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APPENDIX 6

FINANCIAL POLICY DOCUMENTS

PROPOSAL

FOR

EXTERNAL PROVIDER OF EDUCATIONAL SERVICES

Applicants:

EDUCATION REVOLUTION, INC.

And

THE MCKINLEY-GOODE CHARTER SCHOOL

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BANK ACCOUNTS PROCEDURES

Purpose:

The Board will designate one or more banks or bank and trust companies as depositories for the

safeguarding of school funds.

Procedures:

A. Each depository is required to report monthly to the Treasurer or Board on the status of funds, in the

manner required by law.

B. Each designated depository must furnish proper security for deposits in the amount designated by

the Board and in accordance with law.

C. Each designated depository will be advised not to cash checks payable to the Charter School but rather

to deposit said checks into the school account(s).

D. The Board will periodically obtain quotations for specified banking services prior to designating its

depositories.

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BILL PAYMENT PROCEDURES

Purpose:

It is the Boards intent to direct the timely payment of School bills but at the same time ensure that due

care has been taken in the review of such bills.

Procedures:

A. Payment of bills prior to Board approval can be made by the Controller under any of the following

conditions:

1.

The prompt payment of items that will accrue to the schools advantage. 2.

Progress payments to contractors specified in a contract approved by the Board.

3.

Orders to cover approved salaries and agency account deposits.

4. Utility bills in months the Board does not meet.

B. It is the responsibility of the Controller or designee upon receipt of an invoice to:

1. Verify that the purchase invoice is in order.

2. Goods were received in acceptable condition or services were satisfactorily rendered.

3. Funds are available to cover the payment.

4. The Board has budgeted for the item.

5. Invoice is for the amount contracted.

C.

Should the invoice vary from the acknowledged purchase order, the Controller or designee willdocument on the invoice the reason for such variance.

D. Should funds not be available in the account to which a proposed purchase will be charged, the

Controller or designee will determine the overage and request the Board make a legal transfer to

cover it, and a listing of any bills paid under this section will be provided to the Board on a monthly

basis for their approval.

E. All claims for payment must be submitted to the Board and recorded in the minutes of the Board

meeting.

F. The list of bills must include for each:

1. Check number.

2.

Check date.3. Vendor.

4. Amount of remittance.

5. Amount charged.

G. Reports to include are Open Payables report, Check Detail report and Cash Activity report.

H.

Upon approval of an order, the Controller or designee will prepare a check for payment and cancel

the commitment placed against the appropriate account.

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I. All checks approved by the Board will be signed by those duly noted on the account.

J. No check may be made out to cash.

K. The Charter School is exempt from sales tax on the purchase of tangible, personal property or services

that are sold or used by the school.

1. The School will control the use of its sales tax exempt number issued by the Department of

Revenue, in compliance with established regulations.

2. The exemption number may only be used only when buying property or services for school

use.

3. The School will obtain a sales tax license number for School organizations that purchase items

to be resold.

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BUDGET PLANNING PROCEDURES

Purpose:

The budget is designed to reflect the Boards goals and objectives concerning the education of Charter

School students. The budget must be organized and planned to ensure adequate understanding of the

financial needs associated with program support and development. The financial requirements of school

programs will be reviewed on a continual basis.

Procedures:

A. The administrative staff will:

1.

Include an estimated annual cost for implementation of the schools educational program.

2. Prepare a long range plan for annual maintenance and replacement of facilities.

3. Prepare a plan for current and future technology needs.

4. Maintain an inventory of school equipment.

5. Establish a projected budget of expenditures and income for the ensuing year.

6. Prepare an annual estimate of anticipated school enrollments.

7. Maintain a plan of anticipated revenues based on changes in state and federal legislation.

8. Report to the Board any serious financial implication arising from the budget plan.

B. To help ensure careful budget considerations, all major program changes and their associated costs

are to be presented to the Board prior to the tentative approval of the budget.

C. Tentative budget time lines will be established in accordance with State and Federal guidelines.

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BUDGET PREPARATION PROCEDURES

Purpose:

The Board considers preparation of an annual budget to be one of its most important responsibilities

because the budget is the financial reflection of the Charter Schools educational plan.

The budget must be designed to carry out that plan in a thorough and efficient manner, to maintain the

facility, and to honor school obligations.

Procedures:

A. The budget is to be studied by each Board member during its preparation, but once adopted it

deserves the full support of all members of the Board.

B. In preparing the budget, there must be general priorities for expenditures for:

1.

Staff for maintenance of programs.

