Transcript Facility Financing Workshop Self-Help Building Hope Who is Self-Help? • Non-profit CDFI founded in 1980 • Mission: Creating and protecting ownership and economic opportunity for people.

Facility Financing Workshop
Self-Help
Building Hope
Who is Self-Help?
• Non-profit CDFI founded in 1980
• Mission: Creating and protecting
ownership and economic opportunity for
people of color, women, rural residents
and low-wealth families and
communities.
• Over $100 million lent to charter schools
nationwide since 1997
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Building Hope
Mission: To close the achievement gap by providing student access to high
quality charter school facilities through the provision of the following services:
Technical Assistance
Financing (Loans and CE’s)
CS Business Services
Incubator Initiative
•$42 million in total lending since 2003
•Over $17 million in guarantees
•Supporting $310 million in facility costs
•Supporting over 18,500+ seats
•50+ transactions
•Provide accounting and I.T.
services to over 25 charter school
campuses
•Prepared eRate applications for
over 50 schools
•HR Management
•Property Management
•Partnership with DC Gov’t
•Established 5 incubators for 6
charter schools
•Leased and renovated over
110,000 sq ft creating seats for
approximately 1,000 students.
* As a % of staff time
•Assisted over 100 charter
schools with business
planning, real estate, and
finance
•Speakers at national
conferences and U.S.
Department of Education
programs
•Led ground-breaking
conversion of 7 Catholic
schools to charter schools
•Provide grants for feasibility
studies
•Support/manage charter
school applications for surplus
DC school facilities
•Project management to build
or renovate facilities
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Charter Schools Need To
Demonstrate:
Financial Control and Sustainability:
• Credit and Financial History
– Report, tax returns, audited financial
statements, year-to-date results,
projections
• Cash Flow
– Profit, increasing enrollment
• Collateral
– School property worth ~50-75% of loan
value, so need to fill gap with other real
estate, cash pledges in CDs, equipment,
personal guarantees, etc
• Cash Equity
– Standard down-payment is 20%
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Two Factors About Financial and
Facilities Planning
1. Numbers of Students
2. The Amount of Per Pupil Revenue You Will
Receive
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Plan only with money you have either in hand or
committed by law
Too many schools get in trouble because they
assume their enrollment will grow. If you play
optimistically, even a modest shortfall can
challenge your school’s ability to honor its
obligations.
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Charter School Budgeting Worksheet
Question 1: What is my maximum gross revenue?
• How many students do you expect to enroll in Year 1?
150
• How much per pupil revenue will you have?
$6,000
• [# of students] X Per Pupil Revenue= Maximum Growth Revenue
150 X $6,000= $900,000
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Determining a Realistic Revenue
Projection
Question 2: What is my likely gross revenue?
Note: Most new schools suffer 10% attrition from opening day
[Maximum gross revenue] x [0.9] = likely gross revenue
$900,000 x .9=$810,000
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Maximum Facilities Expenses
Question 3: How much should I spend on my
building?
Note: Occupancy costs should be no more than 15% your
revenue. This includes maintenance, rent/mortgage
payments, insurance and all other building related
expenses.
[0.15] x [likely gross revenue] = maximum facilities expense
.15 x $810,000=$121,500
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Size of the Building
Question 4: How big of a building do I need?
• Note: You should plan at least 75 square feet per
student (100 square feet per pupil is ideal)
[# of students] x [75] = minimum usable space for building
11, 250 sq ft
[Max payment] / [Min square feet]
= max rent or mortgage per square foot
$121, 500/11, 250=$10.80/sq ft
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Ideal Mortgage or Lease Payments
Question 5: What rent or mortgage payment can I afford?
• Account for operating costs; typically, about $6/ft2
[Max cost per sq ft] – [ $6 ]
= Max mortgage or non-inclusive rent
per sq ft
$10.80-$6=$4.80/sq ft
[Max mortgage or non-inclusive rent
per ft2] x [building size in ft2]
= Max mortgage or non-inclusive
rent
$4.80 x 11, 250 = $54, 000
Mortgage or Lease
Utilities
CAM
Repair/Maintenance
Grounds
Security
Administration
+ Insurance
= Total Facility Cost
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Teaching Staff Expenses
Question 6: What is my total teaching budget
• Your spending on teachers should equal at least
55% of your likely gross revenue. (This includes
salary and benefits.)
[0.55] x [likely gross revenue]= teacher staffing
budget
.55 x $810,000 = $445, 500
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What’s Left?
Question 7: How much do I have to spend on
everything else?
• After 55%+ in the classroom,
• 15% for occupancy costs, you have:
30% likely gross revenue for
student services, administration,
and any other costs.
[Likely gross revenue] – [minimum teacher staffing
budget] – [maximum facilities expense] =
What you have left
$243,000
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Caution on Facility Spending #1
• Caution: Realtors may encourage you to
spend 20% of your maximum gross revenue
on your lease or mortgage because this can
increase their commissions by as much as
30%
• Spending such a high % of your revenues on
facilities provides no margin for error should
enrollment lapse.
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Caution on Facilities Spending #2:
• Caution: Schools that spend less
than 55% of their revenues on
instruction and more than 15%
on facilities have limited budget
flexibility:
• You can always hire additional
teachers or part-time instructors to
fill gaps, but you cannot easily
eliminate 2,000 unused sq feet of a
building they you renting or have
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purchased.
4 Key Take-Aways
1. Facility budget = Max 15% of likely gross
revenue
2. Teacher staffing budget = at least 55% of
likely gross revenue
3. Minimum facility size = 75 ft2 per student.
100 ft2 per student is ideal.
4. Be aware of your realtor’s personal
interests and be wary of any singlesource agreements.
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Contact Us!
Jane Ellis
Director of Charter
School Lending
Self-Help
(919) 956-4407 or (800)
476-7428
[email protected]
Joe Bruno
President
Building Hope
(202) 457-1999
[email protected]
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