing Board for adoption
The Governing Board of DC Flex will establish a Finance Committee made up of knowledgeable financial advisors who will work closely with the DC Flex Business Manager to ensure that the financial needs of the school are met and that there is full compliance with all local, state and federal laws and regulations that apply to charter schools.
The Finance Committee and the Business Manager will work together to prepare and implement internal controls and processes to protect the assets of the school and minimize the possibility of fraud or misuse of funds. The internal controls and procedures manual will address the following, at a minimum. This is not intended to be an exhaustive list.
y Cash receipts and disbursements o Authorized signatories o Approval authority levels o Segregation of duties
o Monthly bank reconciliations y Procurement Process
o Purchase requisitions o Approved vendors
o Approved authorizers re: purchase orders
y Human Resource Policies and Processes
o To address the approval of all hires and salaries
o To ensure there are no conflicts of interest among hired DC Flex staff o Ensure the confidentiality of all personal and personnel information o Ensure benefits are competitive and provided
o Ensure compliance with all local, state and federal laws and regulations o Implement an employee performance evaluation system
o Provide staff with professional development opportunities y Fixed Asset Policy
o Dollar amount for capitalization o Depreciation periods
o Asset tagging o Annual inventories
y Budgeting, Forecasting and Reporting Processes
o Annually the Business Manager will prepare a “working budget” in May for review by the Finance Committee and the Governing Board. Working with the Board and Committee, the Business Manager will make all necessary arrangements for final Budget approval by June 30th for the succeeding fiscal year.
o Monthly the Business Manager will prepare a financial report which will address the changes in net assets for the period in addition to a monthly cash flow statement and balance sheet.
o All variances from the approved Budget will be investigated and explained. o Quarterly, based upon year-to-date results, the Business Manager will
prepare a full year forecast for comparison to the approved budget. This will enable the Board to take the necessary actions, if any, to ensure the budget is met.
o The Business Manager will ensure monthly that all regulatory reports are filed in a timely manner.
o The Business Manager, working with the Finance Committee and the Governing Board, will identify an independent accounting firm to audit the DC Flex books and controls annually. A minimum of three firms will be considered based upon their experience in charter school audits and their reputation for quality and integrity. The sole decision will rest with the board of Trustees.
o The Business Manager will work closely with the auditors each year to ensure the audit is conducted in an efficient manner and any recommendations are implemented immediately.
o The Business Manager will work with the Board of Trustees to procure federal entitlement funds, state funds, and other grants and ensure that each is properly accounted for in accordance with Fund Accounting standards. d. Civil Liability and Insurance
DC Flex is working with Arthur Gallagher & Co. Insurance Brokers to seek insurance coverage. The coverages recommended (see Section D) are comprehensive and far exceed the types and minimum levels recommended in the charter application. The estimated cost for this insurance has been included in the budget (see Section E).
e. Provision for Audit
DC Flex will have an annual financial audit performed. The audit will be conducted according to Government Auditing Standards by an independent Certified Public Accountant licensed in the District of Columbia and included in the Approved Auditor List for charter schools. The school will provide all necessary financial records, documentation, and data required to complete the financial audit in a timely manner. The completed audit will be submitted to the DC Public Charter School Board and other appropriate authorities as required by law.