Budget to Actual Analysis

Budget to Actual Analysis

March 27, 2020 | Financial Management

Charter schools are required to establish budgets which outline how the school will spend its funds throughout the year.  The budget’s goals, priorities, and planning are decisions driven by the school board and superintendent. The campus and charter-wide campus improvement plan are the drivers of the budget expenditures.

Charter schools are required to get the budget adopted by the board of trustees no later than August 31st for schools starting on September 1 and June 30 for schools starting on July 1.  The board will approve all activity in Fund 420, Fund 240, and on all debt activity at the functional level (Fund-Function.)  Funds cannot be used in any manner other than what was provided for in the board-adopted budget.

The superintendent and other business leaders at the charter should regularly review actual activity compared to the budget. Differences between the budget and what is spent are called variances.

Charter School Success prepares Budget to Actual statements for its clients every month to show these variances. We review the report as a percentage of the year complete and see if expenses are in-line with that percentage. We would expect that for schools starting September 1 that by March, the school should have used approximately 50% of the budget. It would be great if all expenses could be equally divided as 1/12th per month, but we know that is not the case. We review variances greater than or less than 5% of the year-to-date complete to determine the cause. For example, a common variance is paying annual payments in full which would fully expend the budget and cause a variance for much of the year.

Schools should research the causes of each variance to determine if they are expected or unexpected.  Unexpected expenses may lead to a budget amendment. It is important that the charter school review these reports and prepare a budget amendment for the board to approve if expenses in any function will exceed 100% in Funds 420, 240 or debt service.

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