The Fiscal Responsibility Method: How to Navigate Charter School Finance Complexity

Speaker A: Foreign. Well, let's kick it off. So welcome everybody. Welcome to Procurement Week for Charter Schools hosted by Procurify. I am your host today, Bron o', Connor, VP of marketing here, Procurify. And um, before I introduce our guest today, just a couple of introductory remarks. So for those of you who don't know, a lot of you do know. For those who don't know, Procurify is the leading AI power procurement accounts payable, expense and payment platform. So it's designed for mid market organizations, but serving organizations from SNB all the way through to enterprise. We definitely empower businesses to gain full control of their spending, driving those cost savings, operational efficiency and making smarter decision, um, as well. So we'll be talking about all of that today with our guest. Um, but I do want to share a couple of housekeeping notes before we get into it. This session is recorded so no need to be taking notes, no need for the pen and paper. We are going recording here so it will be shared probably within a day after this event or sooner. Um, we are deck free today so that means that we're really here to share as much insights with you as possible in a way that suits you best. So tune in visually here or pop us in your ear for the recording as well later on or if you want to go off and get that walk in while listening, you won't be missing anything on screen. It will be myself and Raj here having a conversation and we'll be sharing all those insights and we do that so that we can meet you where you are so that you're not confined to watching a, ah, presentation in screen if it doesn't suit you. So again, make yourself comfortable, do what you need to do and um, tune into us. Um, I want to introduce you to Amanda who is in our chat. Amanda is driving our community function here. So as part of Procurement Week we really want to be driving those insights from our community. We all in the chats that are happening. So meet Amanda, say hi and be sure to engage with her throughout this session. Uh, we also have Q and A at the end of this session, so add your questions in there. You'll see it in the functionality here in Zoom. So add your questions in there at the very end. We've got about 15 minutes put aside to get to some questions so feel free to add them in throughout. I'll remind you in case anybody's forgotten as well. And lastly, if you're looking for more resources to help you on your journey, uh, in you know, financial acumen for charter schools. Please do check out the Curify's resource section on our website. In there we have jam packed resources for charter schools. So we have everything that you need to know. And we release new content every week. So bookmark it, visit back, or you're obviously on our mailing list. You'll also get it in email as well. Okay, so without any further ado, I want to introduce you to Raj Tucker, our guest of honor today. Raj is a nationally recognized expert in charter school finance. He is the founder and CEO of New York City based charter schools business management, also known as csbm. And he is the author of fiscally secure, Prepare, protect and um, propel your charter school with responsible financial management. I am so excited to get into this conversation today with Raj and what an honor it is to have him here. And this week, actually, as part of procurement week, for the guests that show up early, that show up on time for our sessions, we are sending the first 25, 30 guests away with a gift card to purchase Raj's book. So we're going to dive into everything that's covered in that book today as a quick introduction. But some of you will be lucky enough to win a copy of that book today or another session later on in the week. So we'll be sure to send you that gift card within the next day as well. So keep an eye out for that. Okay? Well, Raj, thank you so much for joining us today.

Speaker B: Thank you so much for having me.

Speaker A: Such an honor to have you here. I know the community all know you, so you're a well known face in this space. So let's get into the, the bulk of our conversation here. Uh, to begin, we're going to open up with a little bit of, you know, situational awareness here. We're going to take a look at the state of financial health in charter schools. And I guess, you know, the first area you want to talk about really is what are the most common financial challenges charter schools are facing today.

Speaker B: So, uh, the overarching challenge is a lack of financial acumen. Um, and you know, I think it's by design. I, ah, know the US doesn't really, uh, teach responsible financial management in K12. Not so much in college either. And um, I think it's kind of purposely done, uh, to keep people in the dark. And that's something I'm trying to combat in the book.

Speaker A: Book.

Speaker B: Uh, what that lack of financial acumen leads to is essentially underestimating what's involved with managing finances. Uh, they think that the financial side of managing a charter school is just a little bit of bookkeeping. The operation side is a little bit of clerical work and um, you know, we'll definitely dig in. And it's, it's a lot more complex than that. Uh, there's, and that, that leads to so many other challenges, but it's that lack of financial acumen and is the main thing.

Speaker A: Yeah, for sure. And you know, when we were chatting before, you mentioned about hiring as well. So you know, that puts pressures on hiring experienced staff and you know, budget cuts on resources and all of that impacts, you know, the, the children and the, the, I guess the students of these schools. So it really does have such a waterfall effect.

Speaker B: Yeah, and I can speak to that. Uh, so when you don't know what's involved, um, then you may hire too few people. You may not know who is well qualified, who is, um, if you need to outsource part or all of your finances, you need to make sure that they're qualified service providers. Um, and then a lot of times what we see is that there's these budgets that are almost like wishful thinking type budgets. They're well intended, but uh, they represent what they hope is going to happen, um, instead of what they, you know, better estimates, better informed assumptions of what, what will happen. So uh, it's, it's much better to capture as much of the reality as possible in your budget and that will lead to, you know, whether this is sustainable in the short term and in the long term instead of, oh no, all of a sudden we're out of cash or we didn't get enough students and all these other ripple effect type things that will occur. So it's really understand all the details of managing finances. Responsibilities, uh, is the key.