2. Technology, equipment and supplies.

3. Maintenance of existing facility and equipment.

4. New staff necessary for improvement or expansion of programs.

5. New technology, equipment and supplies necessary for improvement or expansion.

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BUDGET ADOPTION PROCEDURES

Purpose:

It is the Boards determination that the final annual budget proposal represents the position of the Board.

All reasonable means must be employed to present and explain the proposed budget to the sending

school districts and their residents when required by law.

Procedures:

A.

Board members and Charter School administrators must be thoroughly familiar with, and understand

the need for proposed expenditures so that they may answer questions directed at them.

B. At least 30 days prior to adoption of the final budget, the administration will prepare and present a

proposed budget which will be set forth in detail using the forms required by the Department of

Education.

C. The final date for the adoption of the budget is June 30 as the fiscal year begins on the first day of

July.

D.

The proposed budget must be available for public review at the administrative office at least 20 days

prior to the adoption of the budget.

E. Final action may not be taken on the proposed budget until after 10 days of public notice.

F. The administration will develop procedures for the dissemination of budgetary information to the

sending school districts and the communities when required by law.

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PURCHASES BUDGETED PROCEDURES

Purpose:

It is the policy of the Board that, when funds are available, all purchases contemplated within the current

budget and not subject to bid will be made in a manner that ensures the best interests of the Charter

School.

Procedures:

A.

All purchases that are within budgetary limitations may be made upon authorization of the Controller

and such other administrators as may be approved by the Board.

B. All purchase order requests must be referred to the Controller who will check:

1. Whether the proposed purchase is subject to bid.

2. Whether sufficient funds exist in the budget.

3. Whether the material might be available elsewhere within the school.

C. In the interests of economy, fairness and efficiency in its business dealings, the Board requires that:

1.

Items commonly used in the school will be standardized whenever possible.

2.

Opportunity to do business with the Charter School may be provided to as many responsible

suppliers as possible.

3. Lists of potential suppliers for various types of supplies, equipment and services will be

developed and maintained.

4. No purchase request will be honored unless made on the Charter Schools requisition form

and has the necessary approval.

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PURCHASES NOT BUDGETED PROCEDURES

Purpose:

The laws of the Commonwealth and the interests of the community require fiscal responsibility by the

Board in the operation of the Charter School. Appropriate fiscal controls shall be adopted to ensure that

public funds are not disbursed in amounts in excess of the appropriations provided to the school.

Procedures:

A.

In the event of emergency, which exists whenever the time required for the Board to act in accordance

with regular procedures would endanger life or property or threaten continuance of existing school

classes, a purchase order may be authorized by the Controller or such other individual(s) as may be

approved by the Board.

B. When budgeted funds are allocated, the total amount budgeted may not be exceeded without prior

approval.

C. Any expenditure in excess of appropriation made in conformance with this procedure must be

reported to the Board at the next meeting with a recommendation of funds to be transferred to cover

said purchase.

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COOPERATIVE PURCHASING PROCEDURES

Purpose:

The Board recognizes the advantages of centralized purchasing and encourages the administration to seek

the benefits and savings that may accrue through joint agreements with political subdivisions, associations

and similar entities for the purchase of supplies, equipment and services.

Procedures:

A. The Controller will negotiate appropriate cooperative purchase agreements with other political

subdivisions, associations and similar entities in accordance with law and Board policy.

B. Cooperative purchases require an agreement approved by the Board and the participating contracting

body(s) which may specify:

1. Categories of equipment or supplies to be purchased.

2. Manner of advertising for bids and awarding contracts.

3.

Method of payment by each participating party.4. Other matters deemed necessary to carry out the purposes of the agreement.

C. All such agreements must conform to relevant provisions of the School Code.

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PURCHASE SUBJECT TO BID/QUOTATION PROCEDURES

Purpose:

It is the policy of the Board to obtain competitive bids and price quotations for products and services

where such bids or quotations are required by law or may result in monetary savings to the Charter School.

Procedures:

A. Bid specifications are to be prepared by the Controller or designee.

B. Bid specifications are to provide for alternates wherever possible.

C. The Controller or designee will combine like items of supply and material whenever it is feasible and

permissible under the statute and will not split purchases to avoid requirements for bidding.

D. The Board Secretary or designee is authorized to advertise for bids, in accordance with statutory

procedures, without prior approval of the Board.

1. The Board must be informed of such action at the next meeting.

2.

Records must be kept in sufficient detail to show that a reasonable number of qualifiedvendors were invited to bid.

E. Bids must be opened publicly before one or more witnesses at a previously designated time and place.

F. Contracts shall be awarded to the lowest responsible bidder upon resolution of the Board unless the

Board chooses to reject all bids.

