The budget report was presented to the charter school’s Local Governing Council by Lorrie Davidson, vice president of finance for Charter Schools USA.
The school will be assisted in making up the deficit by a $975,000 corporate sponsorship from Charter Schools USA, the school’s management company, Davidson told the council.
Present at the meeting were Local Governing Council members Heather Blevins, Lyn Carden and Larry Blase. Sandy Castro, Charter Schools USA senior manager of development and Assistant Principal Dana Burton were also in attendance. LGC member Byron Greene and Principal Vanessa Suarez called in via teleconference, along with several other CSUSA employees.
LGC members not present included Danny Dukes, who is running for Cherokee County Board of Education chair, along with Vince Baker and Jay Wright.
As a condition of receiving the charter, CSUSA at the time pledged to cover any deficits the school incurred, according to Louis Erste, director of the charter schools division at the Georgia Department of Education.
“Covering any deficit wouldn’t be a loan, that’s just a gift (or) a grant,” Erste said Wednesday.
Nationwide, charter schools do not typically break even in their first year, Erste said.
“To receive charter in Georgia, (schools) have to have balanced budget which is why the management company must pledge to fill any deficit,” Erste said.
However, Erste said the budget issue is something the state education department would look to resolve moving forward.
“Typically, the management company will subsidize the school in its first couple years, then the enrollment rate rises,” Erste said.
According to CCA’s budget for its inaugural year, the school only had 817 students enrolled while it budgeted for 995, leaving them a deific in state funding of over $1 million and the funding rate per student $520,555 less than budgeted or $637 less per student.
Erste said Charter USA’s willingness to support not making cuts to the school and keeping the charter school’s level of service high is better for the students enrolled there.
“Given the company is willing to fill the budget gap when they could have made cuts, choosing to support school at a higher level is a commendable thing,” Erste said.
Reduced revenues to the school are credited to the shortfall of special education funding from the state, according to the budget explanation.
The total deficit reported is $1,549,573.
The school anticipated $325,000 for their initial state charter school implementation grant, but were approved the full two-year grant of $625,000, Erste said. The school reports spending $620,819 of the state grant, which Erste said can be spent any time within the first two years of the school’s operation.
CCA also spent $45,403 of Title I funds, which the school did not initially account for in its budget.
The sponsorship from CSUSA and $2,100 in uniform donation funds and $19,000 in federal funds provided the school extra cash. However, a deficit of $155,154 in food service revenue and $56,771 in before and aftercare revenue were due to the enrollment shortfall offset by lower expenses.
As far as the school’s expenses, the school budgeted $57,523 in bonuses but only spent $5,000 of what was budgeted, but spent $17,823 in stipends which was $5,823 more than budgeted. The budget shows $42,163 was spent in sick day buyout, with only $6,360 in the budget.
The school also reported spending $161,020, $101,320 more than budgeted, in contracted special education instruction due to increased services provided by the vendor Fundspeech.
For professional services, the school budgeted spending $15,000 per month on CSUSA management fees, or $184,546 for the year, but reported having “no actuals” in that line item. CCA spent $33,791 in advertising and marketing, much less than the $73,044 budgeted for that category.
In vendor services, the school reported $4,759 in bank charges and loan fees, more than the $3,600 budgeted.
CSUSA reported the standard budgeted amount for travel, automobiles, meals, lodging and airfare as $9,000, and budgeted for that expectation, but CCA spent $11,422 on these expenses throughout the year.
CCA also spent more than anticipated on dues and subscriptions at $8,452, noting the payment to Georgia Charter Schools Association alone was $3,000, which was all the school had originally budgeted.
A major operating expense for the school was in building repairs and maintenance for which the school had to pay $240,336, or $124,519 more than budgeted. The budget credits the higher cost to required repairs for several code violations. The building housing CCA is being leased from its private owner, Delaware-based Manufacturers and Trading Trust and Company.
The school reported $614,376 in total assets and $583,586 in total liabilities, $122,793 of which is due to CSUSA. The total fund balance for the year ending June 30 is $30,790, with a combined total liabilities and fund balance of $614,376.
Erste said every state-chartered school is required to send his department an audited financial statement by Oct. 1 to be reviewed.
Dukes, a certified public accountant, wrote a Letter to the Editor in March saying “At that time (June) revenues will catch up to operating expenses and our financials will no longer show a deficit.” Dukes did not return calls for comment on the school’s budget.
In other business, Principal Vanessa Suarez reported 10 students withdrew during the month of June, with two moving out of the area and eight indicating the school was not a good fit.
The school had 97 new students enroll in June and has 345 students on the wait list. Suarez said total enrollment for the 2012-13 school year was 995 students, meeting the school’s enrollment goals.
The school added 81 new staff members during June with a total of 15 new teachers hired.
The board also:
n Approved 4-0 the passage of a resolution entitled “A Resolution in Support of Reforming and Thereby Improving Education.” The resolution states the LGC “supports and endorses the education reform candidates running in local and state races as well as the passage of House Resolution 1162.”
n Voted 4-0 to table the changing of the board meeting time until the Aug. 22 meeting. Blevins said she had been unable to consult all LGC members prior to the meeting to get a consensus of what time would be desirable for a majority of the board members.