Enabling Change

School Leaders Guide to Special Revenue Funds and Effective Grants Management

Even the best-laid plans in grants management do not always lead to the best use of funds. School leaders can spend an inordinate amount of time and effort simply tracking down, understanding and complying with the rules and regulations associated with restricted funds, which ultimately takes time and focus away from academics and school culture.

To help ease the burden, the Afton Partners team and our friends Tammy Robicheaux, Chief Academic Officer, ReNEW Schools and Julane Mullins, Budget and Staffing Director, Fayette County Public Schools (which supports its STEAM Academy), are providing some expert guidance, helpful hacks, and resources for school leaders on managing special revenues and implementing effective grants management processes.

In this blog post, we'll address some of the most critical challenges schools and districts face when managing special revenue funds, as well as highlight samples of the most effective (free) resources we have seen that assist schools, district and leadership teams in effectively managing these funds.

These key issues include:

• Staffing capacity and training
• Policies, procedures and processes
• Cash flow planning
• Systems use and structure

Staffing Capacity and Training

Experienced grants managers are often developed rather than found. There is a significant lack of capacity in this area of education management, and finding someone with the right training and knowledge base to best perform the job can be challenging. Grant expenditure transactions require the involvement of programmatic/school staff, budget staff and accounting staff with additional support from human resources, board members, directors and others. Training this range of staff and stakeholders requires materials to be tailored to each position, but also requires providing each team member with an understanding of what’s important to their colleagues. There is no “I” in grant management, but there is in compliance—so making sure each team member knows his or her role and its importance is crucial.

“Our school leaders are supported by a dedicated grants management staff member that handles the fund applications, budgeting and compliance needs based on funds usage. This position requires a lot of ongoing development in order to stay up-to-speed on all available funds and how they can help implement our innovative school design.”
–Tammy Robicheaux, Chief Academic Officer, ReNEW Schools

“Even in a district-supported environment such as STEAM, many schools are adding business manager positions in order to deal with the increased requirements of grants management. This keeps school leaders focused on educational priorities, while having a solid focus on operational requirements of funds.”
–Julane Mullins, Budget and Staffing Director, Fayette County Public Schools STEAM Academy

Policies, Procedures, and Processes

Grants have specific policy and procedure requirements for schools that must be followed to guarantee compliant reimbursements. The OMB policy of “reasonable and necessary” is a general requirement that must then be turned into procedures and processes at the school level. Those three words from OMB involve the grant process from application to audit, but provide little guidance for organizational functions. Finding the resources to comply varies based on the city, authorizer, district, LEA, etc. However, there are some best practices that can be followed:

1. Develop an iterative fund-based budget model for every source of revenue. Create a calendar of grant activities and due dates that is shared with all stakeholders.
2. Never allow a grant to be solely managed by a single individual, and cross train staff on grant management practices. Have a culture in your organization that acknowledges the challenges of grants management.
3. Do not include special revenues as a regular source of cash flow forecasting. Utilize fund accounting systems and prepare financial reports similarly.
4. Involve all stakeholders from school leaders to board members as each serves an important role. Foster interpersonal relationships with grantors and establish relationships with similar schools in your area to share knowledge.

Cash Flow Planning

One key challenge to managing grants and reimbursements is the understanding that these funds, depending on their source, lack consistent cash flow. Too often we’ve seen organizations assume that an allocation equals cash, and that couldn’t be further from reality. At best the formulaic grants (e.g. Title I, IDEA) will be eligible for monthly reimbursements assuming (and you know what they say about that word) all requirements have been met, the budget is in place, and expenses are consistent. In the absence of those factors—and in a climate of challenging relationships with grantors—schools can expect cash reimbursements to occur six to ten months after the fiscal year begins. Therefore, if 15 percent of your school’s annual revenues are reimbursable grants, then expenses will occur while cash flow does not. Without a comprehensive view of the total picture (including a financial plan) and a fund balance to fund cash shortfalls, schools may quickly run into a situation requiring a cash infusion or spending of existing net assets.

“It’s critical to protect the investments that have been made, especially for expenses related to IT. A lot of work goes into the reimbursement of funds, so compliance is important. At first we (the central office) handled the compliance work, but now teachers and school staff are more responsible for auditing their own gear.”
–Tammy Robicheaux, Chief Academic Officer, ReNEW Schools

Systems Use and Structure

Managing and reporting special revenues requires a robust fund accounting system. All of these sources of revenue have to be separately tracked, encumbered and reported, which requires a proper system. Special revenue expenses are created in payroll and procurement systems, which should align as much as possible to create coding harmony. These three systems and the procedures inherent within their structure and taxonomy have the potential to significantly ease the burden of the special revenue management. The time and effort to create this effective system pays dividends in easing the reporting burden and allows for greater connectivity between academic and finance staff. Since grants can have different compliance standards, it’s a best practice to set up these systems based on the most restrictive funding source. This policy creates a culture that all funds will be handled the same and ensures clear and consistent policies to hire staff, purchase professional development, or record fixed assets.

“Our teachers and school leaders were given a color-coded process to track the technology that has been funded with multiple sources of revenue. This enables them to accomplish the requirements of the compliance for the various grants in an efficient manner. The other required asset tags are on the equipment, but the color codes make the process much simpler.”
–Tammy Robicheaux, Chief Academic Officer, ReNEW Schools

Grants Management: Recommended Resources

Ultimately there are many best practices to guide the staffing, processes, and procedures for the management of special revenues, but the resources available in your location will vary significantly. That is why vigilance and persistence are required to develop and maintain a handle on the constantly changing world of grants. For example, on December 26, 2014, the OMB and EDGAR changed requirements—and the implications of this are just now impacting schools. LEAs and SEAs are dealing with these changes in their monitoring and accountability structures. When the proverbial ball finally rolls down the hill, schools will have to adjust practices without any adjustment to funding. This is just one example of the type of ongoing understanding that is required to properly manage all of the resources designed for student achievement.

Here are some additional resources to help you manage special revenues and implement effective grants management processes.

Grant Training and Management

1. U.S. Department of Education
2. Charter School Resource Center

SEA Level Supports

1. Albuquerque Public Schools
2. Texas Education Agency
3. Georgia Department of Education
4. Minnesota Department of Education

National Groups

1. Office of Executive Councils, Chief Financial Officers Council
2. National Grants Management Association
3. Grants.gov
4. Forecast of Funding Opportunities under the Department of Education Discretionary Grant Programs for Fiscal Year (FY) 2016
5. The School Funding Center

Software Solutions

1. Capterra
2. Streamlink Software
3. Blackbaud

Outsourcing Grants Management

1. Accounting Services of New York
2. Charter School Business Management