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Sample Annual Operating Budget

Related Discussion Group
Budget, Finance & Facilities
: Introduction
: Sample Annual Budget
: Additional Schedules


Introduction:

Annual Operating Budgets

This 1996/1997 budget from the St. Paul Family Learning Center Charter School is a good example of both a detailed charter school budget and a useful fiscal planning document. It should be remembered, however, that the specific estimates and cost projections used in this budget are unique to this school and to Minnesota's system for funding charter schools. Developers in other states are cautioned not to rely on these figures but instead consult with a charter school finance expert in their state. For more information on this topic, please see our Budget & Finance page.

An annual operating budget may serve a variety of purposes. First, and perhaps foremost, a budget is a fiscal reflection of the design principles of a school and a very concrete demonstration of a school's priorities. Second, a budget is a plan. It shows how much money a school anticipates receiving over the course of the year and how it plans to spend the money. Third, once approved by a school's governing board, the budget serves as the board's official authorization of the expenditure of the school's funds. Thus a budget may also serve an authorization and control function.

About The School

The St. Paul Family Learning Center, located in St. Paul, Minnesota, serves a diverse population of urban students under a charter granted by the St. Paul Board of Education. The school is the brainchild of Wayne Jennings, a school design expert and veteran school administrator. The school's design is based on the Community Learning Center's design created by Dr. Jennings as part of the New American Schools design effort.

Operating budgets usually list revenues by source (e.g., state general-purpose aid, state and federal categorical programs revenue, grants, earned income, etc.) while expenditures are usually shown by object (e.g., salaries, benefits, books, rent, utilities, etc.). It is often difficult to understand these figures unless some sort of explanatory material accompanies the budget and lists or explains the assumptions used to generate the revenue and expenditure estimates. The following narrative highlights the major assumptions and features of the St. Paul Family Learning Center budget and explains its major features.

Revenues

One obvious feature of this planning budget is the fact that it is actually three budgets. It shows anticipated revenues and expenditures assuming three different levels of enrollment: 66, 100 and 120 students (see Line 1). School developers often ask how large a charter school must be in order to become economically viable. Under the budget assumptions shown in this school's planning budget, the school would need to serve between 66 and 100 students in order to be viable because the school would run a deficit of $63 thousand at 66 students and a projected surplus of $76 thousand with 100 students (Line 57).

Charter schools' revenues are largely dependent on the terms of the state school finance laws under which they operate and the schools' size and student population. This budget shows that charter schools in Minnesota receive funding from several different sources. The top listed sources include a state general-purpose aid program (Line 4), a compensatory aid program for schools serving disadvantaged students (Line 5), and a state transportation aid program (Line 6). The school also anticipates receiving funds from the federal Title I compensatory aid program (Line 10)--the federal government's largest K-12 aid program and federal funds for child nutrition. Finally, the school's budget anticipates receipt of grants from both the federal government's charter school grant program (Line 12) as well as grants from local charitable foundations (Lines 14 - 16).

As shown by the three columns, most revenues vary with the level of enrollment. Charter school developers should consult with charter school finance experts in their state in the development of the revenue side of their budget and should not rely on these figures which are unique to this school and Minnesota's system for funding charter schools.

Expenditures

The expenses listed in the budget are a combined reflection of the school's design principles and the fiscal realities of operating a charter school. This school places a relatively heavy emphasis on investing in technology at $350 per student (Line 25), staff development at $1000 per staff member (Line 26), field trips (Line 27), and instructional materials and supplies (Lines 28 & 29). Though the level of expenditures on these items may seem low by the standards of the private sector, they are quite high relative to most public school budgets where technology, staff development, and the like often must be trimmed.

Schools are typically very "people-intensive" institutions and spend the vast majority of their funds on staff salaries and benefits. The St. Paul Family Learning Center's budget focuses the majority of its funds on staff, but does so in keeping with the school's design principles. For starters, the school has an unusually long work year, due in large part to the extensive investment in many days of common staff planning time. The school also has a novel performance-based salary compensation program through its FLC Instructional Performance Pay Schedule and an accompanying Expectations of Staff policy. While the program provides a base salary of only $22,500 per teacher, teachers may make up to an additional $32,000 per year, depending on where they place on the performance-based schedule. These details are shown on Lines 97 & 105 of the budget and the subtotal is reflected on Line 32 of the expenditures.