G.

The Board recognizes that emergencies may occur when imminent danger exists to persons or

property or continuance of existing school classes is threatened, and time for bidding cannot be

provided because of the need for immediate action.

H. Supplies

1. The Board will after due public notice advertising for competitive bids, purchase furniture,

equipment, school supplies and appliances costing $10,000 or more, unless exempt bystatute.

2. The Board shall advertise once a week for 3 weeks in not less than two newspapers of general

circulation.

3. Furniture, equipment, school supplies and appliances to be purchased by the school costing

more than $4,000 but less than $10,000 may be obtained on written or electronic quotations

unless exempt by statute.

4. If it is not possible to obtain three quotations, a memo must be kept on file showing that

fewer than 3 qualified vendors exist in the market area.

5.

The written price quotations, written records of electronic price quotations, and memoranda

must be kept on file for a period of three years.

I. Contracts

1. The Board will, after due public notice advertising for competitive bids, contract for construction,

reconstruction, repairs, maintenance or work on the school building having a cost or value of more

than $10,000 unless exempt by statute.

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2. All contracts for construction, reconstruction, repairs, maintenance or work on the school building,

having a cost or value of more than $4,000 but not more than $10,000 may be obtained on written

or electronic quotations, unless exempt by statute.

3. If it is not possible to obtain three quotations, a memo must be kept on file showing that fewer

than 3 qualified vendors exist in the market area.

4.

The written price quotations, written records of electronic price quotations, and memoranda must

be kept on file for a period of three years.

5. The Board may authorize school employees to perform construction, reconstruction, repairs or

work having a cost or value of less than $5,000.

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FISCAL OPERATIONS PROCEDURES

Purpose:

The Board recognizes its responsibility to ensure that public monies expended by the Charter School are

utilized for delivery of the educational program in a manner that mandates full value to the taxpayers and

sending school districts, and that adequate procedures and records are established to ensure that end.

Procedures:

A. The Board has the authority and responsibility to prepare and adopt the budget, approve bids, and

approve the expenditures of the school.

B. Fiscal policies of the school will be governed by the provisions of the Public School Code of 1949, as

amended for public and charter schools.

C. The fiscal year for the school will begin the first day of July and end on the thirtieth day of June each

year.

D.

The Controller is to:1. Establish sound accounting procedures based upon recommendations of the school auditor

and state and federal government.

2. Institute effective business practices.

3. Recommend appropriate equipment and technology when necessary.

E.

The Controllers responsibilities include:

1.

Review monthly the financial operations.

2. Report to the Board on effectiveness and recommended improvements.

3. Prepare administrative procedures for sound school fiscal operations.

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GASB STATEMENT 34 PROCEDURES

Purpose:

The Board recognizes the need to implement the required accounting and financial reporting standards

stipulated by the Pennsylvania Department of Education. The primary objectives of implementing GASBStatement 34 are to assure compliance with state requirements, and properly account for both the

financial and economic resources of the district.

Procedures:

A. Capital Assets are purchases of property, plant, equipment, software and hardware with a useful

life of more than one school year.

B.

In order to associate debt with acquired assets and to avoid net asset deficits, any asset that has

been acquired with debt proceeds shall be capitalized, regardless of the cost of the asset. The asset

life of these assets shall be considered relative to the time of the respective debt amortizations.

C. For all other assets not acquired by debt proceeds, the dollar value of any single item for inclusion

in the fixed assets accounts shall be not less than $4,000.

D. The assets listed below do not normally individually meet capitalization threshold criteria:

1. Library books.

2. Classroom texts.

3. Computer equipment.

4.

Classroom furniture.

These asset category costs shall be capitalized and depreciated as groups when that group's

acquisition cost exceeds the capitalization threshold in any given fiscal year.

E. For group asset depreciation purposes, the estimated useful life of the group may be based on an

assessment of the life of the group as a whole

F. Periodically, the school shall review the estimated life of groups of assets and adjust the remaining

depreciation life of the group.

G. Capital assets will be labeled before being put into service.

H. Labels will be used to identify the asset and for inventory purposes as set forth below.

I. A physical inventory will be performed at least once every two years, more often if staffing and

time allows.

J. As part of the physical inventory, all capital assets will be identified, and assessed for their current

use.

K.

Should any assets be determined to be out of service or no longer useful for their originalpurpose, they will be added to a proposed disposal listing.

L. The proposed disposal listing will be reviewed by an individual who is independent of the

accounting and inventory process.