Speaker A: And you just hit on that word there, responsible. So I was thinking about fiscal responsibility as you were talking there. That's exactly it. This isn't a high level strategy for how we hope to operate. This is really, you are accountable for the performance of this particular budget and it needs to operate within uh, the, the name of reality, I guess, on, on what's, what's practically coming in and going out so that you can hold yourself accountable, um, for the outcomes of, of how the budget can perform. And you know, it's interesting, you know, obviously like every sector in every business, we go through a lot of highs and lows. But how has the landscape evolved and changed in the last few years from your perspective?

Speaker B: Yeah, so there's been a lot of change. So I've been in the charter School industry since January of 2000. For 22 years. Uh, the original promise was autonomy in exchange for accountability, um, in exchange for accountability. And, um, there was a lot more freedom earlier on, uh, in the charter sector. And whether that's bad players that have, um, taken advantage of the rules or well, intended yet incapable operators, uh, have caused the authorizers who open and close charter schools, they keep evolving the rules. So, um, the rules have. They just get more and more intense over time. And there's always the right, you know, finding the right level of compliance and accountability is really the trickiest part. But a lot of times the lowest common denominator ends up determining what the rules look like for everybody else. Uh, the landscape has also changed, uh, especially during the pandemic. After the pandemic, uh, the great migration of everybody moving all over the country, you know, many times leaving the big cities for suburbs, you know, moving down south in the U.S. uh, uh, those enrollment changes have caused quite a few ripple effects. So, uh, you know, there's fewer students in New York City, in Denver, um, in Los Angeles, in South San Francisco, um, and they've moved down to Texas, they moved down to Florida, you know, so that, um, is another big change. And given that we have a new president and the new administration, there's a lot of speculative things, um, which, you know, I don't want to jump into because we'll see how that can change. But the potential elimination of the U.S. department of Education, uh, the potential of allowing religious charter schools to operate, uh, depending on how the Supreme Court, um, decides, uh, there's just. There's a lot of. A lot of things in motion right now.

Speaker A: I mean, that's a whole topic in itself, isn't it? And, you know, you could sit here and try to read the tea leaves, I think, uh, by the end of the day, unfortunately, sometimes we have to wait and see, which is the painful reality. Um, but, you know, we touched on it there a lot. But it's been, you know, widely reported, obviously, that financial mismanagement is one of the leading causes of charter school closures. And I'm sure the great migration has had a huge impact on that as well. But around the financial mismanagement, you know, why do you think that is? What. What's at the core of that issue?

Speaker B: So most charter schools are launched by these very passionate founders who are educated in, um, academics and classroom management and all of those things. Uh, and they're not educated in managing finances responsibly. Um, they are made to, you know, being a Principal, a school leader, and they want to create a wonderful environment for children to learn. But at the same time they're not um, well versed in leading these rapidly expanding multimillion dollar organizations. Uh, and this is not just only relegated to charter schools. Right. So when you're launching a nonprofit, when you're launching a small business, um, when that small business becomes a medium sized business or a larger business, those same founders are always very passionate about their idea. Um, and they're either less passionate or not passionate at all about is this financially sustainable. You know, the, the mindset is just like, of course this is going to work, this has to work. Everyone is going to love my idea just as much as I love my idea. And that may or may not be true. So it, it is, um, it is, it is a tricky, is a tricky balance. You have to have that passion obviously to get it off the ground, but the ability to make sure that it's financially sustainable in the short term and the long term is a really key component.

Speaker A: Yeah, I think that the passion mixed with self awareness is probably knowing when you've brought it to the, you know, the line that you can bring it to and then bringing in the uh, you know, the folks that know how to grow and scale a, ah, business and you know, really to deliver back on the mission which is to bring long term education to these children and quality education and mitigate any, I guess administration issues that can impact that. So I'm um, sure there's been a lot of journeys, especially as you mentioned, how it was a little bit more of the Wild west to begin with in terms of what you could get away with. And now as you know, a lot of things continue to evolve, the rules begin to change as well. So all that change though impacts uh, the children in the school. So it's uh, an ever evolving thing. But I think um, you know, something you've touched on with your book. So back to the, the book that you wrote is you mentioned to me when we were chatting before met that uh, you know, it's really applicable to individuals and not just charter schools as well. So I think that that's really interesting where yes, like this book is fantastic for charter schools and then you'll learn a lot about it, whether you go into other industries or your own personal uh, finances. And to your point, if it's not taught early on, it's one of those skills that you have build over time. But you really does take a lot of nurturing to become um, educated in a way that you can benefit your, your business and your. Yourself.

Speaker B: That's right. Yeah. You'll notice and when we dig into it, the fiscal responsibility method that uh, we came up with and have been practicing for so many years throughout the history of our company, we launched almost 19 years ago back in 2006. Um, that framework works in any type of organization as well as in your personal life. So that's part of the grand plan eventually, uh, is to adapt the manuscript of the book for um, K to 12 students, for individuals, adults, for nonprofits, for independent private schools, for uh, small business. You know, it's adaptable. But I wanted to make this applicable to the industry that we've been serving for so long. Uh, and really get into the details there.

Speaker A: Yeah, well, let's hop to it. I know the audience here are going to be really interested. So for it's called a fiscal responsibility method and we're going to go through an overview of it here in a conversation. I'm going to dive into a few because I've been looking up to get a preview of this and there's a few cures, as we call them, within the method that are just so interesting. And I think we could go into all 10 of them, but we've picked out a few of them that we think will be really pertinent for the audience today. Um, but first of all, um, I do want to remind the audience this is recorded again so don't worry about getting the pen and paper out if you're about to take notes and everything. It is recorded. And we'll, we'll um, we'll ask Raj as well now in a moment about some other further resources for the learning. So you're going to have it all there at your fingertips. But to set the scene, how did you come up with this method? You know, what was the origin and you know, share us a little bit about the background of that.

