Commonwealth Charter Schools Excess Surplus Report for Fiscal Year 2022

---

Pursuant to M.G.L. Chapter 71, Section 89(hh), Commonwealth charter schools return excess tuition payments to the sending districts based upon parameters described in statute. At the end of each fiscal year, each Commonwealth charter school is required to submit a supplemental schedule calculating the amount of any excess surplus in accordance with statutory requirements. Data on this schedule is derived from the charter school's End of Year Financial Report (CSEOYFR) and is reviewed by the Department of Elementary and Secondary Education for accuracy. The summary tables found at FY2022 Commonwealth Charter Schools Excess Surplus Report contain the amounts described in the statute that the Commissioner has certified for fiscal year 2022.

Here is an explanation of the columns on the summary charts:

1. Surplus carryover: The actual carryover amount from the prior year's surplus calculation.
2. Change in net assets: The change in net assets as reported on the school's audited Statement of Revenue, Expenses and Changes in Net Assets.
3. Adjustments to change in net assets: Adjustments to the change in net assets are reported based on non-tuition revenue sources (such as fundraising); principal payments on debt; capital expenses; depreciation; and transfers to reserve funds.
4. Cumulative (total) surplus: The cumulative (total) surplus as of the end of the fiscal year is defined as the carryover from the prior fiscal year plus the change in net assets for the current year, net of adjustments.
5. Allowable carryover: The statute permits charter schools to retain a reasonable surplus as working capital for the upcoming fiscal year. The amount of the allowable surplus carryover is equal to 25 percent of the prior year's tuition payments plus 20 percent of the budgeted operating and capital expenses for the upcoming year.
6. Excess surplus: Identified cumulative surplus in excess of the allowable carryover must be returned to the sending districts.
7. Actual carryover: This column shows the amount to be carried over to the following fiscal year, to become the starting point of the new year's surplus calculation. The actual carryover amount is either the year-end cumulative surplus or the allowable carryover, whichever is less (but not less than zero).

For surplus calculations for this fiscal year and subsequent years, a vote of the board of trustees of a charter school is required to designate funds to be held in reserve for the purchase or renovation of an academic facility pursuant to a capital plan. Capital plans must be submitted as part of the charter school's annual report, and amounts transferred into reserve accounts for capital projects are reported as an adjustment in the surplus tuition calculation. Please note the surplus calculation is subject to compliance testing procedures as outlined in section 1012 of the Charter School Audit Guide . For further information, please contact Joanna Laghetto (781-338-3221) or James DiMaio (781-338-3228).

Last Updated: January 17, 2023