M. This individual will initial that he or she has reviewed the disposal listing and concurs with the

assessment that the assets should be disposed of.

N. The Board will review and approve the removal of assets from the fixed asset listing.

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O. Adequate insurance will be maintained to provide for reimbursement in the event of loss of capital

assets. It should properly reflect the market value of the schools capital assets.

P. Once capital assets are identified and labeled, they will be added to the schools asset detail listing.

Q. The asset needs to be identified by number, description and location.

R. As a general rule, the following useful lives will apply. However, exceptions to these estimates can

be made if the asset purchased clearly has a shorter/longer estimated useful life.

Real Property: Land Improvements -

Includes buildings, land improvements,

and significant betterments to existing

owned structures.

25 Years

Lease Hold Improvements: Significant

remodeling, fixtures attached to the

leased property.

Remaining term of current lease

Software and Hardware No longer than 3 Years

Furniture and Equipment 5 Years

Vehicles 5 Years or term of corresponding debt

S. All capital assets existing as of the date of adoption will be inventoried and labeled according to

these procedures.

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SCHOOL AUDIT PROCEDURES

Purpose:

The Board recognizes the importance of the publics right to have access to the public records of the

Charter School, including public financial records.

The public has the right under law to inspect and procure copies of the annual audit conducted by the

schools accountant and the audit conducted by the Auditor Generals office.

Procedures:

A.

The Board will employ an independent, certified public accountant to conduct an annual school

audit in conformance with prescribed and legal standards.

B. The completed audit must be presented to the Board for its examination and approval.

C. The Board must make the results of both the schools audit and the Auditor Generals audit available

to the public at the Administrative Office.

D. Special audits by special interest groups are not permitted.

E. Certain information will not be made available to the public.

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SPECIAL PURPOSE FUNDS PROCEDURES

Purpose:

The Board is responsible for adopting and enforcing reasonable policies and rules regarding the

management, supervision, control and prohibition of Charter School activities, including raising and

disbursing funds.

Student activity funds include the funds of Board-approved student groups such as student government,

clubs, publications, performing groups, and school classes.

Student activity funds are to be raised by students and expended for purposes related to the activity, with

student participation in the decision making process regarding these areas.

Procedures:

A. Student activity funds are not to be a part of school funds and must be approved by the Board.

B.

The Board will ensure proper supervision of student activity funds under the schools responsibility.

C. Financial reports of the condition of each Special Purpose Fund must be submitted monthly to the

Board.

D. The Board recognizes that General Fund Budget monies may be needed to subsidize special purpose

funds.

E. The Controller or designee is responsible for developing and implementing administrative procedures

governing special purpose funds.

F.

All special purpose funds must be under the supervision of the Controller.

G.

The Controller or designee is responsible for working with students and advisors, implementing

policies and procedures, and maintaining fiscal records.

1.

The Controller or designee will serve as custodian of the student activity funds.

2. The Controller or designee will countersign all checks drawn upon them in original ink.

H. Activity advisors are responsible for working with students in assigned activities and ensuring

compliance with policy and procedures by the student organization.

I. The organizations student treasurer and faculty advisor are responsible for maintaining records of all

funds collected and disbursed and submitting required reports to the Board as deemed necessary.

J.

All expenditures from activity accounts must be related to the goals and objectives of the student

activity programs.

K. Student Activity Funds

1. Each student activity covered by this policy must be recognized and budgeted by the student

organization before funds can be collected or disbursed in the name of the group.

2. All extracurricular student activities will be on a self-sustaining basis except for situations

approved by the Board.

3.

Student activity funds generated through school-wide fundraising activities, commission, and

investment of student funds may be used to subsidize school classes or clubs, student

government, student welfare and the operation of the funds.

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4. Student group advisors and student government officers as a committee, except if the age of

students involved precludes sufficient understanding of the process, must approve the

disbursement of funds generated through school-wide fundraising activities, commissions

and returns on investments.

5. Specific school-wide fundraisers may be designated by the Controller or designee to have the

income prorated to the classes involved in the fundraiser.

6.

Investments permitted by this procedure are those defined in Section 440.1 of the School

Code as amended which are collateralized in accordance with applicable laws.

7. Funds of any student body organization may be deposited or invested in banks whose

accounts are insured by the FDIC.

8. All fund collected by student organizations must be deposited in a student activities fund in a

bank designated by the Board.

9.

No school sponsored student organization is permitted to establish an account separate from

the student activities fund.

10.Records must be maintained of the receipt and disbursement of all funds in designated

accounts, according to the bylaws of the activity involved.