Speaker B: Sure. So, so we've um. I'm a very detail oriented person. I think I get that from my parents. Uh, they were immigrants that came over from the US and um, they were always nervous about getting something wrong, doing something wrong and getting uh, in trou trouble and all that kind of stuff. So uh, it made us be very focused on the details and um, throughout the organ throughout. Before launching Charter School Business Management, I used to be the CFO of Explore Charter School in Brooklyn, New York for four years. And um, before that I was in startup technology companies. And again like it was, it was just getting through all the details one at a time and what ended up happening was during the pandemic, I started realizing that there's a method to our madness. We do this every single time, and may not be in the same exact order every time with our clients, but why don't I just start documenting, um, what we do, what our practices are, and then it almost like revealed itself into this framework that really, um, kind of makes sense. So I don't know if I should jump in now, uh, but, uh, and the Cure, it has 10 cures for the 10 common causes of financial mismanagement. And then we go a layer deeper where there's five remedies per cure for a total of 50 remedies for the common symptoms of financial mismanagement. So, um, if you can jump into it.

Speaker A: Yeah, yeah, I'm eager.

Speaker B: Yeah. So the anytime you have 10 of anything, you need a framework that can help you digest it. So the framework is yesterday, which is the accounting all about reconciling the past. Uh, then there's uh, today, which is the finance, all about, uh, commanding the present. And then there's tomorrow, which is the management and governance, which is all about forecasting the future. So, um, the first cure is all about, uh, establishing and evolving roles, responsibilities, policies and procedures because you need clarity on who's doing what, when, where, why and how. And that cuts across all three areas of uh, yesterday, today and tomorrow. Um, the first part of yesterday is set up and maintain your accounting infrastructure because you want to preserve a solid financial foundation. Uh, the third cure is to process payroll precisely and promptly because you want to, uh, respect your workforce's efforts. Um, all of us are trying to make a living. The least we can do is pay them on time and pay them accurately. Uh, and then the last part of yesterday is to, to ace the audit. You want to demonstrate to your, uh, internal stakeholders as well as your external stakeholders that your financial house is in order. And then from there, getting into today, uh, you need to build reality based budgets where you're translating, estimating and iterating your vision. So you're literally converting the words of the vision into numbers that are based on informed, uh, assumptions. Uh, and then from there you're checking against that budget where you're preparing and analyzing vital financial reports, forecasts and metrics. Um, and the goal there is to assess your fiscal health in order to make informed decisions instead of these fingers crossed, hope this works type of decision making which we don't support. Uh, and then the last part of today is control cash carefully. You want to ensure that plenty of tomorrow uh, ensure plenty of tomorrows can exist. Um, you know, it sounds ridiculous, but cash does rule everything around me. Uh, you know, like you around everybody. You're, you're in and out of cash flow is, is really important. Your paycheck comes in, you've got bills to pay, uh, just like a school. Um, and then the last part, and I promise I'll be done here, uh, is to grow wisely, know whether, when and how to scale. Uh, Cure nine is to mitigate risk proactively where you maximize stability and minimize disruptions. And then last but not least is to um, value your invaluable talent and technology where you amplify your impact and reduce your turnover. So I know that was a whole lot that I just unloaded, but that's, that's, that's the, the framework, uh, in a nutshell.

Speaker A: Amazing. Amazing. I mean there's so much there to dive into and I did see some questions start to come in. So a reminder to everybody, if there was anything that you heard it in there that was obviously an overview, do ask the question so we can dive deeper into the cure that you're most interested in or stuck on today. And we will get that answered for you. You know, there's, there's so many. And I guess I'm going to start with cure one because as you mentioned that, you know, I took a note that for me that feels like unless you lay the foundation, the rest of it is a house of cards. So thinking about that first cure, and it was financial visibility and control, it feels really critical, as I mentioned, for the success that follows. So can you share a little bit more about the remedies that go into laying that foundation? And for anybody wondering, remedies now has become part of our vocabulary with this. But this is really those solutions that really help, um, offset this challenge. So I'd love to hear more about that. Laying a solid foundation with cure one.

Speaker B: Yeah, so there's um, you really have to set up the uh, financial policies and procedures manual that lays out all of the internal controls because you cannot have any one individual who has far too much control from purchasing to receiving the goods, uh, to paying, you know, entering them into the accounting software, to paying for them, to doing the bank reconciliations. If there's one individual that has total control of that, then they could be, you know, doing all sorts of fraud, uh, and capturing in that document. Um, there's, there's some folks who have a beautiful looking document, but in real life they're not, they're not, um, following, practicing what they preach. And then some people, they're doing all the right things but they haven't documented it well. Um, or they had a new employee that got into the mix and then they forgot to say we did that or now we're using Procurafi for our purchasing. We forgot to enter that into the, into the financial policies and procedure manual. You know, so all those checks and balances are really, really important. Um, and they may vary state by state. So uh, because charter law is state level law, there's nuances that happen, you know, when we help schools in New York versus Minnesota versus Texas versus uh, Oregon, um, and elsewhere. It is, there's different nuances everywhere and, but you have to have those checks and balances otherwise um, the likelihood of fraud uh, will go up tremendously.

