School Rescue’s sole focus is on bringing experience and expertise to schools in financial distress to determine personalized solutions, solve problems, improve operations and achieve economic stability. School Boards can rely on School Rescue to establish sound fiscal and operational policies, procedures and practices. President Sid Faucette brings practical insight and wisdom from decades of experience to help Investors ensure sound financial and operating systems are in place and loans can be repaid.
There are Investors who recognize that S&P’s metrics and assessment processes don’t necessarily provide real world insight into the school financial health forecast needed for sound decision making on loans to schools. School Rescue specializes in the types of real world studies that allow investors to gain a greater insight into the school and allow schools to secure loans and other funding.
School Rescue works with schools in crisis:
Sid understands that each school has distinct circumstances and faces unique problems and School Rescue’s individualized service starts at the very beginning with a Scope of Work specifically defined by the expectations of Investor or Board.
A Consultant Report is made available to Investors and Board members following a complete fiscal health and operational practices review. Reports include: defined reality with the Investor and the Board; description of the study in cooperation with the Investor or Board; findings of the study; and recommendations.
Our services help Investors and Boards assess and make decisions related to:
School Rescue provides Investors and Boards with findings and recommendations to establish sound financial and operations systems to ensure compliance with the terms of loans and long-term fiscal stability.
“Sid words can not express the gratitude I feel for all you’ve done for our school. I’m certain without your expertise, guidance and persistence we would be facing closure. I know when you entered this venture you did it with eyes wide open but had no idea the mess that was hidden beneath the surface. You gave us the courage to make tough choices and change things that had remained stagnant for years. You allowed us to dream and then led us on a realistic path to make those dreams come to fruition. I will forever be in your debt for all you’ve done for the staff, students and community of New Bedford Academy. I’m confident we’re on a course for great things! “
The type of sound financial strategies and operational management practices that are needed for schools to thrive are dependent upon a strong governing Board that holds everyone accountable to the responsibilities of their role within the organization and that stewards efficient and effective leadership. Boards should undertake an annual audit of their Charter Contract. Outside assistance on the audit is encouraged to maintain objectivity and ensure compliance with the Charter Contract. Boards, Authorizers and Investors should remain vigilant in identifying signs of distress.
Signs of Distress
The school is unable to consistently meet the short-term and long-term measures set by the Investor. The school has difficulty making payments to creditors and is unable to get credit and loans. Remember, too much debt can close a school and bad credit carries higher interest rates and the loss of potential future lines of credit. There are financial and operations metrics to guide decision making related to loans. State Aid Anticipation Notes, or Bridge Loans, are generally perceived necessary to neutralize the State’s enrollment based distribution of revenues to schools.
The building is not at enrollment capacity or charter cap and anticipated enrollment growth is not occurring to generate revenue estimates, and as a result programs are in jeopardy. Cutbacks in programs and services set off an alarm to parents and employees and debilitate stakeholder morale. Enrollment is the economic factor that drives all services for children and builds capacity to finance property, building, and FFE.
Students are not satisfying the Authorizer’s Educational Goals and an effective Action Plan is not being carried out. There appears to be an inability to achieve the agreed upon academic goals. Every dollar spent should contribute to the academic success of every child and should meet or exceed Authorizer and State standards. Educational program should be audited for charter contract compliance and effectiveness, and amended to achieve the Authorizer’s Educational Goals.
Qualified Audit Reports
The Board designated Independent Auditor has structural audit findings that result in a Qualified Audit, which is viewed as unfavorable by Investors and Authorizers. Prior to a qualified audit report the Board should be on the lookout for weak budget development practices, accounting practices that do not track cash flow, unauthorized lines of credit, and erratic or unusual spending patterns. The Board and management must always be alert to fraud, mismanagement of funds, and conflicts of interest.
The Board and leadership must get their financial house in order to achieve Unqualified Audit reports. Banks, Investors, Authorizers, and Regulators value audited financial statements for their analytical needs and financial stability determinations.
Low Fund Balance
A safety-net is essential to stability. Budget development and budget discipline are essentials to financial stability. Each Authorizer has an evaluation system to determine the health and status of the school for charter renewal or non-renewal, if these systems are not being followed, it’s a red alert.
Authorizers typically conduct mid-contract reviews that give insight into the school’s performance on the reauthorization rubric. The Board needs to hold management and leadership accountable for implementing the charter contract and school improvement plan, including Authorizer concerns. Investors must be assured that charter renewal is solid.
Dysfunctional Governing Board/Ineffective Leadership
The Board has the role and responsibility to fund the school’s capability to improve student achievement for all students; shape school culture; hire and sustain highly effective school administrators; adopt policies and accountability systems to ensure effectiveness of school operations and management; encourage and sustain open and effective communications with all stakeholders, especially parents and community; and maintain a high credit rating for the school. If there are issues in any of these areas, a fiscal and operational management audit is needed to root out problems before they grow untenable.
What can School Rescue do?
School rescue can identify and stop a problem in its tracks and lead schools out of crisis situations. Sid has first-hand experience at overcoming all of the distress factors and brings the lessons of experience to his consulting work with each school. He offers the practitioner’s lens with an outside-in diagnosis, analysis, and solutions to real world issues related to efficient and effective school operations and sound financial practices. Sid pinpoints deficiencies, vulnerabilities, and policy and procedures gaps and breakdowns in the financial system, and works with the Board (at the request of the Lenders or the Board) to build efficient and effective systems to promote longevity and stability.
School Rescue works with an informal Quality Control Advisory Council to ensure all aspects of each unique scenario are identified and understood, and to remain current of the regulatory environment. The School Rescue Quality Control Advisory Council is made up of Investors, Lenders, Attorneys, Board Members, CPAs, School Leaders and Active Parents.