When creating a new Charter School, the leadership team has a lot on their minds - curriculum, hiring teachers, finding a building location, and passing the State's approval process. One thing that may be unaccounted for is the school's actual accounting. Charter Schools in North Carolina use software known as LINQ. LINQ is designed and supported by a North carolina company out of Wilmington called, Education Management Systems, Inc. The North Carolina Department of Public Instruction (DPI) actually supplies the software to the Charter School and the Charter School is then responsible for paying the quarterly support payment of $745.00.
The LINQ software accounting program is the Charter School's primary method of communicating financial information to DPI. DPI requires month end reporting of all financial transactions and payroll within the first two business days following month end. The LINQ software will create the following formatted files for DPI reporting: financial reporting, payroll files, orbit reporting files, and employer reports for Staff ID.
Why is Financial Reporting So Critical?
The monthly financial reporting is used by DPI to determine if the State and Federal Funds, requested by the Charter School, have been used in a correct and timely manner. There was once instance of a school being caught and actually shut down in the Summer of 2014 for using the State funds for personal expenses. This was quickly caught and the school was shut down. Since this is money supplied from State and Federal governments, it must be used and reported properly, or else the school will face immediate consequences. If you feel at all uncomfortable with this duty, then it is best to contact a certified North Carolina accounting firm that handles Charter School Accounting.
Did you know that the majority of Charter Schools who lose their charters, lose it over financial difficulties, rather than scholastic deficiencies? It is very important for Charter School leaders to recognize that they are operating a business, not just a school. Also, it is important to realize that this is a business that is funded by Federal, State, and Local taxpayers, so their will be a spotlight focused on how and why these funds are spent.
In order for leaders to focus on providing the best possible education for their students, it is recommended to discuss your accounting with a CPA Firm and to give thought to outsourcing your accounting department to a CPA Firm that has experience handling charter school accounting.
Charter School Financial Best Practices
- When determining the opening date of your school, consider when funds will realistically be available to you.
- Request your local funds ASAP! Your first allotment will be used very quickly as there are a lot of startup expenditures.
- You must receive your Certificate of Occupancy before you will receive any state funds.
- Do everything you can to not delay your opening - this can scare away parents, who may decide to just go with their assigned public school to be on the safe side.
- Have a budget and be prepared to adjust for financial changes.
- Take in to account if you will need the same staffing if you have a lower enrollment than anticipated.
- As a rule: Staffing will account for 80% of your expenses.
Your finances keep your Charter School open. Make sure your finances receive the attention they deserve. To learn more please reach out to our Charter School Accounting Team for your no-cost consultation. Our team specializes in providing LINQ Accounting, Financial Reporting, Funds Management, Bookkeeping Services, Complete Payroll Services, State and Federal Tax Reporting, Budget Building, and Audit Services to Charter Schools across the state of North Carolina.