Speaker A: Yeah, I mean that's, that's so interesting. And you know, as it comes to effective management, one of the other ones you mentioned I think was Cure three around managing spend. In particular, you mentioned forecasting, I think, or uh, we've touched on forecasting a little bit and I know it's, you know, we talked about the living in reality versus in the dreamers land, but the forecasting really is your friend. So um, I guess my question is what are some of the common mistakes in forecasting that you've seen schools make and the remedies that you think could be applied for especially for our audience online today?

Speaker B: Yeah, uh, so there are many schools that will do a budget versus actuals financial ah, report which is backwards looking only. Um, what we're big proponents of is forecasting at minimum through fiscal year end so that you have a sense of what kind of ah, surplus or deficit you're headed towards on an accrual basis as well as on a cash basis. Um, and if any of those numbers start running negative, then based on where the numbers are headed tomorrow, you can actually take action today and say, oh, the numbers are heading the wrong direction. What do we need to do? We need to ah, increase our credit line. We need to start collecting our receivables, we have to start delaying some of our payables because we cannot miss our payroll, we cannot miss our rent payment or health insurance payment. You know, there's a lot of things. So one um, mistake is some schools don't forecast at all. So if you're not forecasting, believe um, it or not a charter school is, uh, you can really forecast quite well with it, especially when there's stability in the, in the student enrollment and stability in the staff there's not, you know, people aren't getting fired, uh, and hired all the time. If you have stability in your enrollment, you can project out how much revenues, uh, you will have over, over time. And then if you know what staff you have, then you can project out how much their salaries are going to be, how much in, uh, health insurance and other insurances that you're offering them. Um, if you know, your rent for your building, you can forecast that out. Um, and then there's usually a very small, um, portion that is variable expense. And quite a lot of the spending happens, uh, in the summertime in and in quarter one of the school. So you can get a pretty accurate, um, or close enough forecast of what kind of surplus or deficit you're headed towards and make, um, decisions based on that. There's other schools who they will forecast, but they don't do it well. Uh, they could be kind of lazy about it and take some shortcuts. And um, I know the saying is the devil's in the details. I prefer saying that there's divinity in the details, um, where you, if you have, um, an assumption first in your budget, next to every line item in your budget, that's really important because you need to know where that number came from. Same thing in the forecast. Where did the forecast come from? Well, we're forecasting X number of million in revenues because historically our student, uh, population is currently at X, but we typically go down by 10% over the year. Okay, then let's forecast out less 10% so that we can, um, balance everything on that number. And if we have any more, then we'll find ways to spend it or we can save it for a rainy day. But it's just important to um, to just, just keep forecasting well and knowing where every single number came from. So when board members are, uh, you know, holding the finance team accountable, when management is holding the team accountable, you need to be able to stand by every single number in that budget in that forecast. You need to know where it came from. Otherwise, you know, that that's, that's taking the lazy way out.

Speaker A: Yeah. You know, and I, I, it's responsibility for every dollar, like you mentioned, that could either be saved, it could be put to another initiative, a rainy day, but it's seeing every dollar and knowing where it goes because as you said, you are accountable to another board or body. And you know, that's something that obviously in a completely different industry like sas, we think about as well as our investors. But for charter school industry, we're really thinking about, you know, they're accountable to a board. So how has the framework been useful for schools that you've worked with in communicating effectively with the board, and how has that been received?

Speaker B: Yeah. Um, so I just want to mention something before I dive into the board. Their charter schools are, um, held accountable by multiple stakeholders, right? So first and foremost, they're accountable to the students and parents, you know, the families, uh, of. Just like you made us a promise that you're going to educate our children better than the neighborhood school. Uh, and we chose to enroll here. So you're accountable to them. You're accountable to the management team, the leadership team, the school principal, the head of school, the CEO, uh, your. The board members are fiduciary responsible. So they actually are in possession of the charter, the contract. Um, but then you're also held accountable by the authorizer that decided to open you up, and they may decide to close you if. If, you know, God forbid that, um, you're not sustainable in the long haul financially, academically, you're not doing well, or you're not in compliance with all the laws. Then there's accountability, uh, by your auditor. There's an. There's an audit firm that will audit the school every single year. Uh, there's funders who are contributing dollars, um, and they want to make sure that their investments are, uh, wise. And then there's lenders. So if there's a school that has, uh, been lent money, uh, for the building, for example, um, they're holding you accountable as well. So there's multiple layers of accountability that are going on, uh, specifically with the board, uh, board members. A lot of times, um, because they may or may not have that financial acumen the book enables, it gives them all these different questions that they can ask the school leader and they can know what to look for of what, uh, determines, uh, fiscally, um, what financial indicators are demonstrating fiscal health, uh, good or bad. And then what can we do about it? Um, and then the. The book that we have is. It has the 10 cures, the. The 50 remedies. So they. The board members can actually ask, like, hey, are you doing this? You know, does the. Does the board and management team understand financial terminology? And if not, let's. Let's dig into it and make sure, you know, what an asset is, a liability, revenues, expenses, you know, all. All that finance speak, instead of being, you know, letting it go over your head and, um, pretending to know what's going on, you know, so. But yeah, there, there's. They. They now have the language and the book is written in a way that it's respectful to financial and non financial people where there's a section at the end, valuable vocabulary where it's um, you know, they can, they can go to these key terms that are in bold and say what does that mean? Let me, let me dig in a little bit deeper.

