Cherokee Charter Gets Needed Funds

Editor's note: At a Feb. 29 meeting of the  Governing Council, members revealed that lower than expected enrollment and lack of available funding have contributed to a . Today, one member of the council submitted this letter to the editor in response to news reports on the topic. 

• • •

Dear Editor:

As the Treasurer for the Georgia Charter Educational Foundation and the finance member of the Local Governing Council for Cherokee Charter Academy, I find it necessary to set the record straight on the recent report of a $1.3 million deficit. As Mark Twain once said, "The rumors of my death have been greatly exaggerated." This is the case with Cherokee Charter Academy’s financial situation.

The underlying reason for the misperception lies in the fundamental differences between for-profit accounting and non-profit/governmental accounting. For-profit companies recognize revenue when an invoice is mailed to a customer, not when cash is received. Cherokee Charter operates under the rule of non-profit accounting, which recognizes revenue when the cash is received. When cash payments are delayed for an entity recording receipts on a cash basis and payments for expenses have occurred in advance to fund the operation, a cash deficit will result, as is the case with Cherokee Charter at this point in time.

So, where is the cash? Cherokee Charter is subject to the same State QBE funding mechanism that Cherokee County School District deals with every year. However, since this is our first year of operation, the problem is magnified because the state had no idea how to anticipate the number of special students, both gifted and special needs. However, using the QBE formula, we now know how much funding to anticipate from the State. Further, it is important to note that our management company, Charter Schools USA, has graciously advanced us the needed funds to ensure that our students and our school can operate until the cash arrives between now and June. At that time revenues will catch up to operating expenses and our financials will no longer show a deficit.

Cherokee Charter Academy is thriving as an economic enhancement to our county by providing more than 100 jobs and utilizing what would have been a vacant facility in the Sixes Community. Our reported financial distress was a result of required, unique accounting conventions that differ from those used in for-profit entities. So, after considering these issues, you can see why our financial problems, as innocently reported, were greatly exaggerated.

Danny Dukes

Georgia Charter Education Foundation, Board Member

Cherokee Charter Academy, Local Governing Council Member