KINGMAN – Arizona is concerned many charter schools are closing their doors due to financial woes and have failed to meet standards set by the State Board for Charter Schools, according to a report by The Arizona Republic.
The Daily Miner spoke with Susan Chan, executive director at Kingman Academy of Learning, to see how the district is doing financially.
Charter schools are classified under three different categories of performance: financial, operational and academic. Under the financial performance KAOL and other charter schools are measured under near-term and sustainability. In the near-term category, KAOL meets all three measures: going concern, unrestricted days liquidity and default.
Going concern is how the school rates in regards to if the school is at risk of closing their doors within a year. KAOL meets this requirement, which means they will remain open.
Unrestricted days liquidity indicated how many days a charter school has to pay their expenses with the cash it has on hand. The state board requirement is at least 30 days, but KAOL exceeds that amount with about 82 days.
KAOL also hasn’t defaulted with any of its lenders, so they meet the default requirement for the state board.
Under the sustainability measure, charter schools are measured in three categories: income, fixed charge coverage ratio, and cash flow. KAOL fails to meet the requirements for these categories.
KAOL’s net income, according to the state board financial performance dashboard, shows that the district is spending more than what they are receiving.
“Many years of not being funded expenses go up,” Chan said. “We don’t get money to cover that.”
KAOL is supposed to have a ratio greater or equal to 1.1 to meet the fixed charge coverage requirement, but it is almost there with a ratio of 0.88.
The districts cash flow, which is the cash balance from one year to another, also fails to meet the state board requirement.
The state board is watching some schools closer than others but that’s their job Chan said. KAOL is not in a financial hole because the school has a healthy cash reserve, which is ‘emergency money,’ and they are frugal with their money, Chan added.