Board Minutes (July 2017)

July 26, 2017 Board Meeting

5105 Wheelis

Memphis, TN

Greg’s Office

Commercial Advisors

Notes from Luke Pruett:

Motion to vote to approve the minutes from last month by Lisa, second by Jacque. Unanimous vote for support.

Announcement of new positions vocationally to 2 board members: Greg (EVP of Commercially Advisors Asset Services); Lisa (Chief Performance Officer, ASD).

 

Lisa : Submission of minor provision changes to the Board Charter. Lisa begins taking initiative as role shifts from Proposed Board Chair to Board Chair. Increased efficiency in opening & pace of Board meetings.

 

Finance Report from Thomas: high level overview of where we are for the next 12-14 months. Total giving of 1.4 million in Grant's. Cheers to Danny for his work in acquiring these funds. Not stop there with pursuing funds. Committee will begin getting together fiscal policy handbook. Need to follow procedure so the Finance committee has approved changes to the Budget's for August contract labor. Org structure reporting important in updates. 

 

Danny: Finance committee needs to approve before going to the entirety of the Board. EdTech will provide another board.

 

Jeffrey Gyahart client manager from EdGech back office provider. Jeff's background isin education finance. The Fiduciary Role of the Board: adopt a balanced & thoughtful budget, maintain public trust through proper oversight of public funds, meet financial obligations of the school. Cultivate resource ops. For the school.

  1. Are we on track w/ our target number of students (120)?: the biggest source of our funding is from BEP. Keep an eye on periods 2,3,6,&7 (October-November; February-April). Weighted averages formula is how the state determines funding. ADM (average daily membership) is determinative of BEP funding allotments. We open August 1st 2018. Want to utilize a waitlist & continuous recruiting. 

  2. What part of my budget is going to staffing? Minimum of 50% of funds going to services & benefits, this is the biggest area of spending for any school & provides insight about human capital issues.  Watch out for: cost creep over time (Promotion inevitable so make sure jumps are in line) & subcategories. Tools: --Org. Chart (clear path to advancement a huge way of getting folks to stay) that can grow & -- Budgeted Staffing plan. Want employer benefits costs to stay great. 

  3. Are staff & vendors being paid on time? Delays usually signal that school may be having financial challenges.  Watch for: --liability balances staying high -small or nonexistent operating margins combined with a small reserve.  Tools to use: check registering/aging report. --cash flow/balance sheet. Watch: --cost of borrowing --cash on hand.

  4. Are we borrowing money in any way? Board must be involved in any decisions concerning debt. 

  5. Are we accessing and utilizing all the possible funding sources we are eligible for?  Don't leave money on the table, maximize your allocation. Watch for: --lack of budget diversity. Use the budget as a tool. 

  6. Where are we deviating from the trends & benchmarks? Charter school financial activity is cyclical. Cost drivers largely consistent across schools. Watch for: breaks from expected trends & deviations without explanation. Cash flow. Annual budget/multi year budget. How are we tracking financial information. It's the job of EdTech (back office provider) & ED/DOO to be in the details & it is then the Fiduciary duty of the Board to ask questions. 

  7. Are we meeting reporting obligations? Status reports that go out from state & annual financial audit (consolidated audit for 2016 through first year of operation needed--18 month audit from inception, BMA Incorporated began in Sept. 2016). Smart tool to use is the state reporting calendar. Reporting consistent with internal reporting to board?

  8. What is currently our biggest financial risk? Insulate & protect from risk as much as possible, exposure to risk will derail you the fastest. 

  9. What are our current financial goals? Budget, strategic plan, current year v. Multi year, facilities. What is the school working towards?

  10. What does my audit report say & does it match our internal reporting? 

 

Thought partner: how does this align with your mission? How does this move your work along?

 

EdTech is a social company strategically aligning with us. 

 

Notes from KLC

KLC arrived at 640 pm. Meeting started at 620 pm.

Present: Greg Spillyards, Jaqueline Rowe, Thomas Marino, Danny Song, Lisa Settle, Luke Pruett, Elena Cole, Kacy Coble

Not present: Al Bright

Also present: Jeffrey Gayhart to present proposed budget to the Board. Also present Jefferson - .

 

EdTech Presentation – Jeffrey, EdTec Advisor

10 Questions We as a Board Should be Asking

Q1 Are we on track with our target number of students?