Staff benefits are also a major expense and the budget assumptions underlying the figures are shown on Schedule D: Benefits (Lines 108-114) and are reflected in total on the budget at Line 33. They include 7.65 percent of salaries for federal Social Security and Medicaid (FICA) taxes, an employer-paid contribution toward professional staff retirement costs at 8.14 percent, and life, disability, health, and workers' compensation insurance. Instead of hiring a principal and business manager as part of the staff, the school contracts with the firm Designs for Learning, Inc., to provide management services (Line 35).

Like most charter schools, and unlike most public schools, the St. Paul Family Learning Center pays a very large proportion of its operating budget toward facilities lease costs, over $102,000 per year (Line 39). This high level of spending on facilities would bankrupt a typical public school and has been a major fiscal challenge for charter schools nationally. Fortunately, the state of Minnesota recently added a facilities aid component to its charter school finance system. This new source of state funds, combined with the fact that the school will grow to fill the leased site, will greatly enhance the school's budgetary position in 1997-98. The school also spends relatively heavily on telephones (Line 43) to ensure that all staff have access to both voice and Internet communications (Line 38).

Line 57 shows that the school's operational budget anticipates breaking even at between 66 and 100 students. As shown on Schedule A: StartUp Costs (Lines 64-68), however, startup costs of preparing and furnishing the facility and playgrounds are substantial and drive all three scenarios into the red--at least for the first year. Presumably these startup costs, if capitalized, could be paid off within a few years if the school continues to operate and is of sufficient size. Though not shown here, a long-term projection or breakeven analysis could be developed to display this in more detail.


Sample Annual Budget:

SAMPLE 1996/1997 BUDGET FOR A CHARTER SCHOOL
3/13/97
Line
Number of Students
120
100
66
1
 
2
REVENUE
3
General revenue $404,104 $338,320 $204,871
4
Compensatory Revenue $101,804 $84,836 $55,992
5
Transportation Revenue $14,535 $12,169 $7,369
6
TRA Reduction (above less WDAM*19) ($2,121) ($1,775) ($1,075)
7
Food reimbursement Revenue $29,580 $24,650 $16,269
8
DL Sub-lease, share of utilities, etc. $13,000 $13,000 $13,000
9
Federal Title I funds $44,160 $36,800 $24,288
10
Grants:
11
Federal charter school start up grant, Summer 1996 $50,000 $50,000 $50,000
12
Federal charter school start up grant, Spring 1997      
13
Technology Enhancement $10,000 $10,000 $10,000
14
St. Paul Foundation $5,000 $5,000 $5,000
15
Bigelow Foundation $10,000 $10,000 $10,000
16
 
17
TOTAL REVENUE $680,063 $583,000 $395,715
18

Total revenue per student		 $5,667 $5,830 $5,996
19

Payable in July 96-June 97		 $466,490 $390,195 $240,442
20
Payable in Oct 97 $51,832 $43,355 $26,716
21
 
22
EXPENSE
23
Advertising, marketing, and recruiting $3,000 $3,000 $1,100
24
Computer Equip, repair, training ($350:student)-$10K $32,000 $25,000 $12,000
25
Staff Development ($1000 * Instr. Staff) $8,400 $6,300 $6,000
26
Field Trips ($40/student) $4,800 $4,000 $2,640
27
Instructional materials and equipment $18,000 $15,000 $9,900
28
Instructional supplies, library materials $7,200 $6,000 $3,960
29
Dues and Subscriptions $1,000 $1,000 $1,000
30
Office/General Supplies/Postage ($50/student) $6,000 $5,000 $2,400
31
Payroll/Salaries (see Schedule C) $218,331 $180,630 $180,623
32
Benefits (see Schedule D) $38,957 $32,269 $32,267
33
Professional fees (legal and accounting) $4,500 $4,500 $3,000
34
Principal/Bus Mgr Contract (3 percent of Revenue) $20,402 $17,490 $12,000
35
Contract services $2,000 $2,000 $2,000
36
Printing, copying (2000 copies @.05:staff) $11,660 $9,350 $5,000
37
Internet Access $2,000 $1,500 $1,500
38
Building lease ($9760/mo.) $102,471 $102,471 $102,471
39
Utilities:water & sewer, electric, gas ($2000/mo.) $21,000 $21,000 $21,000
40
Cleaning Contract ($575/mo.) $6,000 $6,000 $6,000
41
Maintenance, repairs, custodial supplies $2,000 $2,000 $2,000
42
Telephone ($3500+$700:50 students) $5,180 $4,900 $4,424
43
Insurance-Property and Liability $4,000 $4,000 $4,000
44
Grass-snow removal, pest control, security $4,000 $4,000 $4,000
45
Transportation $17,000 $17,000 $17,000
46
Food Service $29,580 $24,650 $16,269
47
Technology Enhancement $7,000 $7,000 $7,000
48
 
