Budget2017-18

__Charter School

Page 1

Date

Letter INDIVIDUALLY addressed to CBO

Dear:

Thank you for the submission of the ___ Charter School’s2017-18Budget due onJuly 1, 2017, as required by Education Code 47604.33. Our review included an assessment and analysis of the following major components of the district’s review:

  • Unrestricted Ending Fund Balance
  • Unrestricted Deficit spending trends
  • Average Daily Attendance (ADA) & Enrollment
  • Current and Multiyear Projections
  • Staffing Projections/Salary Settlements
  • Long-Term Commitments (optional)
  • Ending Cash and Monthly Cash Flows
  • UNRESTRICTED ENDING FUND BALANCE – As certified by the charter school, the Budget projects an unrestricted ending fund balance of $______in the current year, $___ in 2018-19, and $___ in 2019-20. The 2017-18 Beginning Fund Balance <matches> <does not match> the reported 2016-17 Ending Fund Balance <of $____>. The fund balance reported is (not) sufficient to satisfy the reserve requirement of __%, as established in the Memorandum of Understanding (MOU).
  • UNRESTRICTED DEFICIT SPENDING – {Pick one:}{If not deficit spending in CY but deficit spending in both SYs:The charter is projecting no deficit spending in the current fiscal year. However, deficit spending of $__ is projected for fiscal year 2018-19 and $__ for fiscal year 2019-20. This {increasing} deficit spending appears to be attributed to __.} Anticipated deficit spending should be for one-time, non-recurring expenditures to avoid depletion of the charter’s ongoing unrestricted reserves.

{If no deficit spending in the CY and one SY:The charter is projecting no deficit spending in the current and 201_-__ fiscal years. However, deficit spending of $__ is projected for fiscal year 201_-__. This deficit spending appears to be attributed to __.} Anticipated deficit spending should be for one-time, non-recurring expenditures to avoid depletion of the charter’s ongoing unrestricted reserves.

{If deficit spending in CY: The charter is projecting unrestricted deficit spending of $__ in the current fiscal year, primarily due to __.} {If continuing deficit spending: This trend of deficit spending is continuing}{If not continuing deficit spending: Deficit spending is not projected}in fiscal year 2018-19{by $__} and in fiscal year 2019-20{by $__.} This {ongoing and increasing} deficit spending appears to be attributed to__.} Anticipated deficit spending should be for one-time, non-recurring expenditures to avoid depletion of the charter’s ongoing unrestricted reserves.

{If no deficit spending:The charter is projecting unrestricted revenues to exceed unrestricted expenditures in each of the current and two subsequent fiscal years.

  • AVERAGE DAILY ATTENDANCE (ADA) & ENROLLMENT PROJECTIONS – The charter is projecting P-2 ADA of ___ for 2017-18, ___ for 2018-19, and ___ for 2019-20. Based on enrollment projections of ____, ___, and ____, the ADA to enrollment ratio is anticipated to be ____%, ____%, and ____% respectively. The charter’s certified enrollment for the current year is _____ and the prior year ADA to enrollment ratio was ____%. {The Charter’s review indicated <no> concerns regarding the reasonableness of the charter’s ADA, enrollment and/or UPP projections.} {indicate any concerns identified by the charter}–Or- {The Charter did not comment on the reasonableness of the charter’s ADA,enrollment, and/or UPP projections.} (Indicate any specific concerns about the charter’s review of the charter’s ADA, enrollment and/or unduplicated pupil counts: including trends, reporting accuracy, and/orreasonableness.)
  • CURRENT AND MULTIYEAR PROJECTIONS – Our review included an analysis of the charter’s projection of revenues and expenditures in the current and two subsequent fiscal years. The charter is projecting LCFF revenues of $______for the current year, including projected In-lieu Taxes of $______. LCFF Revenue projections for the two subsequent fiscal years <do not> appear reasonable, given the assumptions included. (explain if not reasonable: could be due to not including correct ADA or not including one time or ongoing reductions). The charter included Gap Funding increases of {54.18}% in 2017-18, {72.99}% in 2018-19, and {40.36}% in 2019-20. {Comment on risk associated with Gap projections – i.e.The charter is using conservative projections for Gap Funding to mitigate the risk associated with projecting future funding increases – or – As a high-LCFF charter, the charter has assumed a higher risk to future funding increases, since Gap Funding increases are not guaranteed.}{The charter has incorporated $______in anticipated budget reductions that have {not} been fully approved by the governing board.} {Reserves set aside -The charter has set aside designated reserves of $______should Gap Funding not materialize as projected in the subsequent fiscal years.}or {The charter has not set aside any unrestricted reserves in the event that Gap Funding does not materialize as projected. If these funds are not realized, the charter may not meet the state recommended minimum reserves.}{Indicate any other specific concerns regarding the charter’s multiyear financial projections in the two subsequent fiscal years.} We recommend that the charter continue to be proactive by developing contingency plans in response to the potential for further changes in the Governor’s 2017-18 January Budget proposal.
  • STAFFING PROJECTIONS/SALARY SETTLEMENTS – The majority of a charter school’s budget is spent on salaries and benefits. If salaries and benefits are growing at a rate faster than total expenditures, these costs will consume a disproportionately greater share of the charter’s resources, putting significant pressures on the rest of the budget. The charter’s ratio of unrestricted salaries and benefits to total unrestricted expenditures shows that __% of unrestricted expenditures is being used for salaries and benefits costs. The documents also indicate that there are <no> potential salary schedule increases or decreases included in the current projected budget or subsequent fiscal years {other than __}.
  • LONG-TERM COMMITTMENTS – (Optional; remove if no debt)The charter’s 2016-17 Audit Report indicates non-voter-approved long-term debt of $______, which constitutes ______% of the charter’s projected general fund budget. The charter should ensure that adequate revenues are received to provide for the current debt repayment schedule for principal and interest payments, and take appropriate action should revenues not materialize as anticipated. Additionally, the Audit Report identifies the charter’s Net Pension Liability of $______as long-term debt. This is recognition of the present value of the charter’s portion of the unfunded liability for earned CalSTRS and CalPERS retirement benefits. The charter’s portion is approximately ___% (CalSTRS) and ___% (CalPERS) of the Statewide liability.
  • ENDING CASH POSITION AND MONTHLY CASH FLOWS –Our review of the cash flow provided indicates that the charter will have a positive cash balance at the end of each month and at the end of the fiscal year. {Our review of the cash flow provided by the charter indicates that the charter will not have sufficient cash in the month(s) of ______unless further expenditure reductions, revenue enhancements, or temporary borrowing is implemented.} A good cash projection will allow the charter to schedule expenditures in months when adequate cash will be available.

If you have any questions concerning our review, please contact the undersigned.

Sincerely,

Angel Arrington

Business Services Project Manager

Business Advisory Services

(909) 386-9675

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