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§ 10154. Financial Soundness Review and Determination.

4 CA ADC § 10154Barclays Official California Code of Regulations

Barclays California Code of Regulations
Title 4. Business Regulations
Division 15. California School Finance Authority
Article 1. Charter School Facilities Program
4 CCR § 10154
§ 10154. Financial Soundness Review and Determination.
(a) A Financially Sound Charter School shall have been a financially capable concern for at least 24 months prior to submission of the Application. In addition, a Financially Sound Charter School shall have at least two academic years of instructional operations of a Charter School prior to submission of the Application.
(b) Where the Application is for new construction or rehabilitation for a Charter School with less than two years of instructional experience, the organization that is applying on behalf of the school shall demonstrate it has an approved charter or charter amendment for the new Charter School at the time of submission and that it has operated or managed another Charter School or Charter Schools for at least two full academic years of instructional operations of a Charter School prior to submission of the Application. In addition, if the Application is for a new school, and the organization applying on behalf of the Charter School does not have experience operating other Charter Schools in California for at least two academic years, the Applicant may satisfy the requirements of this section by providing evidence of its educational plan, financial resources, facilities expertise, and management expertise. Management expertise must be established by demonstrating, to the Authority's satisfaction, that key personnel (e.g., Chief Executive Officer, President, Operations Manager, Chief Financial Officer, Principal, etc.) involved in operating the Applicant charter school have at least two academic years of experience in management positions at other charter schools in California. To establish the required level of management experience, the Applicant must provide:
(1) Name(s) and address(es) of the charter schools in California where experience was earned;
(2) Titles, responsibilities and duties of the key personnel at the charter school(s);
(3) Length of tenure of the key personnel at the Charter School(s);
(4) Name(s), address(es), phone number(s) and other contact information of the key personnel's immediate supervisor(s) and the President(s) of the Charter School(s)' governing board;
(5) Student performance data for the Charter School(s) covering the period of service; and
(6) Available information regarding performance of the key personnel at the Charter School(s) where the experience was earned.
(c) Where the Application is submitted by a school district or county office of education and the Charter School has not operated for at least two academic years as a Charter School, the school district or county office of education's experience operating public schools may be used to satisfy the requirements of this section.
(d) The Authority shall review and evaluate Form CSFA 03-01, revised 3/04, and supporting information that is requested or otherwise received by the Authority for purposes of determining whether an applicant is Financially Sound. In making this determination, the Authority will utilize the apportionment eligibility amounts provided by the Board and will rely on such amounts as being sufficient to complete the project, without verification by the Authority. The Authority shall consider certain factors, including but not limited to:
(1) Whether the Charter School has complied with the terms of its charter agreement and is in good standing with its Chartering Authority. Charter Schools that fail to demonstrate compliance with the terms of the charter agreement and good standing with the Chartering Authority shall be deemed as not Financially Sound. The Authority will rely on information from the Chartering Authority regarding the Charter School's good standing and compliance with the terms of its charter. Charter Schools may appeal any response by the Chartering Authority's staff directly to the Chartering Authority's governing board. It shall be the Charter School's responsibility, and not the Authority's, to ensure that the good standing and compliance response letter is received by the stated deadline;
(2) Whether the Charter School is in imminent danger of having its charter revoked or not renewed;
(3) Whether the Applicant's or Obligor's audited financial statements are free of material exceptions and “going concern” issues;
(4) Whether financial results and projections demonstrate the Applicant's or Obligor's ability to operate at least on a break-even basis, historically, as well as in the future, taking into consideration the increased obligations resulting from the applicant's participation in the Program. The Authority will evaluate the reasonableness of projected financial performance and corresponding assumptions based on current and historical performance and the Charter School's business and/or strategic plans. The Authority will consider current and historical performance, including cash flow, major revenues, degree of reliance on grants and fundraising, enrollment trends, student performance data, projected average daily attendance, expenses, and debt service coverage, if applicable;
(5) Whether the Applicant or Obligor has the ability to make its proposed lump-sum payment, if applicable;
(6) Whether the Applicant's or Obligor's financial condition is consistent with its planned contributions to the project;
(7) Whether the Applicant or Obligor has the ability to pay the matching share through Matching Share Payments at the interest rate prescribed in Education Code, Section 17078.57 (a)(1)(D) and (E) and achieve a minimum debt service coverage ratio determined by the Authority to be sufficient, but in no event to be less than 1.0x. The Authority may allow an applicant to subordinate specific oversight fees to a Chartering Authority or educational management organization where such subordination allows an applicant to meet the minimum debt service coverage requirement. In addition, on a case-by-case basis, the Authority may allow applicants to use restricted fund reserves or other funding sources to achieve the minimum debt service coverage ratio;
(8) Whether the Charter School consistently meets recognized academic achievement standards;
(9) Whether the Charter School has sufficient qualified management and staff to perform necessary administrative, curricular, financial and human resource functions;
(10) Whether the Applicant or Obligor is free of any material risks that would threaten the financial or operational viability of the Applicant or the charter school;
(11) Where the Applicant is a Charter School that contracts with an organization to provide educational management services and oversee its operations, and the Charter School does not meet the minimum debt service coverage ratio of 1.0x pursuant to subdivision (d)(7), the Authority shall perform an analysis of the current and historical financial and operational condition of the organization. In this case, the overseeing organization shall be considered the Obligor.
(e) The Authority will perform a site visit of the Charter School facility currently used by any Applicant that is located outside of the school district that chartered it. Such visit shall be during hours when pupils are present and instruction is being provided. The Authority reserves the right to perform such a visit of any other applicant.
(f) The Authority also may consider any information voluntarily submitted by the Chartering Authority, the school district in which the Charter School will be located, the county office of education for the county in which the charter facility will be located, and any school district or county office of education whose students currently or are projected to attend the Charter School.
(g) The Authority will provide the Board with an initial determination of whether an Applicant is financially sound for the purposes of the Board establishing the Preliminary Apportionment.
(h) For purposes of Advance or Final Apportionment, the Authority shall conduct reviews of an Applicant's or Obligor's updated information and provide the Board with updated determinations of whether an Applicant or Obligor has maintained its financial soundness.
(i) The Authority's determination of financial soundness shall be valid for a period of 12 months for purposes of the Board's approval of an application for Preliminary and Advance Apportionment, or for Final Apportionment, which shall satisfy the Board's requirement of current financial soundness certification set forth in California Code of Regulations, title 2, Section 1859.167.
(j) As a condition for the Authority's determination of financial soundness, the Authority may require the applicant to agree to specific contingencies.
(k) As a condition for the Authority's determination of financial soundness, to the extent feasible, the Intercept method shall be required for payment of the Local Matching Share pursuant to Education Code Section 17199.4.
(l) Prior to the Board's Final Apportionment, the Authority will provide the Board with a final determination of whether the Charter School is Financially Sound. The Authority reserves the right to withdraw any prior determination that a Charter School is Financially Sound if any material change to the Charter School occurs, or an identified area of concern has not been remedied between the Preliminary and Final Apportionment which, in the opinion of the Authority, makes the Charter School no longer financially sound.
(m) As a condition of, or subsequent to, the Authority's determination that an Applicant is financially sound, the Authority may require that an Applicant provide regular updates to the Authority on key aspects of its legal status, or financial or operating condition. The Authority shall have the discretion to establish the specific support documents that an Applicant must submit for purposes of such updates.
(n) As a condition for release of funds for Advance or Final Apportionment, the Authority shall require each Applicant to provide the Authority with notice of any material changes to the Applicant's legal status, operating condition, or financial condition within 30 days of such material change.
(o) Upon an Applicant's submission of updated information pursuant to subdivision (n) within this Section, the Authority may conduct a review to determine whether an Applicant continues to maintain a condition of financial soundness. In the event that the Authority's review finds that an Applicant is no longer Financially Sound, the Authority shall immediately notify the Board of its specific finding. At any time, the Authority may require an Applicant to submit a corrective action plan or request information from the Chartering Authority regarding changes to the condition of the charter.