49
SUBTOTAL EXPENSES $576,481 $506,061 $459,555
50
Total expenses per student $4,804 $5,061 $6,963
51
 
52
Extended Day (24 hrs:$20 hr:day) $0 $0 $0
53
 
54
TOTAL EXPENSES $576,481 $506,061 $459,555
55
 
56
REVENUE LESS ALL EXPENSES $103,581 $76,940 ($63,840)
57



Additional Schedules:

ADDITIONAL BUDGET SCHEDULES FOR A CHARTER SCHOOL

3/13/97
Line
Number of Students
120
100
66
62
 
63
SCHEDULE A: STARTUP COSTS      
64
Capital Equipment & Improvements ($2000:student) $240,000 $200,000 $132,000
65
Office and Classroom Furniture ($100:student) $12,000 $10,000 $6,600
66
Playground Equipment & Facilities $10,000 $10,000 $10,000
67
Total startup capital required $262,000 $220,000 $148,600
68
       
69
SCHEDULE B: OPERATING ASSUMPTIONS      
70
Number of students, Reg-K 25 20 23
71
Number of students, 1-6 95 80 43
72
Number of students, total 120 100 66
73
Number of WADM 113.95 95.40 57.77
74
Number of school days 170.00 170.00 170.00
75
Number of Lead Teachers 0.00 0.00 0.00
76
Number of Teachers (1:33 students) 3.60 3.00 3.00
77
Number of Special Ed teachers 0.50 0.50 0.50
78
Number of LEP teachers 0.50 0.50 0.50
79
Number of Health Service Workers 0.20 0.20 0.20
80
Number of Paraprofessionals (1:25 students) 4.80 3.30 3.30
82
Number of Secretaries 1.00 1.00 1.00
83
Number of Custodians 0.00 0.00 0.00
84
Number of Clerks 0.00 0.00 0.00
85
Per student-Instructional materials $150 $150 $150
86
Per student-Library materials $60 $60 $60
87
Per student-General Revenue $3,546 $3,546 $3,546
88
Per student-Compensatory Revenue $3,205 $3,205 $3,205
89
Percentage of students on AFDC 26.47% 26.47% 26.47%
90
Per student-Transportation Revenue $170.00 $170.00 $170.00
91
Per student Transportation Transition (reduction) ($42.44) ($42.44) ($42.44)
92
Per meal-Food reimbursement $1.45 $1.45 $1.45
93
       
94
SCHEDULE C: SALARIES      
95
Lead Teacher (@$40,000, 11 month) $0 $0 $0
96
Teachers (@$22,000, 10.5 month) $79,208 $66,007 $66,000
97
Substitute Staff (2% absence @ $70) $2,523 $2,023 $2,023
98
Paraprofessionals (@$16,000, 10.5 month) $76,800 $52,800 $52,800
99
Secretary (@$24,000, 12 month) $24,000 $24,000 $24,000
100
Clerks (@$12,000, 10 month) $0 $0 $0
101
Health Service Workers (@$24,000, 10 month) $4,800 $4,800 $4,800
102
Custodians (@$24,000, 12 month) $0 $0 $0
103
Contract $16,000 $16,000 $16,000
104
Competency-based salary increases (see FLC Instructional Performance Pay Schedule) $15,000 $15,000 $15,000
105
Subtotal $218,331 $180,630 $180,623
106
       
107
SCHEDULE D: BENEFITS      
108
FICA (7.65%) $16,702 $13,818 $13,818
109
Retirement, Professional (8.14%) $6,448 $5,373 $5,372
110
Life and Disability (.9%) $1,965 $1,626 $1,626
111
Health and other insurance (.7%) $13,100 $10,838 $10,837
112
Workman Comp-8868-.34 per $100 $742 $614 $614
113
Subtotal $38,957 $32,269 $32,267
114