By Jessica Williams, The Lens staff writer, and Kelsey Foster, charter school reporter |

One of the schools under the KIPP New Orleans brand is up for a contract extension this year. The school’s performance history, including a less-than-favorable 2011 financial review, was up for discussion at a recent board meeting.The state education department has deemed that one of the schools under the KIPP New Orleans brand needs extra fiscal monitoring.

Board members briefly discussed the Louisiana Department of Education’s 2011 review of KIPP Central City Primary at their Apr. 19 board meeting. KIPP Central City Primary, one of KIPP’s schools eligible for a contract extension this year, received a less-than-favorable financial performance review from the Louisiana Department of Education. The review mentions flagged findings on an audit report, a spending deficit in at least one of the last three years, and a financial safety net deemed too small by state standards.

Note: The above has been changed to reflect that the fiscal review was conducted in 2011. 

Charter schools receive annual evaluations from the state for their academic, financial, and legal and contract performance. When the state conducts a financial risk assessment on a school, that school can score anywhere from “excellent” to “unacceptable” in five targeted areas: business practices, questioned costs, audit report results, cash on hand, and major events that could affect financial performance.

KIPP Central City Primary received a “needs improvement” and an “unacceptable” ranking in the cash on hand category last year, for having a deficit of just more than $7000 for the 2008-2009 year and for having less than 5 percent of a financial “cushion” – meaning that its general fund balance was less than 5 percent of its revenues. The state also noted that the independent auditor’s report on KIPP for that year found a material weakness in internal controls. As a result, the department has decided to either conduct a site visit or host a conference call with school leadership to discuss finances. The assessment indicated that the state could also bring the matter up with the state Board of Elementary and Secondary of Education, or employ a fiscal administrator to assist the school with finances.

The KIPP New Orleans Board discussed the state’s decision when discussing the school’s charter extension. s for the brand’s other eight schools. It also reviewed student applications and briefly discussed next year’s revenues.

Note: The other eight schools at KIPP are not up for renewal. 

KIPP Chief Financial Officer Michael Dunn said in a follow-up interview that the deficit is from the 2008, when KIPP Central City Primary was only receiving start-up funding and not all of its per-student revenue.

“In the very first couple of months…we may have been starting to buy supplies, but we didn’t have any revenue yet,” he said.  “So that year we ran a deficit in the start up period.”

Dunn said that the school is no longer carrying a deficit. He also said that collectively, KIPP New Orleans’s fund balance is more than 8 percent of its revenues, and that in the future, KIPP would work to improve fund balances at its individual schools.

Although the state’s assessment said that an audit report found a material weakness, the audit report in question, which covered the 2009-2010 fiscal year, noted several findings that contributed to what auditors called “internal control deficiencies,” not material weaknesses. An understaffed accounting department with a high turnover rate, for example, led to slow financial reporting. The administration also didn’t properly document the time of staffers who get paid with certain federal funds, the auditor wrote.

KIPP responded by hiring a new chief financial officer, a grants manager, and an accounting manager, the audit report reads. The organization also bought new software to help track employee time, and had all staffers who got paid with federal funds provide extra documentation.

Still, the state is putting put a closer eye on KIPP’s finances, in what is officially called a “dialogue” response.

Note: The above has been corrected to reflect the timing of the review. 

The state’s choice to review KIPP Central City wasn’t the only topic of discussion at the meeting. Board members also got around to enrollment and next year’s finances.

KIPP McDonogh No. 15 has received the most applications for the 2012-2013 school year – 806 total – from students who listed the school as a choice on their application, board members discussed. In all, KIPP schools have received 3,338 applications.

Some board members asked if the state’s new student private-school voucher program would affect the enrollment process. The program funds some public-school students’ private-school education, using public dollars. However, in order for students to qualify, they have to be attending schools that are low-performing by state standards. Two of KIPP’s six schools – KIPP New Orleans Leadership Academy and KIPP McDonogh #15 – fall into that category, receiving a D and C grade from the state, respectively.

Bertsch said that most likely, competition for enrollment would only come from Orleans Parish School Board high schools. KIPP has also been communicating with students to get an idea of where else they are applying, he said.

KIPP has also received its dollar amount per student from the state, the finance committee reported. Schools received $12,111,542 and accounted for 63 percent of the budget. The board had estimated within one percent of this amount, leaving no surprises for the budget in the months to come.

The next board meeting is on June 21.