Purpose of Audit

The purpose of our audit was to evaluate the effectiveness of the School’s compact contract with the Foundation, and the process for developing and monitoring its annual budget for the period July 1, 2011 through June 30, 2013.

Background

The Brighter Choice Charter School for Girls is located in the City of Albany. The School is governed by the Board of Trustees, which currently comprises six members. The School’s budgeted expenses for the 2012-13 fiscal year were approximately $4.14 million.

Key Findings

• On May 27, 2011, the Board approved a compact contract between the School and the Foundation that states that the Foundation will provide the School with access to legal and financial assistance, technical support and advocacy at State and local levels. The fee for these services is 1 percent of per pupil revenue from the prior academic year. On January 31, 2013, the Board approved a revised compact contract with the Foundation that supersedes the prior compact contract. The revised contract increases the fee from 1 percent for the 2012-13 school year, to 1.5 percent for the following year, and 2 percent for the final year of the contract. The increase in the fee percentage over the next two years will place an additional financial burden on the School. The fee structure of a percentage of per pupil revenue does not appear to be reasonable, as the services being provided do not have any bearing the number of students at the School or the State Education Department Charter School Tuition rate.
• The School did not budget properly. The School failed to accurately budget a number of expense accounts, including failing to budget some account codes and using unrealistic amounts in others. In addition, the School does not modify its budget during the year. During fiscal years 2011-12 and 2012-13, School officials had budgeted for a $650,362 surplus. However, the actual net income amounted to only $89,497, a shortfall of $560,865.

Key Recommendations

• Determine if there is a more cost effective means to receive the desired services currently being provided by the Foundation. Ensure that contracts include a sufficient description of the benefits, rights, and responsibilities of all parties to the contract, and the Board should use this information to monitor compliance with the contract.
• Adopt a budget that includes realistic estimates of all revenues and expenses based on both historical data and expected activity in the upcoming school year.