Nonprofit Charter School Organizations Live and Die by Their Budget
Marketing Budget
It is impossible to cover everything about charter school budgeting in a short blog post; however, in general nonprofit charter school organizations live and die by their budget. We all know that unforeseen events can and will occur, but nonprofit organizations, unlike for-profit organizations, have limited options when it comes to adjusting their budgets midstream.
Basic Charter School Funding
For example, a for-profit organization that is experiencing a rise in expenses can opt to pass that expense on to its end user or customer and this change can happen relatively quickly. A charter school that is experiencing increased costs simply must absorb those additional costs and hope the state provides more funding in the upcoming legislative year.
So what does a new charter school do to create its budget? The first thing a business manager at a charter school needs to understand is the basic make-up of a school’s budget. On the revenue side, we have state equalization payments – this is the funding received on a per pupil basis.
This line item is the bulk of revenue a charter school receives. The other line items may include miscellaneous grants (federal & state), national school lunch program revenues and other revenue generated from school activities.
It is important to understand that approximately eighty percent of revenue comes from one source, state equalization, and the main driver of this revenue is students. Knowing this allows you to focus your resources on attracting students and keeping students enrolled in your school.
It’s sometimes difficult to use financial terms like “revenue” or “cost to acquire” when speaking about students; however, if a charter school wants to achieve its mission of providing a high- quality education, it needs to have students in seats. Once a school has met its enrollment targets for the year it needs to shift its focus on retaining those students for the next year.
When charter schools prepare their budgets, the process will be different depending upon at which stage the school is in their life cycle. A new school will not have historical data to use when creating its budget. Therefore it is important to use benchmarks when creating a budget. Knowing that state payments are simply multiplied by the estimated amount of students is an easy way to begin. However, schools in the early phase of their existence need to maximize flexibility when creating their budgets. Having worked with approximately 40 new schools over the past number of years, I have rarely seen a school meet its enrollment target in its first year of operation. The majority of charter school founders overestimate the interest that their school will generate within the community, resulting in a missed enrollment target. Consequently, the entire budget needs to be adjusted as fewer students will ultimately mean fewer teachers, less supplies, etc. I always recommend that schools create a dynamic budget that includes a low enrollment estimate, a middle estimate and high estimate. This allows the charter school personnel to see what happens to their budget if they don’t meet, or if they do meet or exceed their enrollment projections.
A common question that is asked a lot regarding a marketing budget for new charter schools is “how much should I budget for marketing expenses?” The true answer is – it depends. It depends on many factors: the community where you will locate, the number of students you intend to serve, the demographic of the students you will serve, etc. Here is a simple guideline – research shows that the national average is approximately $300-$500 in marketing expenses per student. Of course, in some
