Afton Provides Financial Governance Tools, Recommendations, and Implementation Plan for School System
Afton has advised many public school systems on best practice financial governance.
In one example of Afton’s financial governance services, we advised a large charter school system on their path to improve their financial governance. As part of this work, we developed a set of tools for their board members and management team to use including a new board member financial onboarding process, a monthly calendar of seasonal financial governance activities, and a monthly finance committee reporting and agenda expectations.
We also provided guidance to meet the unique needs of the school system who was struggling with board member engagement in financial activities and trust between the board and financial management team. Our work included interviews of board members and leadership team members, review of financial reporting materials, and review of applicable laws. Our conclusions in this work included actionable recommendations such as:
- Increase board capacity – board size, financial expertise, engagement capacity, and ability for monthly financial governance engagement
- Establish a Finance & Audit Committee to meet monthly
- Prioritize relationships between management team and individual board members
- Enhance financial planning and reporting
- Establish individual board member expectations surrounding financial literacy for the purposes of monitoring financial health and meaningful voting on the annual budget, new financings, and other material financial transactions
- Enact financial governance onboarding for new board members
For each of these recommendations, we provided details of how to implement the recommendations and the most immediate next steps in the process.
Through Afton’s experiences with school systems across the country, we believe that board governance is highly related to a school system’s ability to achieve its mission. Financial governance is a core aspect of a school board’s work. While this work can be challenging and require meaningful engagement, a school system with well-functioning financial governance can ensure fiscal health and an alignment of resources with a school system’s priorities.
Clearly defined and understood roles and responsibilities is foundational to strong financial board governance. Together, the Board and Management are responsible for ensuring the organization is a good steward of public funds, in addition to providing a high-quality education for its students. Each of Board and Management has a specific role to play. The Board is responsible for oversight, and Management is responsible for day-to-day leadership and execution. Aligning on clear roles and responsibilities through a tool such as a RACI matrix can ensure these equally important yet distinct functions both receive the attention they require.
To perform their respective financial duties, board members and management must rely on clear guidance and transparent information flow. Boards require accurate, timely, and thorough information to do their fiduciary roles well and make critical decisions. They need proactively established and facilitated financial planning and reporting processes, and they need transparency into decision-making processes. Management, on the other hand, needs clearly established policies and board expectations (through agendas, committee timelines, goal setting, etc.).
Board members must be actively engaged in their financial oversight responsibilities. Boards and finance committees should meet monthly. There must be adequate financial expertise within board makeup, and these members should lead the finance committee’s work. Expectations for what will be reviewed when should be set through a financial calendar, and, as noted above, ensuring the right materials are shared in a timely manner is essential for strong engagement.