Speaker A: It's, you know, it's definitely the kind of book that you really get your highlighter out and you just start highlighting sections and turning down and using it as a manual or a handbook. And um, another thought is that it's actually so practical as well with there being turnover with those in admin departments of schools as well. It's like this is our method. Read the book. Part of their, you know, coming into the role is getting them trained up on the framework so that everybody's speaking the common language and then referring back to it but really seeing that book as a manual. So great idea for schools online that if you're thinking about how to you know, improve your procurement department or team or processes depending on scale here we're probably talking about processes and, and approach. You know, this is a really valuable uh, guide to use for your team to get everybody on the same page. Especially about the start of the year. It's no time like the present, so just a food uh, for thought for the team. Um, well, not the team, the, the audience online. I know I'm thinking about my team of this is how it's very valuable for us to all be talking the same language right out of the gate, especially when it comes to verbiage and how we refer to different things. So you know, thinking about this framework and again we've, we've talked about the, the different um, the different cures and we've, we've gotten to dive into a few of them. I wish we could dive into all of them. But really thinking about, can you share with us a real world example? So we have a lot of schools online today about where, you know, let's say a school faced a significant, ah, financial issue and how it could have been avoided by leveraging this framework.

Speaker B: Yeah, so, so great question. Um, there are right now a lot of the funders are giving a lot of money to add seats in their school. So um, that could look like you're a K to 5 school and you have two sections of kindergarten, first, second, third, fourth, fifth grade and now you're going to add more seats and there's going to be three sections or four sections of all those grades. So that is what we call expansion. Um, uh, they could also expand, that's expanding, uh, horizontally. They can expand vertically and say we're going to go From K to 5 to K to 8 school and you're adding seats that way. Another way to add seats is to say, you know what, we have this K to, you know, K to 12 building. We're going to add another K to 12 building in another neighborhood, uh, you know, a few miles away. Um, so what ends up happening is that growth, um, there's a lot of emotion tied into that growth because that founder is just like, oh my goodness, my idea actually worked. Now I have to create a second one. Just like a franchise, right? Ah, like we're gonna, we're gonna create a second one. Um, but that growth takes a lot of investment. Um, there's, there's this like, what are the non negotiable aspects of that school building that you wanna replicate in the other building? And then that school leader of that second school building, what flexibility or not, do they have to do things their own way? Because you know, human beings are such that they, we all want to have some, impart, some impact on, on, on you know, what we're doing and make it their own and everything. So being clear about that. But it's, it's really, um, that growth is expensive, that growth is more difficult than you realize. And making sure that it's financially sustainable is really key because there's sometimes there's money, there's funding from the federal government and hopefully that continues over time to expand to replicate into a charter management organization. Um, there's money in the philanthropy, philanthropic world where they can add those dollars but if they're growing too fast, uh, you may run out of money to, to keep investing in that growth. Um, and then it can all, you know, unfortunately come crashing down or the flagship is suffering. But the new replications are working well. You know, it's, it's, it's, it's really managing all those details to make sure it's all sustainable over time.

Speaker A: Yeah, it's really about managed growth. And while you're talking there, you reminded me. So tomorrow's part of procurement week, we have a session with uh, two charter schools. So for those online, if you haven't yet registered for that, then take another look at the landing page and get registered for that session. Because we have leadership public schools and CEO Panoma as well. And we tackle that conversation where we're talking about scale and growth and then also reduction. So we talked about, you know, enrollment Issues with the Great Migration. And then that's actually produced other issues where another school has actually grown substantially. Now. How are they adapting to that? So just a reminder for one line, if you're going through this process and this is, this sounds like your life right now, tune into that session as well, because we tackle that in there. Um, so we're just going to go towards, you know, really what we wanted to do with this session was to leave our audience with actual learnings. And we're not nowhere near the end here yet, but I want to make sure we have lots of time for that. So thinking about the path forward, um, and I see lots of questions coming in. Thank you everybody for adding those in. Um, what are the first steps for charter schools to take from moving from a maybe a period or a, ah, reality of instability to sustainability? What, how do you get out of this maybe motion you're in and start to help your future self?

Speaker B: Um, so there's lots of options, right? So, uh, aside from reading the entire book, which could be intimidating because it's 300 plus pages of everything that's in my head, in our collective heads at CSBM and in this document, um, it's written in such a way that it's respectful to everyone's time in that you could read the, uh, table of contents which lays out every cure, every remedy, and go exactly to the page that you want to go and say, look, I'm having trouble with this particular matter. Let me dig right in and use it as a reference guide. You can read a cover to cover, or you can go right to the conclusion. And the conclusion is where you have every, uh, cure and remedy in the form of a question. And you, the reader, can ask themselves, have we mastered this proven practice? Um, do we need to tweak what we've done? Do we need to overhaul what we've done, or do we need to implement this from scratch? Because this proven practice is not, you know, this cure or remedy is not being implemented at all. Uh, so there's 60 potential things you can do. And for the things that you are already doing, great, pat yourself on the back. It can be very affirming, saying, oh, cool, we're, we're doing all the right things. And I also, I hesitated to call these best practices because who am I to say whether they're best or not? I felt comfortable saying they're proven practices because we've been doing them for 19 years as well as, uh, during my time at Explore Charter School. Um, but like, I, I very clearly in the introduction to the book, say, this is one way to do this. This is not the end all, be all, this is not the only way. This is one way to do this. And feel free to use this as a guidepost. But if you want to go deeper into something else and have 10 remedies per cure, have at it. This is just a framework for you to build off of instead of um, being like, oh well this doesn't apply in my state. We try to make it as national in scope as possible. But we, we do not have experience with every single state. So there may be certain nuances where you can feel free to be like a jazz musician and you know, improvise as needed that's applicable to your specific requirements.

