Fiscal Policy
Operating a charter school is both rewarding and complex. Strong fiscal policies ensure transparency, accountability, and financial stability, allowing schools to effectively manage their resources. Charter schools should implement internal controls that provide reasonable assurance that their financial objectives are met, including:
- Safeguarding the charter’s assets
- Ensuring the reliability and integrity of financial information
- Maintaining compliance with legal and regulatory requirements
- Promoting operational efficiency
- Supporting the achievement of financial and educational goals
The following sections outline best practices for implementing and maintaining effective fiscal policies within a charter school.
Administration
Charter school administrators must be actively involved in financial oversight. They should have a clear understanding of the school’s financial status, policies, and operations to ensure that decisions align with the school’s mission. Administrators are responsible for maintaining strong internal controls and regularly participating in financial management activities.
Annual Budget & Amendments
The school administration prepares an annual operating budget, detailing projected revenues and expenditures, for Board approval. The Board must approve a final budget before the end of the fiscal year. Budgets should be reviewed regularly and adjusted as needed to reflect changes in enrollment, funding, and expenses.
Funds may not be spent outside the adopted budget without an amendment. The Board must approve amendments that involve transfers between budget categories or additional funding needs. Amendments should include documentation that justifies the request.
Bank Accounts & Signatory Authority
The charter school must maintain depository bank accounts for receiving TEA funds. The Board may authorize additional accounts for specific purposes, ensuring that all accounts comply with state and federal banking regulations. To prevent fraud, signatory authority should follow segregation of duties, ensuring that no single individual controls the entire approval process.
Finance & Business Operations
Charter schools must operate in compliance with state and federal financial regulations. Financial records should be maintained using approved accounting software that meets TEA, TRS, and PEIMS reporting standards. Systems must have secure internal controls to protect financial data, and backup files should be stored securely to ensure financial information can be recovered if needed.
Cash Management
Strong internal controls over cash handling help prevent fraud, loss, and mismanagement. Best practices include:
- Separation of duties – Different staff members should handle cash collection, deposits, and reconciliations.
- Proper documentation – Every transaction must have receipts, logs, and supporting records.
- Secure storage – Cash and deposits should be locked away until deposited.
- Timely deposits – All funds should be deposited within one business day.
Petty cash funds may be established for small, non-recurring expenses but must be documented and reconciled monthly.
Segregation of Duties
To prevent fraud and ensure accountability, financial duties must be divided among different individuals. Key roles should be separated so that no one person has full control over financial transactions. This applies to:
- Approvals – Authorizing purchases and expenditures
- Accounting & reconciliation – Recording transactions and reconciling accounts
- Cash handling – Managing receipts, disbursements, and deposits
Debt Management
Debt must be carefully managed to prevent financial strain.
- Short-term debt – Financing that must be repaid within one year.
- Long-term debt – Borrowing for major projects with repayment exceeding one year.
- Approval process – The Board must approve all debt agreements, which must clearly state the loan purpose, interest rate, and repayment schedule.
Investment Policy
Charter school investments must follow the Public Funds Investment Act and comply with state and federal laws. Investment policies should prioritize:
- Safety – Protecting the value of principal investments.
- Liquidity – Ensuring funds are accessible for operational needs.
- Return – Achieving a reasonable return within the school’s risk tolerance.
The Board must review and approve investment policies annually.
Inventory Management
Schools must track equipment, furniture, and learning materials to safeguard assets and prevent unnecessary losses. Inventory policies should include:
- Tracking purchases & receipts – All new assets must be documented and tagged.
- Annual inventory checks – Schools should conduct regular audits to verify asset records.
- Proper disposal procedures – Outdated or damaged items must be removed responsibly.
Annual Audit
Charter schools are required to undergo an independent annual audit conducted by a Certified Public Accountant (CPA). The audit verifies compliance with state financial regulations and Generally Accepted Accounting Principles (GAAP). Key aspects include:
- Reviewing financial records for accuracy and compliance.
- Identifying deficiencies and recommending corrective actions.
- Submitting the audit report to TEA within the required deadline.
The school board must review and approve the audit and address any findings to maintain financial integrity and avoid penalties under the FIRST rating system.
Conclusion
A strong fiscal policy framework ensures that charter schools operate efficiently, comply with regulations, and safeguard financial resources. These policies support long-term sustainability and help schools fulfill their educational mission while maintaining public trust.
While this guide provides a foundation for best practices, schools should tailor fiscal policies to meet their specific needs and operational structure.
Need Help?
Email Finance Director Norma Garcia – ngarcia@charterschoolsuccess.com
Questions?
Visit the Charter School Community Roundtable to ask questions, get answers and discuss now.
Register for the newly-updated online course: Fiscal Policy.