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Using Your Charter School Finance Committee for Impact and Sustainability

Written by Afton Group on . Posted in Charter Schools, Effective Governance, Financial Sustainability, Leadership Development.

At Afton Partners, we advise our charter school partners to follow the framework of the “5 Cs” when developing and evolving their organization’s financial governance. The “5 Cs”– Charge, Composition, Content, Collaboration, and Cadence– provide a roadmap for cultivating strategic thinking and effective decision-making with your board, all meant to elevate and sustain what’s working in your schools.

The 5 Cs of Charter School Financial Governance

The 5 Cs of school financial governance are arranged in a line.

Charge: Who is responsible for the financial decision-making process for charter schools?

To ensure a seamless sharing of responsibility, it’s an important first step to define everyone’s roles clearly. For instance, the leadership team is primarily responsible for the daily leadership and execution of the priorities set in collaboration with the Board. The Board provides oversight and accountability and ensures fidelity to the plan, including the financial plan. Blurred lines can lead to the co-managing of the budget–not an optimally effective or desirable approach. On the other hand, administrators should feel supported and not solely responsible for the organization’s financial strategy and health. Everyone has an equally important and distinct role in the stewardship of the school’s financial resources.

Setting shared expectations– with an understanding that roles will grow and evolve as the school network grows– builds trust and lessens confusion around how decisions are made and who will execute which pieces.

For example, when it comes to financial decision-making, the school board finance committee serves as a consultant, ambassador, and governing body. The CFO has the important role of collaborator, content creator, and guide to strategic decision-making. And, contrary to what some may believe, the CEO has an important role in ensuring a strong board composition, board engagement and collaboration, and guide in strategic decision-making alongside the finance committee.

Composition: Who should be on a charter school finance committee?

A charter school board finance committee carries out the principal aspects of the board’s financial duties. They set fiscal policies and expectations, continually assess the financial health and direction of the school or network, and make strategic financial decisions in alignment with the broader strategic plan.

To carry out these duties, a strong board finance committee should consist of diverse professional backgrounds and skills, including business strategy and operations; banking; fiscal planning, management, and analysis; and real estate. Board members leverage their expertise and connections in their respective areas to strengthen and sustain the school or network’s financial standing.

In our practice, we find that taking care to build and sustain your board’s financial skillsets and engagement translates to high impact.

Content: What information is important for effective financial governance?

The Finance Committee should have the materials and data needed to make decisions that support long-term sustainability and align the budget to the overall priorities. Examples include:

  • Year-to-date financial statements, compared to budget
  • Long-term financial projections
  • Cash flow monitoring
  • Current key performance indicators and up-to-date financial reporting on those metrics
  • Metrics on debt compliance and authorizer standards

With this information, the committee can then develop or revise standard metrics criteria across key performance areas (e.g., cash, enrollment, fundraising, net assets, etc.) and decide on targets. Part of each meeting should be devoted to evaluating progress towards the targets.

To mitigate challenges toward those goals, the committee should also monitor the organizational risks related to financial planning and decision-making.

The table details types of risks charter school finance committees encounter and examples of those risks.
Example categories that can be adapted to suit your school context, as each will affect financial position and forecast.

Collaboration: How should finance committee members work together?

First and foremost, the ability to collaborate well requires everyone to understand their roles regarding the organization’s financial management. Leveraging their various skill sets, committee members work together to build ongoing conversations with one another, the CEO, the CFO, and the full board. Engaging each member’s background and insights facilitates healthy discussion, leading to actionable strategic plans and informed decision-making. Effective finance committees should also commit to making adequate time for the work at hand, earning one another’s trust, and coming prepared to fully engage.

For best results, CFOs and Finance Committee Chairs should plan to work together one-on-one in advance of committee meetings. This ensures that the right priorities and information are presented to the group for productive discussion and strategic decision-making. Working in close consultation with the CEO, this trio provides leadership for the larger board to consider academic investments with respect to financial guardrails. Especially amid complexity during the budget cycle, their collaboration with one another and the meaningful incorporation of their respective vantage points is critical to impact and sustainability.

Cadence: What is an effective meeting plan for a finance committee?

Finance committees should meet regularly, with an eye toward the seasonal “arc of the year”.

A sequenced meeting calendar notifies the board of decision-making timelines. It also mitigates the risk of smaller–but no less important–agenda items getting crowded out by a waterfall of more discussion-heavy priorities.

Prescheduling board meetings for the year can aid in the planning process for each meeting and provide predictability for committee members. Prescheduling also allows the committee to allocate the proper amount of time to items requiring a deep dive, ensuring that multiple major discussions or approvals do not end up on the same agenda.

Putting Effective Financial Governance in Action

Intentional financial governance increases impact and improves sustainability. If you don’t have an engaged, effective finance committee, it’s not too late to make it happen. Use the 5 Cs to help you determine where to invest your time. Want more hands-on support? Reach out to our team!

As the national leader in charter school financial planning services, we understand the unique challenges charter management organizations commonly face. We have partnered with more than 80 networks of all sizes, from single-site operators just getting started to the largest charter school organizations in the country. Our services for charter schools build finance capacity, strengthen financial sustainability inform school resource allocation, and strategically inform organizational decision-making on growth, facility affordability, debt financings, mergers, and restructurings. To learn more, contact Carrie Stewart.

