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Five Strategies for Charter School Financial Success

Budgets are plans that help you to prioritize where your money should be spent. By building a budget, it minimizes frivolous spending and creates a uniformed plan that everyone should follow. Public charter schools receive millions of dollars annually in public taxpayer money. Since we know that the number one cause of charter school closings is based on fiscal mismanagement, I want to share with you five strategies for fiscal success in charter schools.  What I learned from Jon Schwartz’s Charter Growth Fund, was instrumental in helping me meet my goals. We utilized Jon’s strategies to turn around the fiscal standing of two public charter schools. One school had over $500,000 in previous year’s debt. We used these strategies to not only pay off all debt, by carry a $100,000 surplus.

 Tip #1: Start budgeting in the First Quarter, Not the Last: If you’re reading this in the Spring, that’s ok; just begin planning differently moving forward. Once the audit has been completed, your enrollment is set and the school’s fixed revenue has been adjusted by the state. At this point, you should be preparing for next year by analyzing your benchmarks. This will force the entire organization to continue to make staffing projections and evaluate school improvement initiatives that need additional investments or need to be cut. Here is an example of what your financial team may accomplish per quarter.

First Fiscal Quarter
  • Prepare all documents for the auditor (for last fiscal year).
  • Reflect on previous year’s budgeting process.
  • Identify any enrollment shortfalls.
  • Finalize projected cash flow for the year.
  • Analyze the new student population demographics to identify any new trends (Exceptional Children, At-Risk, Gifted Students, students needing transportation).

Second Fiscal Quarter

  • Engage the school improvement team to identify any upcoming challenges that may impact this year’s and next year’s budget.
  • Explore line items that need adjusting.
  • Prepare report for the board on the short- and long-term goals for fundraising campaigns (facilities and assets).
  • Analyze the salary scale based on any adjustments made by the state.
  • Request the formula from the local school district to have an understanding of how the local per pupil revenue was established.
  • Provide quarterly deep dive financial report to the board.
  • Ensure cash flow forecast is still on target.

Third Fiscal Quarter

  • Based on 2nd quarter analysis, lock in new budget assumptions for the upcoming school year.
  • Finalize teacher salary levels for the upcoming school year.
  • Begin monthly budget development meetings with principal, operations and facility managers.
  • Revisit school improvement team to receive evaluative analysis on new programming purchases.
  • Secure any new staffing positions for the upcoming school year.
  • Provide quarterly deep dive financial report to the board.

Final Fiscal Quarter

  • Finalize drafted budget based on new staffing, school improvement initiatives and short term facility needs.
  • Provide end of year report on fundraising efforts and tweak any plans if needed for stronger results.
  • Secure final budget approval of senior leadership team and the board.

Tip #2: Budget Per Pupil Revenue Conservatively to Avoid Emergency Repairing on the Backend: Too many times, schools overestimate the number of students who will fill their seats. Our data demonstrated that on average, public charter schools in North Carolina only filled 76% of the projected seats in year one (enrollment data from 2013-2016). Imagine starting your school year with a 24% budget hit! The best method is to create multiple versions of your budget using two criteria: 1. Budget based on 90% of your projections and 2. Budget based on last fiscal year’s per pupil value.

Tip 3#: Establish a Budgeting Strategy: By establishing a budget strategy, less time is wasted during the process arguing over where money should be invested. Part of your strategy should include: budgeting based on a percentage of the projected enrollment (use 90% or 95%, never 100%), a per-pupil expenditure for curriculum and operations, and an annual evaluation of school improvement initiatives and programs. As a result, the budgeting team can establish a line item percentage for the management team to operate within based on what the organization values as being most important to meeting the needs of the students. For example, if a school agrees that 65% of annual revenue will be spent on salaries and benefits, 15% will be spent of facility costs (including utilities), 8% for professional development, and 5% will be place in reserves, this leaves 7% on other expenses to be utilized to operate the school effectively. This reduces annual arguments over distributed funds. The key is transparency and systems for program evaluation. This will help to ensure needs are funded over wants. 

Line Item

% of the overall budget

Salaries and Benefits


Facilities and Utilities


Staff Development


Cash Reserves


Instructional Supplies/Programs




Building Maintenance




Tip #4: Budgeting is a Team Process: Finance teams are better off engaging all departments of the

organization in the fall and winter to identify any anticipated changes that will impact school budgets the following year. Engaging the departments (academic, technology, exceptional children, and facility) by participating in meetings and asking questions will build a stronger relationship and create buy-in once the budget is drafted. As a result, the Finance team is better positioned to help leaders make spending decisions that are mostly likely to impact student achievement.