9600-9700 per pupil. Funds on a weighted average formula. District splits up the periods of enrollment over 10 periods. Periods 2, 3, 6, and 7 – these are the only periods that count toward average daily membership (“AND”). Goal is 120 students; if we open 8/1 and we have 90 kids. That won’t affect our funding because that is period 1. We have 6 weeks to ramp up for period 2, which counts. 6 is usually in March. 2 – 12.5%; 3-17.5%. 6-35%. 7-35%. Use a waitlist to help keep numbers steady for periods 6 and 7. We also have to maintain continuous recruitment, no matter how good our name is. Someone else will always be recruitment.

Watch neighborhood trends; demographic trends. Siblings, grades, etc.

Q2 What part of my budget is going to staffing?

Most schools – 50% goes to staff and benefits.

Q3 Are staff and vendors being paid on time?

How to notice cash flow problems – liability balances are staying high and there are small or nonexistent operation margins combined with a small reserve. Tools to use? Check register/aging report and cash flow/balance sheet.

Q4 Are we borrowing money in any way?

Board has to sign off any time we are taking on debt. Always investigate the interest rates and terms, as well as the covenants. Look to the check register and cash flow/balance sheets. Consider the cost of borrowing and the importance of cash on hand.

Q5 Are we accessing and utilizing all possible funding sources we are eligible for?

Make sure we are accessing all money that is on the table. There are funds we can access through the government but we have to apply for those funds.

Q6 Where are we deviating from the trends and benchmarks?

Watch benchmarks – like how much is our personnel cost per pupil. How much is our overhead per pupil. It should be shrinking over time. Tools to use – cash flow and annual budget/multiyear budget.

Reviewed where should you ask questions slide.

Q7 Are we meeting reporting obligations?

Complete a budget and AFR to Shelby County every year. Also responsible for getting a financial audit and reporting those findings to the state comptroller. Will need a consolidated audit for this previous year. Will send a letter to the state comptroller requesting a consolidated audit so that our audit can be combined for the planning year (inception) through the first year of inception. Consolidated audit is from the day the charter is approved through the first year of operation. Tools to use? State reporting calendar. Have a general idea of when these items are due. Are these reports consistent with these internal reports we are getting at the board meetings? Be watching this.

Q8 What is currently our biggest financial risk?

As a board, we should be risk averse. Extremely risk averse. Everyone seems to be on the same page regarding the biggest issue. Watch for risks that don’t seem to go away over time or as the school grows/matures. Is it enrollment – is it facility safety – what is it?

Q9 What are our current financial goals?

Is it buy a facility? Is it bussing? What are the goals and are they well defined? Use the budget and strategic plan to watch and monitor our goals. A lot of times these financial goals require a lot of sacrifice. Are we building a reserve for our goal(s)?

Q10 What does my audit report say and does it match our internal reporting?

Take time and look at the audit and the commentary. Review the numbers and analyze. Look and compare budget to the audit. Did we execute the budget? How did Danny and the DOO do? How good were the guesses and assumptions we made in the budget? This will help us ground our assumptions for the following year. Were we right or do we need to adjust?

Danny commented re Jeffrey’s availability and how great of a resource he has been for Danny over the last couple of months. He has been a true thought partner. Jeffrey has given us a proposal for us to consider which the Board will vote to approve or deny at the next Board meeting.

Thomas also asked questions of Jeffrey re: the services EdTec provides.

 

Jeff introduced himself. Jeffrey Warren – introduced himself.

Luke presented to the Board for the governance committee. Review the prospective board members spreadsheet on the shared drive. Asked existing members to complete section for yourself on Sheet 2. Emphasis on finance background. Diverse finance members (some non-white males). Availability is important for board members. Also strong network. Ross Montague is a candidate that stands out to the committee. Trey Carter because young, entrepreneurial, and building a network. Tanja Mitchell has a huge North Memphis community connection. Review the proposed resumes and ask any questions that arise. Would prefer to 2 board members and open to adding up to 3.

Proposed officers to interview the recommended board prospects before the next board meeting and then make a recommendation to the board at the next meeting.

Lisa presented for the policies/structure committee. Reviewed the job descriptions. Reviewed potential policy changes. Agreed to send Danny notes re: committee questions and proposed changes to job descriptions and employee handbook.

Greg presented for Facilities. Talked about potential facilities and sent out a list of potential facility owners. Requested board members review and communicate re: connections/ins. Greg took an aerial of the medical district.

HOS Report – Biggest risks right now are enrollment and facility. Several community engagement events coming up. July 29 – 2-5 pm, 2nd anniversary of Memphis Lift; August 4 is Bridges USE community-citywide event geared toward middle and high school students – it is a community action fair – Danny is hoping parents will be there; UpTown Block Party – Aug 5 from 11-130 at GreenLaw.

Lisa moved to adjourn at 7:59 pm.



 

Danny Song