Speaker A: And as you're talking there, I'm thinking about, so the audience here know, you know, where to find the book and, and the value within it and other resources on CSBM as well that we should make sure we mention here, uh, for this audience to be again bookmarking and coming back to so that they're constantly staying up to date and probably getting a more maybe personalized or unique view as well. Um, from different blog articles. Was there anything you wanted to guide everybody towards?

Speaker B: Uh, we, we have all these documents called Impactful one pagers. Where those impactful one pagers are like at a, at a, at a high level, um, I can describe a few of them so it's much more tangible. So there's one that's all about startup from a non academic perspective. So on one page it shows these are all the different things when it comes to purchasing hr, uh, finance, accounting, um, getting the blessings from your board, getting the blessings from your uh, authorizer to actually open um, your school. So that's one of them. There's another one that's all about how well do you know the audit? Um, it's 20 things that auditors may ask you for and it's a quiz and it shows you why they ask for it because it's not just this annoying uh, thing that they do. It's, there's a, it's a serious process. Uh, there's another one that is about recommended um, responsibilities uh, for the senior finance team, the support finance team, the senior operations team, the support operations team, and the development fundraising, uh, team that you also may have depending on the size of your school and network. Um, these are resources that are, uh, you know, people have printed these over and over and said okay, when we were 100 kids and we first started out, this was our back Office and front office. And now that we're a thousand students, now we have many more. We went from a few generalists to several specialists that are just focused on different parts of it. But there's quite a few resources, uh, that um, again our goal is to educate people and staff it with the right number of people based on the volume of work and the size of your student population, size of your staff, getting, uh, people who are qualified. You don't want a clerk who's going to be serving in a CFO level role. You um, want to have people with the right uh, background, um, and experiences to do the actual work. Um, otherwise what ends up happening is you burn them out, um, and then they either leave the charter sector altogether, which I hate seeing that happen, um, or then they, they're playing musical chairs and they bounce from school to school, network to network. Um, and then that's a waste of time and energy. Um, because that's just. You want to create that school culture, that staff culture that's like they, you value them, um, you're providing them professional development, not um, just time management courses so people can work harder and faster. Uh, because that, that, that certainly happens. I want not only teachers to get professional development, all non academic staff members should get that professional development too.

Speaker A: Oh, absolutely. Um, well there's ah, we're, you know, we talked about the situation at the beginning of our chat today around where we are in the season and it's budgeting season. I think that gives people shivers sometimes, you know, depending on your, your acumen for it. But I guess for our charter schools online today, and anyone that may be feeling either overwhelmed or not as quite in control as you'd like to be or feel like you can proactively tackle budgeting season, can you share with us, let's say three practical first steps they should take to improve that situation?

Speaker B: Sure. Um, so the thing that we used to do with the school founder, uh, at Explore, Morty Ballen, he and I, back in the day, he would, in words, tell me what his vision was. And he said this is what I would love to see happen. Um, and I would do my best to convert those words into numbers. And then we would keep iterating until we landed on something that both honored his vision, it honored what was in the charter agreement, that, that, that, that's our contract with, with the authorizer. Um, and it's balancing, it's, it's balanced in the budget wise, numbers wise. Um, otherwise it's, it's a fantasy based budget and you know, so building that reality based budget is a big thing. Um, the second step I would recommend is to have assumptions for every single line item in words that says this is where that number came from. So for example, um, the cost for XYZ is $100 per student or $500 per staff member or $5 per square foot based on the facility cost. You need to know where these numbers came from so that next year when you're doing the same budget, you know what, that $5 per square foot for electricity numbers went through the roof. It's actually $8 per square foot. Okay, now we know where we were off by or. Um, the $100 per student was actually $250 per student. Uh, the $500 per staff member was actually $750 per staff member. So if you have those assumptions, um, then you can know how to tinker with them. And, and the goal is to make your budgeting muscles get stronger and stronger each year. Uh, and then the third item I would say is to have some sort of contingency plan where there's always unknown expenses, um, as well as reductions in revenues. Uh, because perhaps the student enrollment that you expected did not happen or the federal grant that you were expecting was less than what you thought it was going to be. Uh, so you can have multiple versions of, of the budget, um, where you have these scenarios of, this is the baseline of what we think is going to happen. If, God forbid, this is where 10% lower, 15% lower, this is what the budget looks like. And then we will drop the teaching assistants in grade three, for example, and start, you know, have them From K to 2 only. Um, and then if we get more money, um, than expected, then what would we do with that? So it's, it's all these if then type things. And I know it sounds really onerous to do all this, but the example that I use is, um, there was this great speaker I saw one time in one of the entrepreneurial sessions I went to where he framed it as easy hard or hard easy? If you take it easy on the front end, it's probably going to get harder later. And if you do the hard work up front, it's usually going to get easier because you've already done all your homework and now you know we need to make cuts. Okay, well, to go from that mid level budget to the oh, we're in trouble kind of budget, these are the cuts we need to make. You've already kind of pre vetted all those decisions instead of, oh no, now what are we going to do. And then the emotions get all involved in there and then you, that throws your judgment off and you want to make these decisions minus the emotions ideally, uh, instead of when it's emotion filled and then, you know, things can go completely off course.

