Fiscal Intelligence

Fiscal analysis that enables educators, small business owners, and community organizers to make informed decisions.

Category: Leadership

Gleevec

“The amount patients pay can vary widely depending on their insurance plan, and Halford’s cost started at $500 a month, but within a year the drug she needs to stay alive was costing her more than $800.”

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Wealth inequality has widened along racial, ethnic lines since end of Great Recession

Wealth inequality has widened along racial, ethnic lines since end of Great Recession.

The Little School that Could by Charles Upton Sahm, City Journal 12 September 2014

The Little School that Could by Charles Upton Sahm, City Journal 12 September 2014.

FINANCE AND GOVERNANCE: The critical role they play in the charter schools movement and its survival.

When people think about one of the most common reason/rationale for charter schools closure what immediately comes to mind is an instructional reason, however, what the most recent research points out to is a completely different story.  It turns out that an often overlooked area surfaces as a rationale for most of the charter school closures and that is financial mismanagement. Another factor that is usually mentioned is governance. Pondering a second over this, the financial reason makes a great deal of sense. The students drive the inflow of capital into the schools. Therefore, if enrollment falls substantially that can jeopardize the viability and sustainability of the school. We have seen this scenario played out in some of the New York State suburbs and throughout the nations where municipalities have been forced to close down numerous schools because of a decline in enrollment.

When the authorizers are making a decision to close a school (not renewed its charter), they do tend to weigh heavily the fiscal viability of the entity. If they consider it not to be a robust one, they likely move forward with the decision to shut down the school. A point of reference that is important to mention  is Washington, D.C., where 50% of the students attend charter schools. When one looks at the report  released by the District of Columbia Public Charter School Board (PCSB), more than 50% of the charter schools closed since 1996 have been due to financial mismanagement.   Although the rest of the school might not have been closed solely for financial management, this rationale was mentioned as one of the reasons for the decision.  This sheds some light on the importance of having strong financial procedures and a strong finance team with the background and skills needed to support and strengthen the viability and sustainability of the charter school movement.

Another factor that triggers the closure of the charter schools – one that people tend to overlook most of the time – is governance (Board of Trustees). Governance plays a vital and critical role in setting the strategic direction of the school when it comes to procedures, operations, and finance. If they are not doing what they have been chosen to do, which is governing, even if the school is doing well instructionallly the school will not be considered a viable and sustainable entity in the foreseeable future.

Given my professional experience in the education sector, I was not surprised by the findings presented by the research as to the importance of finance and governance. They do play a pivotal role in the viability and sustainability of any school. What keeps getting my attention on a daily basis is that in actuality, these two significance areas are usually overlooked and dismissed to a secondary, not strategic role.  The evidence clearly indicates that these two functions cannot continue to be ignored and must be fully understood in order to ensure that we are building stronger and fiscally viable schools.

See you next time,

Optimization with an Impact

  1. optimizationwithanimpact.com

Investigate * Educate * Optimize

Oversold, Underfunded by Steven Malanga, City Journal 2 May 2014

Oversold, Underfunded by Steven Malanga, City Journal 2 May 2014.

Union Feeding Time at City Hall by Bob McManus – City Journal

De Blasio was paid as an SEIU consultant while he ran for the New York City Council in 2001. His soon-to-be first deputy mayor, Anthony Shorris, a ubiquitous career bureaucrat, left the Bloomberg administration in a dispute over his own SEIU consultancy contract. Emma Wolfe, de Blasio’s political gatekeeper, is a former SEIU organizer, and Dominic Williams, Shorris’s chief of staff, is a one-time SEIU operative. So Team de Blasio will obviously view things through SEIU-tinted glasses.

 

Union Feeding Time at City Hall by Bob McManus – City Journal.

Who Really Betrayed Detroit? by Steven Malanga – City Journal

For years, the trustees granted annual bonuses to retirees and fattened worker-savings accounts with high guaranteed rates of return, siphoning crucial assets out of the retirement system, even as Detroit’s finances deteriorated. By one estimate, reported in the Detroit Free Press in September, the bonuses and guaranteed-interest programs cost the pension funds nearly $2 billion in contributions and foregone investment returns—money that might have made the pension system well-funded today and allowed retirement benefits to remain untouched.

Who Really Betrayed Detroit? by Steven Malanga – City Journal.

The Closing of Diane Ravitch’s Mind by Sol Stern, City Journal Autumn 2013

Education writer and activist Diane Ravitch is very angry these days. She’s convinced herself and her followers that elements of the American corporate elite are working to destroy the nation’s public schools, the indispensable institution that has held our republic together for more than two centuries. According to Ravitch, these fake reformers—the “billionaire boys’ club,” as she calls them—are driven by greed: after destroying the schools and stigmatizing hardworking teachers, she says, they want to privatize education and reap the profits from the new market.

The Closing of Diane Ravitch’s Mind by Sol Stern, City Journal Autumn 2013.

The Next Mayor by Clark Whelton – City Journal

The Next Mayor by Clark Whelton – City Journal.

New Jersey’s Abbott Districts: Education Finances During the Great Recession

“The New Jersey Constitution states that any child between the ages of five and eighteen has the constitutional right to a “thorough and efficient” education.”