Credits

Note: Authority cited: Sections 17078.57, 17179, 17180 and 17180.5, Education Code. Reference: Sections 17078.52, 17078.53, 17078.56, 17078.57 and 17199.4, Education Code.
History
1. New section filed 2-13-2003 as an emergency; operative 2-13-2003 (Register 2003, No. 7). A Certificate of Compliance must be transmitted to OAL by 6-13-2003 or emergency language will be repealed by operation of law on the following day.
2. Certificate of Compliance as to 2-13-2003 order transmitted to OAL 6-12-2003 and filed 7-14-2003 (Register 2003, No. 29).
3. Amendment of section and Note filed 3-29-2004 as an emergency pursuant to Education Code section 17078.57(b); operative 3-29-2004 (Register 2004, No. 14). A Certificate of Compliance must be transmitted to OAL by 7-27-2004 or emergency language will be repealed by operation of law on the following day.
4. Amendment of section and Note refiled 7-19-2004 as an emergency pursuant to Education Code section 17078.57(b); operative 7-27-2004 (Register 2004, No. 30). A Certificate of Compliance must be transmitted to OAL by 11-24-2004 or emergency language will be repealed by operation of law on the following day.
5. Certificate of Compliance as to 7-19-2004 order transmitted to OAL 11-8-2004 filed 12-23-2004 (Register 2004, No. 52).
6. Amendment of subsections (d)(5)-(6) filed 11-3-2006 as an emergency; operative 11-3-2006 (Register 2006, No. 44). A Certificate of Compliance must be transmitted to OAL by 3-5-2007 or emergency language will be repealed by operation of law on the following day.
7. Reinstatement of section as it existed prior to 11-3-2006 emergency amendments pursuant to Government Code section 11346.1(f) (Register 2007, No. 39).
8. Amendment of subsection (b), new subsections (d)(3) and (d)(7), subsection renumbering and amendment of newly designated subsection (d)(5) and (d)(8) and subsections (f) and (h) filed 9-9-2010 as an emergency; operative 9-9-2010 (Register 2010, No. 37). A Certificate of Compliance must be transmitted to OAL by 3-8-2011 or emergency language will be repealed by operation of law on the following day.
9. Certificate of Compliance as to 9-9-2010 order transmitted to OAL 1-19-2011 and filed 2-16-2011 (Register 2011, No. 7).
10. Amendment of section heading, section and Note filed 11-3-2011 as an emergency; operative 11-3-2011 (Register 2011, No. 44). A Certificate of Compliance must be transmitted to OAL by 5-1-2012 or emergency language will be repealed by operation of law on the following day.
11. Certificate of Compliance as to 11-3-2011 order, including further amendment of subsections (e) and (j) and Note, transmitted to OAL 2-7-2012 and filed 3-5-2012 (Register 2012, No. 10).
12. Amendment filed 7-3-2018; operative 10-1-2018 (Register 2018, No. 27).
This database is current through 6/28/24 Register 2024, No. 26.
Cal. Admin. Code tit. 4, § 10154, 4 CA ADC § 10154
End of Document