Speaker A: Yeah, I mean, I love that so much. I was just taking notes there around uh, the other thing that we should want to touch on with the budget is that you're paying yourself the future self, let's say something unexpected happens this year, but also next year. So now you have that framework and you have the, you know, the system to plug in the numbers so that you've built out the scenarios from, you know, if worst case scenario, best case scenario, maybe realistic case scenario, somewhere in the middle, but it continues to build. So while we're paying ourselves for unexpected scenarios later on the year, you're also paying yourself forward for next year as well so that you have the groundwork laid. So really is a very, um, um, valuable gift that you're repeatedly giving yourself, uh, by laying this foundation. So I absolutely love that and um, thank you. So for anybody that was just taking notes there, the three things that Raj mentioned were building a reality based budget. So, so important then clear, detailed assumptions as to where these numbers came from. This is so applicable in my land of work too because you know, you could look at a number and think, where did I come up with that? What's the assumptions I was putting in there? So really adding that detail because you'll soon forget, life takes over and you soon forget. So have that detail in there and then a contingency plan. Have the worst case scenario, have the best case ever scenario and have that middle ground, uh, most likely scenario as your day to day. So now you can pivot and you have, if I get money, if I lose money, if something changes now what. And then as well you mentioned, you know, your, your leader that you're working with, you can now bring a solution forward without being on the back foot trying to scramble for one to then come up with one together. You're now prepared to have that conversation which is so, so valuable for your management of your school. So absolutely love that. Um, we are getting towards the Q and A section now and you know, I definitely have more questions that I would love to ask, but I'm going to just take a quick, quick look in uh, to our Q A. I see we've got a few, um, okay, we've got a few lined up here. So first off, I, um, can't see names. So sorry. I, I can't call, uh, you out here. They're all anonymous. But first one is, if a charter school is struggling financially, what's the first thing leadership should do?

Speaker B: So we, we need to know the source of, of the challenge. Right. So, um, I didn't mention it earlier, but there's the 10 cures, but there's also the 10 causes of financial mismanagement. So you want to be able to pinpoint exactly what the root cause is. Um, and I very purposely lay this out for the, you know, there's a cure for every cause, there's a remedy for every symptom. Um, and the goal is to identify where on the spectrum in between the worst case and the best case, you're actually standing. So, um, I would, I would look at the 10 cures, look at the 10 causes. I would look at the, the, um, the 50 remedies, I would look at the 50 symptoms and see if you can actually pinpoint exactly where the, the challenge is coming from. So, um, for example, uh, if cash keeps running low, I would ask myself, well, is enrollment where it's supposed to be? Um, is, have we overhired the number of people? Or is spending just going way out of control with no kind of checks and balances? Um, are we, are we collecting all the accounts receivable? Uh, do we have a credit line in place? Uh, because there's, you know, there's going to be some ebbs and flows with the dollars coming in and the dollars going out. Uh, if we were supposed to fundraise a certain percentage of our budget, did the board help with bringing in that half a million dollars that they said they were going to bring in? Oh, guess what we're at, you know, a thousand dollars. And that's very different from $500,000. Right? So, so that's where the root cause is. So it's really trying to pinpoint the root cause. Uh, and, and then you can really dig in and figure out, okay, now that we know what the root cause is, uh, we've got to start making some cuts because otherwise it's. Once you're out of cash, then, then you're out of luck. And it's this whole cascading effect from there.

Speaker A: Yeah, thank you for that. And, uh, for the, the person who asked that question, if, if there's any follow ups, just add it into the chat again and we can come back to it in a minute. But, um, the next one actually leads on, you know, pretty well. Or it's again on the same vein as what are the early warning signs that a charter school may be heading towards financial trouble.

Speaker B: So if, if you have, uh, an in house finance team or outsourced finance team that is not able to communicate clearly, uh, what is going on, what is going wrong? That uh, to me is a really big indicator, uh, because they, they, they're the ones in charge, they're the ones who are doing it. They should be able to communicate what's going, going on here. So uh, if they're not able to communicate, like, like they have to inspire confidence, right? So if you have someone who's lacking confidence, um, someone can be a fantastic accountant, but if they can't get in front of a group and speak about it, then, um, then that can create some sort of, uh, challenge throughout. Because then it's like they got up in front of the board and they were nervous about the numbers. Management now looks foolish. Like, why did you hire this person? Or outsource team? Like, what the heck are they doing? You know, so, so it is to me. It starts with the people who are doing the work. Do they know what they're doing? Are they able to communicate clearly what they're doing? Are they hiding behind finance speak that people will assume that they know what they're doing? No, they need to be able to speak, in my opinion, in layperson's terms, as best as possible and give real life examples, um, to inspire that confidence that's needed. Uh, because then if they ring the, the alarm bell, then they'll be taken seriously instead of, you know, like the boy who cried wolf, right? You, you want to make sure that they're, they're taken seriously and provide that detail that's like, this is what's going on I'm supposed to be doing. I'll give you a real life example. I'm supposed to be doing payroll today, but you made me the Director of finance and Operations. And I went from one emergency to the next, from arrival and dismissal to lunch to the snack time. And I'm running around all day and it's 7pm and it's now too late to submit payroll. You gave me too much darn responsibility. You need to split this into Director of Finance, Director of Operations, because these are actually two roles that you've given me. You've set me up to fail right from the start. So sometimes, uh. Have we structured this properly? Are we allocating the right amount of the budget to the right number of people to do the work? Um, instead of, um, it could be, you know, it's not, not necessarily A person, did you overload, you know them with, with, with too much work?

