Public Charter School Board Releases Annual Financial Analysis Report
This report was created with input from public charter school representatives, charter support organizations, and members of our Parent and Alumni Leadership Council. These groups continue to improve the FAR metrics and design, and the way DC PCSB communicates financial information with its stakeholders.
The FY 2019 FAR comprises three key components:
1) Aggregate and supplemental information and commentary on the key trends and opportunities of DC public charter schools’ finances;
2) A Financial Report Card for each school, described in further depth in Report Card Definitions; and
3) Data on each school’s management organization, if applicable.
Summary of Results
DC public charter schools’ aggregated financial results continue to show strong financial performance, as reflected by the six key financial indicators in the table below. Forty-eight local education agencies (LEAs), or 73% of the total LEAs in the sector, meet or exceed all of the standards for these key indicators.
Cumulatively, assets for the sector grew by over $60 million, while liabilities grew by approximately $23 million, for a net increase to total sector reserves in the current fiscal year of approximately $34 million, compared to $39 million in FY 2018, indicating the charter sector’s financial strength has improved compared to the prior year. This fiscal strength is important to allow public charter schools to be resilient in the face of financial, enrollment, or other adversities.
At the time of publication of this report, we are in the midst of a global pandemic, leading to tremendous financial uncertainty for schools. It is to prepare for this type of eventuality that schools build reserves, which they may now draw upon.
As enrollment continued to increase by 1.3% in FY 2019, revenues grew by 4.8%, to $1.02 billion. Additionally, philanthropic revenue, including grants and other private contributions, increased by 10.8% or $4.2 million. Expenses increased by 6.7% to $990 million, which was primarily driven by a $35.2 million increase in total personnel salaries and benefits.
The system’s cash flow from operations increased in FY 2019 to $84.0 million from $78.5 million in FY 2018, an increase of 7.0%. Additionally, the aggregated cash flow from investment activities decreased from $(71.3M) to $(108.9M). This indicates there was an increase in investment from last year by 52.6% or $37.5 million.
Total functional expenses grew by $60.0 million, or 6.4%, compared to FY 2018. Over $58 million (73%) of that growth is the result of increased spending on personnel and other direct student costs. Personnel expenses comprised roughly 61% of DC public charter schools’ expenses, consistent with previous years. However, personnel expenses range from 31% to 76% of expenses across LEAs. In cases where a school uses a school management organization (SMO), the proportion of expenses spent on personnel is impacted by the level of staffing support provided by the SMO.
In FY 2019, schools received $3,255 per student in local facilities funding, for a total of $143.0 million, or 16.2% of their total Uniform Per Student Funding Formula funding. Total occupancy costs for the year were $167.5 million, for a net deficit of $24.5million between facilities funding and total occupancy costs. The percent of expenses spent on occupancy is often higher as schools ramp up their enrollment levels.
School Management Organizations (SMO)
In FY 2019, 16 DC public charter schools operated with an SMO. These relationships are noted in the DC PCSB Observations section of each school’s Financial Report Card, as well as detailed more thoroughly in a supplementary Management Organization/Related Party table following the Report Card. The services provided by SMOs and related parties are also included in the report.
An SMO is, according to DC Code § 38–1800.02(30C), “an entity…with which the public charter school contracts to provide management or oversight services regarding the school’s expenditures, administration, personnel, or instructional methods. The term ‘school management organization’ does not include an entity with which a public charter school contracts solely to provide administrative support services, such as (A) payroll processing or information technology services; (B) academic support services; or (C) temporary management services recommended by the eligible chartering authority to improve the performance of a public charter school.” DC public charter schools receive a wide range of services from their management organizations, from facility management to instructional oversight.
Read the full report here
Read individual reports on the school profile pages here