11.Disbursements from such funds must be made only by check upon the request of the

authorized advisor and the approval of the fund custodian or the designated forms and

disbursements must be supported by invoices or verified documentation.

12.All checks must be signed by those individuals authorized to approve such disbursements in

original ink.

13.

No checks are to be made out to cash.

14. Obligations incurred by students or student groups without prior authorization from an

appropriate administrator will not be the responsibility of the school, the student activities

fund or the Board.

15.

Student activity funds may not be used to supplant school funds in providing materials and

services essential to the operation of instructional programs.

16.Student groups that raise fund through group activities are to direct their use for the benefit

of groups and not individuals.

17.

The funds derived from fund raising activities should be expended to the extent possible to

benefit those students currently in school who have contributed to the accumulation of funds.

18.All purchases of materials or supplies by any organization, club, society, or group or by any

class must be made by the students.

19.All funds accumulated in the name of a specific activity must be closed out annually, and any

residual funds shall revert to the same group for the following school year.

20.The student activity fund must be audited annually during the schools established audit.

21.

Inactive accounts may be liquidated at the direction of the Controller or designee after being

made inactive for a full school year, with provision of notice being given to the most recent

authorized student representative and faculty advisor and the funds may be transferred to

the student government account or to a similar organization with student approval.

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PAYROLL AUTHORIZATION PROCEDURES

Purpose:

Employment of all fulltime, temporary and part-time Charter School personnel must be approved by the

Board.

Procedures:

A. Employment of all fulltime, temporary and part-time Charter School personnel must be approved by

the Board.

B. The Board will authorize payment of salaries to employees.

C. Actions by the Board to employ staff on a contractual basis may include:

1. Name of the individual

2. Position

3. Title

4.

Salary5. Period of employment

6. Position classification

7. Method of payment

8. Budget category to which the wages are to be charged.

D.

Actions by the Board to employ temporary or part-time personnel may include:

1.

Name of the individual

2. Position

3. Title

4. Rate of pay

5.

Position classification6. Maximum number of hours or days employee may work

7. Assignment

8.

Budget category to which wages are to be charged.

E. The minutes of the Board meeting will record all actions with regard to resignation, retirement, death

or discharge of all employees, or non-retention of a temporary professional employee and each action

shall include the name of the employee, date upon which salary or wages will terminate, and the

position formerly held.

F. Daily sign-in and sign-out procedures adequate to meet wage and hour requirements and Board policy

may be required.

G.

The Board my require employees to use keycard system when entering the building to maintainattendance records.

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PAYROLL DEDUCTIONS PROCEDURES

Purpose:

The Board may, at its discretion, act on behalf of individual employees to deduct a certain amount from

the employees paycheck and to remit an equal amount to an agent designated by the employee.

It is the intent of this Payroll Deduction Procedures to designate those purposes not otherwise mandated

by law for which the Board is willing to act on behalf of the employee.

Procedures:

A.

No deduction will be made from wages of an employee except for federal or state income tax, PA

unemployment, local taxes, social security, and Medicare without proper authorization by the

employee.

B. Retirement will be withheld according to PSERS regulations.

C. Wage Attachments

Upon receipt of any federal or state order of decree directing that an employees wages be subject to

attachment, all such attachments will be deducted and will continue thereafter until the order or

decree is withdrawn, vacated or revoked.

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TAXABLE FRINGE BENEFITS PROCEDURES

Purpose:

It is the policy of the Board to comply with regulations of the Internal Revenue Service (IRS) regarding

taxability of employee fringe benefits.

Procedures:

A. The Controller will be responsible for developing and implementing administrative regulations

requiring employees to verify use of school equipment for business purposes and to report any use

or fringe benefits that may be taxable as compensation.

B. The Controller will annually review the determinations of convenience of the school and de minimis

amount to ensure compliance with federal regulations.

C. The review may include discussions with the school auditor.

D. To the extent that a taxable fringe benefit value is provided as either convenience of the school or the

amounts are classified as de minimis, the value may be excluded from taxation.E. Taxable fringe benefits are subject to:

1. Federal Income Tax

2. Social Security Tax

3. Medicare Tax

4.

Other applicable state or local taxes

F.

An employee has the option to reimburse the school for the value of services received; however,

where no reimbursement is received, the value of the services will be treated as taxable

compensation.

G. Taxable fringe benefits include but are not limited to the following:

1.

Cellular telephone provided by the school2. School telephone

3. Internet access provided by the school

4.

Group life insurance in excess of $50,000

5. Laptop/Notebook computers

6. Personal use of school vehicle

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