Speaker A: Mhm. And actually a shout out back to your impact sheet that you mentioned. Right. This is really where those roles and responsibilities of each individual team member should be clearly laid out so that you can make sure do we have scope, are we covered? Or do we have the resourcing to deliver on our obligations? And um, I guess another uh, question and my eyes uh, lit up with this one because spending, spend management is all what we're about here at uh, Procurify. But this individual asked what are some overlooked areas where charter schools tend to overspend?

Speaker B: Overspend? Um, it's typically um, in staff, they're, they're throwing bodies at problems. Um, and you don't have that luxury. And um, what we always Recommend, especially in cure 10, is um, it's the talent and the technology. So there's technology like Procurify, like you know, QuickBooks, like intact. There's a lot of different software that's out there that's going to make uh, you, it's going to help you hire fewer people uh, because you don't. Now that manual process can be done in, in seconds instead of hours or, or you know, lots and lots of minutes over and over, you know, time. So it's um, finding the right software and there's software for all sorts of uh, functions nowadays. There's, there's this one that's field trip management and collecting payments from parents when you have that seven dollar, you know, for the field trips or whatever. Like there's so many different software packages and it's got to be affordable obviously. Uh, but you have to weigh the, you know, the time saved versus the cost of the usually software as a service, um, to make sure that it's, it's feasible over time. Um, and, and it's, it's scalable. So that's really one of the places just throwing bodies at problems. You cannot afford hiring another 50,000, 80,000, $100,000 person at that problem when maybe the solution was $5,000 a year, $10,000 a year to, to streamline processes. Uh, that much more.

Speaker A: Yeah, that's so interesting. So, so interesting. Well I'm going to do one final shout out for questions. If you have any final questions, please do get them in. Um, you've already talked, touched on it there Raj, but I guess if not, if there's no others that come through. My final one is what tools or software do you recommend effective charter schools use? So you obviously worked with Tons of schools. You've been a CFO yourself. What's your go to set? Uh, your, your toolkit essentially to help you drive effective financial uh, management within charter schools.

Speaker B: Yeah. So I would, I would point to the norms within your state because there are certain states that um, QuickBooks is allowed and then in some states QuickBooks is not allowed. You know, so, so uh, that's one. When you get to a larger state, um, intact is a great accounting software, um, where there's a lot of checks and balances, a lot more. You know, you can say this is person's only doing accounts payable and they see nothing else. Um, there's, there's a forecasting, a budgeting forecasting tool that we're currently vetting. So I don't want to put it out there yet because I want to make sure that we've vetted it and you know, uh, well before sharing that obviously procurify, right. So that the, the amount of time that is wasted. Back in the day there used to be a manual purchase order. Then it goes to a stack that people sign, uh, you know, handwritten and then you get the packing slip and you match that and then you get the invoice and you match that. Like come on, we're in 2025. Like, like there's so many better ways to just okay, electronically approve. You're not FedExing, uh checks to be signed by your board member if you need dual signatures. Like all of that stuff that, all this electronic bill pay, um, that, that procurify is also included in this now. Um, that, that it's. There's so many different software packages out there. So um. Yeah just like back in the day payroll used to be ADP and paychecks. Now there's so many. There's gusto, there's you know, paylocity, there's, there's you know it's getting flooded so, so the, the bill pay. Um, there's, it's getting flooded with, with more and more solutions. So if you can have some sort of end to end solution. Uh, I remember I was talking to your CEO uh where I was like can you guys make uh forecastify, you know. Um, because the forecasting is where, where, where you know, that's where all of it is. It is heading because um, the ability to forecast well it just makes things so much easier.

Speaker A: Yes, it's that uh, it's exactly. That's my day to day life right. Is forecasting but also that visibility into spend. So as a final shout out thank you for your overview of the tech stack. Um, I will push ah a poll live here at the end here just to say that if you would like to see a demo of Procurify as mentioned, we are the expense management um, platform, we are the spend management platform. AP's procurement, we've got it all where that end to end solution from procure to pay for mid market organizations. So if you're having any issues, you want to get more information, just be informed as to what the solutions are there. Click our poll here and we will make sure to follow up with you. Uh, but finally, I mean we have come to the, the top of the hour here. Thank you so much, Raj for an insightful conversation. I think that the audience definitely enjoyed it. We've had a wonderful turnout today and again, so for anybody looking for this recording, you want to listen back to it, it will be sent out to your email and then as a separate email. Those of you that attended early and made the cutoff point for a given gift card to purchase this amazing book that will also be in your email. But there's nothing left to say. Other thank you again very, very much and we hope to see the audience online for more questions or more questions for more sessions this week and of course please always do send us your questions. We would love to um, follow up with you. So connect with raj here on LinkedIn, connect with myself, connect with the um, the other panelists you see later on this week as well and let's keep this community sharing insights going forward.

Speaker B: Thank you so much.

Speaker A: Thank you everybody. Have a great rest of your day and we'll see you for the sessions to come later on this week.