 Example Questions to Ask the Senior Leadership Team:

  •  What is the recommended staffing and enrollment model that other school budgets are based on?
  • How are the special education revenues and costs shared throughout the school?
  • What are the trends in our demographics? Are we gaining enrollment in any specialty area that we should plan for? (i.e. Exceptional Children, English as a Second Language, Academically Gifted)
  • What will we do differently in projecting and securing student enrollment? (if the school didn’t meet projections)
  • How many students are we projecting over the next three years? Will the facility hold that many? Will this growth require additional staffing as well?
  • Are there any new schools opening in the next two years within our larger student population?
  • What percentage of our building is not being used throughout the day? (Remember, you can always be innovative when it comes to hiring and programming, but you cannot always find use for an extra 2,000 square feet of unused facility.)
  • Are facilities costs apportioned out across campus or does each school level pay for their own facility (if multiple campuses)?
  • What is the verification process for our accounts receivable? Do we have any unpaid invoices?
  • How are we verifying that we are invoicing each district accurately and receiving the correct amount of local funds?
  • How are we verifying that our third party contracts are needed and providing a strong return on investment?
  • Board Questions:
    • What percent of the budget should be set aside for cash reserves?
    • What is the goal for our reserves and what will we do once we hit that goal?
    • What is the process for accessing these reserves?
    • How will this decision impact our current and long term fiscal standing?
    • Who has access to our funds?

Tip #5: Track Assets and Large Purchases: Many organizations do not evaluate their internal programs to have a clear understanding of what provides the greatest return. Therefore, the management team may continue to purchase large items (curriculum and programs) every year, hoping to find the magic formula. Recently, a school purchased $70,000 of new math curriculum that school year. When interviewing teachers, I found that the curriculum wasn’t being utilized because it seemed cumbersome and too challenging for the students. I also found that no on-going training was provided to the staff. While attending a board meeting that spring I recognized that the school leader had a line item again for $75,000 for new curriculum for the next fiscal year. The board did not ask any questions regarding this line item or how the previous curriculum was meeting the needs of the students. This purchase would have been made with no questions asked if I did not ask the question of the school leader, “Did the school purchase curriculum last year? How well is that curriculum meeting the needs of our students? What was the vetting process for this curriculum purchase?”

Bonus Tip: Operate by Cash Flow: Cash flow is the oxygen for charter schools. One public charter school board I was assisting with their challenges was provided a monthly budget that looked on target. However, as I walked through the school, it was lacking many basic school needs (curriculum and technology). I wondered why the school leader, with the funding being in the budget, didn’t just purchase the items the teachers were requesting. Then, I found a folder titled “Unpaid Invoices”. It was here I learned that current revenue was covering previous debt and the budget looked great because no actual funding was being utilized in most of the line items. At that point I established a cash flow forecast for the board each month in lieu of the budget. We turned a half a million dollar deficit into a $100,000 surplus by being intentional with our incoming cash. If you would like our cash flow forecast template, click this link here for a download.

The board and the school’s management have a fiduciary responsibility to ensure the allocated funds are managed appropriately and safeguarded from risk.  Since 1997, over one quarter of NC State Board of Education-approved public charter schools exist only in media headlines and the memories of those who set out to change the educational landscape in a community. Most, if not all, charter school closures have been the result of financial or financially-related issues.

In North Carolina, out of the 46 schools that opened for operation, but then closed, 35 (or 80%) of those schools closed due to financial reasons. I guarantee that all of these schools had a written budget and knew they were responsible for the fiscal oversight. The perceived cause of these financial issues might have been noted as low enrollment, fiscal noncompliance, or excessive debt. But in reality, the root of their problem was poor execution of a written plan. Cash is the oxygen to any successful business, and charter schools are a business. if the organization does not adjust spending in a timely manner, the school will eventually run out of oxygen and eventually suffocate.

Your organization should have highly qualified leaders in the Treasurer and Finance Director seats. These individuals should be worked diligently towards building systems that work and sharing those systems with other staff members to build a succession plan. Every dollar wasted is a dollar not invested in your people and priorities.

This blog was written by Dr. Thomas Miller, transformational coach and strategic thinking partner for hundreds charter schools across the country. To schedule a complimentary discovery call with Tom click this link. Your discovery call will consist of questions like:

  • What challenges are you or the organization currently facing?
  • What keeps you up at night worrying?
  • What challenges and obstacles do they foresee over the next 6-12 months that may test the team’s weak points? What is it that they personal struggle at in meeting this challenge?
  • What would their organization look/feel like operating at its optimum level?
  • What does personal success look like to you?


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