*Check out this article.

If You’re Going To Close Schools, Do It This Way

Written by Katie Morrison-Reed on . Posted in Effective Governance, K-12 Education.

Across the country, many school districts have seen continuous declining enrollment trends, with a steep loss during COVID that doesn’t show signs of fully returning, along with declining birth rates and shrinking Kindergarten cohorts. School closings are already here, and data indicate many more on the horizon.

When I hear these rumblings, I’m taken back over a decade to my time at Chicago Public Schools, when the district faced a whopping operating budget deficit, over 100,000 empty seats (roughly the size of the 20th largest district in the country), buildings in need of significant improvement, and lagging student outcomes. Ultimately, as is now known and written about often, CPS decided to tackle the capacity challenge in a big wave of 50 school consolidations in 2013. While excess capacity still remained, it was the largest single year consolidation in history – an effort that allowed the district to consolidate its focus on the schools that remained and, in the process, at least partially address some of the financial predicament it found itself in. I’m not going to opine on this process – if it was the right decision, what went right and what went wrong, or the long-term impact. Those articles and opinions readily exist. But as the Director of Transitions at the time, responsible for pulling together the people, plan, and process to implement CPS’ school action decisions with the guidance of our leadership team, I do want to share reflections from having been through it.

Fact: Closing schools isn’t a process anyone ever wants to be a part of. You don’t get into public education to close schools. It’s gut-wrenching work, and it’s heartbreaking and often devastating to the those most impacted. In a perfect world, our schools would be adequately funded and retain or draw families back into them with appropriate resources, well-compensated and supported staff, and excellent programs. This can happen, like in the successes in Washington, D.C. Closures should not be our first answer, and creative solutions can help. But sometimes, like when demographic shifts leave a plethora of under-enrolled, under-resourced schools, the painful solution can become the necessary one. And when it does happen, we have an obligation to minimize the pain felt by all stakeholders involved. Ideally, we are harnessing the opportunity to offer stronger – albeit fewer – schools. With that as context, I offer these reflections for districts facing the prospect of school closures.

  • Know the why. Be clear on why you are considering closures and what you expect the outcomes will be. Understand the context and stories of the schools and communities at risk of closure and understand deeply the consequences of any actions you might take before you take them. Balance that with an understanding of the opportunities a closure may present. But don’t lead with closures being solely about solving a financial crisis. While consolidations can support long-term financial sustainability, it often doesn’t save as much money as we expect, and it costs a lot to do well. And importantly, it’s not a compelling argument to your community, even if it is true. Stakeholders will – sometimes justifiably – push this argument back on poor district decisions or management. Instead, how might a smaller number of schools enable more equitable resourcing and better schools for all students? Is rightsizing a lever to be able to do this more effectively? “Better schools” is a conversation communities can engage in. Fixing a budget hole is not.
  • Know the how. Going into the work, have a clear decision-making process and “rules” for how decisions will be made, ideally done with a representative community body. Have a single empowered leader, and a cross-functional team at least partially freed up from existing responsibilities to focus on fidelity of planning and implementation. Have a solid process to execute, be overly prepared to do it, and have contingency plans for your contingency plans. Be fully prepared with a plan to track and monitor progress and outcomes and have a quick response system for issue resolution during and after the transition. Be prepared to monitor each impacted student – where they go, how they do through the transition, and how they fare on the leading indicator metrics you monitor for outcomes and growth. Know what will happen to the space that is left behind or the process you’ll use to figure that out, again involving the community. And on the note of buildings, understand that you can separate ‘school’ from ‘building’ – good schools can exist in bad buildings. Be diligent yet creative in your solutions.
  • Prioritize people. Know who will be impacted specifically and how. What’s the population of students in temporary housing situations? Students with limited or interrupted formal education? Racial and ethnic demographics of students and teachers? Community groups with connections to schools? Has anyone in the school been shuffled through a school closure before? Know the human stories. Also know the stories of the schools to be closed and ensure there is a plan to honor them. Support schools that are receiving impacted students to prepare students, teachers, and staff and merge school cultures ahead of time. Give them and the school community time, flexibility, and resources to prepare in a way that is informed by students and those closest to them. Prioritize maintaining meaningful student and staff connections where possible and have a thoughtful staff transition plan in place. Whatever you do, lead with empathy.
  • Communicate transparently. Invite people to the table; closed doors put up walls. With engagement and transparency, while everyone might not agree on the decisions, you can agree on the validity of the process to make those decisions. Align with stakeholders and co-create solutions where you can (ex: supports students and staff will need for the transition). Communicate effectively – in language that is accessible and respects the human element of this, and through communication modes that work for the people you are trying to reach. Make a clear timeline so stakeholders know what to expect when, and follow through. Get ahead of the issues and stories by knowing them authentically.

School consolidations are coming. We need to study the past, take what worked, and improve where we can. I believe by knowing our why, knowing our how, prioritizing people, and communicating transparently, school districts and communities can collaboratively address the systemic challenges in front of them. Our team at Afton is here to support your district and community in this process.