What is strategic financial thinking?

Strategic financial thinking arranges your finances to support your mission and objectives.  Simple bookkeeping and accounting, while crucial, are not enough.

Serious problems can arise when you fail to think strategically about your finances, it can even inhibit a school’s ability to serve their students.  When finances deteriorate, it is often the first sign of a school’s eventual academic decline.  As the stakes for success intensify, authorizers are increasing their vigilance in monitoring key financial metrics.  However, this still isn’t enough.  One can’t simply rely on authorizer models to tell you whether or not your finance strategy is sound.  It is only doing some of the work.

Most schools only realize their financial strategy has failed when crisis hits. Don’t wait until then to secure your school’s future.

Two key areas of Strategic Financial Thinking

Managing debt and timing cash flow are two of the most important areas to consider.

Debt can be a powerful tool in achieving your mission but it can also be just the thing which drags a school into trouble.  Debt maturities can come due when cash is low or after leases expire.  Do you have $100,000’s of dollars ready and waiting to make payment?  Will you still owe money on your tenant improvement loans when your lease expires? When moving into a new location, legacy debt from your old space can complicate future financings.  The timing of the debt and total amount due can both be a problem.

Did you know that many real estate appraisals are inflated or disconnected from market reality? This allows you to borrow more money at the beginning but when it comes time to refinance and the value isn’t there, your refinancing efforts can be crippled. Considering selling a building just to pay the debt is a scary prospect.

Debt isn’t the only potential problem.  Cash flow management on a tight budget takes experience and savvy.  All kinds of problems arise from failures in this area.  Maybe you miss payroll one week because of poor cash management.  Or necessary investments in program assets become impossible because resources are already stretched too thin.

Because revenue is reset every year depending on student enrollment, schools can’t even be sure they’ll have the same cash available each year.  I’ve seen over confident schools with a million dollars in the bank feeling secure, but clueless in two years they would be broke due to enrollment trends.

Swift and decisive action at the time of crisis can solve many problems, but –

The best time for strategic financial planning is preauthorization.

However, it is never too late. Schools must incorporate strategic financial thinking as soon as possible.  The stakes are too high not to.

Charter Schools often forget they are multi-million dollar organizations which require a different level of thinking than a mom and pop start up.  Finding school leaders who are expert in academics and business operations is quite difficult.  Understandably, schools often chose to go with a proven academic leader than a business-type manager. Unfortunately, major problems can arise if the right team isn’t built around them.  Leadership can focus too much on student achievement and let strategic financial planning fall by the wayside.

Several factors can distract or even discourage the investment in strategic financial thinking.

First, I think being of service to children somehow reduces the sense of complexity involved in managing an organization of this size.  Smiling faces and cheerful sounds on the playground create a nice bubble which soothes away pressures of managing hundreds of thousands or even millions of dollars per month.

Even more assuring are the steady per pupil allotments, which have the perverse incentive of creating financial complacency.  As those dollars come in predictably each quarter, the idea there could be a financial problem down the road seems unlikely.

And perhaps most importantly, school leaders and Boards want to stretch their direct programmatic spending as far as possible and often skimp in one area that would benefit the mission – sophisticated financial planning and strategy. 

Budgetary pressures may prohibit single campus LEAs from taking on a full time CFO, even when it would make perfect sense to have one on board.  Sadly, adding one more teacher or support staff to strengthen the school instead of a CFO can have the opposite long-term effect: costly financial missteps resulting in even less funds available for program and perhaps even closure.

In my time as Chief Financial Officer and Executive Director of two different charter schools I learned first hand just how painful these mistakes can be.  A school with a $11 million dollar budget couldn’t even make payroll when I arrived.

My first act as CFO was to collect hundreds of thousands of dollars in short-term loans from Board Members – just to make payroll – and even then – they didn’t pay the payroll taxes!

Digging out of that hole was hard. We limited resources, cut jobs, and closed entire campuses.  Strategic financial planning done from the start could have avoided this crisis entirely.

(eventually we saved this school, restored financial strength, and improved student achievement )

I understand: founders, leaders, boards – each want to support the school’s mission and often that means maximizing dollars spent on direct programmatic expenses. 

But short-sighted planning leads to crisis, crisis leads to cut backs, and cut backs can often directly harm student success. 

We can avoid all of this.

That is why I’m offering my services to the Charter School community.  I wish to bring my expertise in strategic finance to as many schools as possible, leveraging my unique skill set and experiences to have the greatest impact on student achievement I can.

Together, we can avoid crisis for individual schools and strengthen the charter sector as a whole.

My clients and partner schools benefit directly from my expertise, and save on the expense of a full-time CFO. 

Working directly with Boards, executive directors, business managers, auditors, and accountants, I can help your school avoid the mistakes of others and if necessary – solve today’s crisis immediately.

Types of strategic financial thinking I offer :

  • Debt Management / Restructuring
  • Short and long-term budgeting
  • Authorizer / Regulator management and liaison
  • Zero-Based Budgeting
  • Fraud, Waste, and Abuse prevention and elimination
  • Tactical Cash Management
  • Crisis Management
  • Insource vs. outsource decisions
  • Curing Audit Findings
  • Executive Director and Board Coaching

Let’s do this together

My track record solving financial problems for Charter Schools is public record. I’ve cured audit findings, resolved budget deficits, built cash reserves, eliminated fraud, waste and abuse, and saved schools millions of dollars through cost-cutting and creative debt restructuring.

Now I offer these results to you.

I know Boards and Executive Directors want to create and maintain excellent schools. In this challenging environment, that takes a team of first class professionals – both academic and financial.  My goal is to provide you with those financial services in a timely and cost-effective manner.

Contact me and let’s begin a conversation.  Scheduling a free consultation is just as easy filling in your name and email below – no strings attached!

Email me today!