A Data-Driven Approach to Financial Oversight: Ensuring Financial Health & Stability for DC Public Charter Schools - Challenges
Joining a new organization can be challenging on its own, but I must say that the leading financial oversight for a charter school authorizer was unique in its own way. As a follow-up to the previous post, this article covers the challenges I encountered when implementing new fiscal oversight procedures for Washington, DC’s charter school authorizer.
In the previous post, I shared the impetus and the overall strategic plan behind the new financial oversight measures. This post deep dives into the challenges and how they were overcome to enhance financial oversight at the agency.
Defining the Business Rules:
Situation: At the time I joined, the agency published a technical guide which defined the business rules utilized in calculating key financial performance indicators for each local education agency (LEA).
Task: Each year, the technical guide would be reviewed, but there were a few areas of judgement with regards to calculating liquidity: some schools argued that specific investment instruments should be considered in the “Days of Cash on Hand” calculation which was one of the most significant metrics.
Action: Through collaboration with auditors, financial managers, and executive leadership, we were able to pass the technical guide with clarification on which instruments would be considered liquid for purposes of the calculation and enhance audit disclosures to provide transparency into school asset portfolios.
Result: The Technical Guide was published with amendments to the days of cash on hand calculation. These business rules were utilized to assess the overall health of each school across a range of measures.
Data Collection
Situation: When I joined the organization, the data warehouse was primarily utilized to store academic data, and financial analysis was conducted in a series of excel documents.
Task: My goal was to incorporate standardize financial data collected from schools into a structured format to offer more real-time, transparent access into each LEA’s performance.
Action: Through collaboration with the data team, I was able to develop a standard template for LEAs to submit their results on a monthly and quarterly results.
Result: The templates allowed us to track results in real-time which enabled me to begin conducting trend analyses and financial modeling.
Data Validation and Reconciliation:
Situation: On a monthly and quarterly basis, schools would submit financial results; however, since each LEA was on independent accounting system, there was no way to validate the completeness or accuracy of what was submitted.
Task: On an annual basis, financial submissions would be reconciled to audited financials to validate the accuracy of results within the system.
Action: I supervised two contractors who helped reconciled financial results from results within the data warehouse to audited financial statements.
Result: On an annual basis, results were reviewed against assurance reports. These reports served as the basis for external reporting to parents, the Mayor’s office, the State Superintendent, and other key stakeholders within the District.
Data Aggregation and Analysis:
Situation: Mayoral budgeting within the District happens at a sector-level rather than a school-level. Therefore, in order to provide recommendations to the Mayor or Superintendent’s office, financial results needed to be aggregated regarding the charter sector as a whole.
Task: Sector-level financial results needed to be compiled utilizing the results from individual schools.
Action: Referencing the validated results from each school, I was able to extract the reports to prepare a compiled Statement of Financial Position, Statement of Activities, and high-level Statement of Cash Flows.
Result: Summary tables reconciling each school’s results relative to the sector were included in the annual financial analysis report.
Data Storage and Documentation:
Situation: Through collaboration with the data and knowledge management teams, I was able to store aggregated and detailed results within the new data warehouse.
Task: The key was to make sure all accounting workpapers had sufficient and appropriate documentation.
Action: Manual copies of audit reports were retained which documented the data validation process. In addition, digital copies of the validated results were retained in the data warehouse with accompanying reviews and approvals.
Result: Aggregate results were published, stored, and presented on public record to both the DC Public Charter School Board and the City Council. Refer to the Financial Analysis Reports approved by the Board for 2017 - 2019 below:
