New School Seminar

1. New School Seminar Private Licensed Schools Division of Higher and Career Education

2. Foundations – Statute, Regs, and Memos Board and staff roles Form PDE-3775 Fees Form PDE-1003 Facility Type of Ownership PDE-5004 Forms School Name Contents

3. Surety Finances Ethics Statement Records Retention Agreement PDE-340 Forms Catalog Enrollment Agreement New Program Applications Admissions Representatives Contents Continued

4. Regulations New School Application Internet Sites Handouts

5. Statute Regulations Board Policy Memos Legal Authority

6. Private Licensed Schools: http://www.portal.state.pa.us/portal/server.pt/cpmmunity/private_licensed_schools/8993 Financial Forms: ftp://ftp.state.pa.us/pub/PDE_PUBLIC/PLSFinancial/ Internet Resources

7. Determine if application is complete and acceptable for Board review Give school feedback with 10-day “cure” period Staff Role

8. Staff can answer questions and provide guidance and insight into Board requirements and standards. Staff cannot teach applicants to develop a syllabus, prepare basic financial statements, or operate the school. Staff

9. John Galganovicz Al Happ Bob Kline Joan Parrett (717) 783-8228 Staff

10. Accountant Attorney Educational/Administrative Consultants

11. Approve Approve Pending Defer Deny Role of Board

12. $200 – This Mandatory Seminar $1500 – Application Fee $700 – Each Additional Program $500 – Site Visit $300 – Admissions Representatives Fees

14. Follow PDE-3775 Use as a check sheet for submission Include in application PDE-3775

16. Complete all information. Must have valid mailing address and phone number. Fax and/or e-mail will speed communications. PDE-1003

17. Be sure the address, fax, phone number, and e-mail that you provide are active. Otherwise, important correspondence or communication about your application might not reach you! PDE-1003 Red Flag

18. Must have Certificate of Occupancy Floor plan with measurements Facility

19. Corporate registration from Department of State, Corporate Bureau Partnership agreement Personal financials if sole proprietorship Type of Ownership

20. Fictitious Name registration from Department of State Corporate Bureau unless the school name is exactly the same as the name of the corporation. School Name

22. Needed for each corporate officer 3 Letters of recommendation – one from a bank PDE-5004 Forms

23. Surety Bond PTAF Irrevocable Administrative Trust Surety

24. All schools are required to submit financial documentation as a component of the license application (24 P.S. § 6507).  The financial documentation is required in order to demonstrate that the school has the financial solvency that will be required to successfully launch the operation and prevent negative consequences for students (22 Pa. Code § 73.53). Each application must include documentation that demonstrates that the school is appropriately capitalized, that accurate assessments have been made regarding operating costs, and that the individual, partnership, or corporation that owns the school is solvent and has the financial capacity to support the operation. Financial Statements

25. In order for the Board to process a new school application, the school’s financial statement has to be audited or reviewed before submission. The Financial Review Committee reviews the financial statements and supporting documentation before each Board meeting.  A license cannot be issued until the Financial Review Committee approves the financial condition of the applicant school. Submit actual financial statements specific to the school on the PDE-2006 form.  This statement should be only for the school site that is applying for licensure (i.e. stand alone statement). The financial statements should not include other schools and reflect actual results. All financial documentation must be less than six months old on the Board meeting date at which the application will be reviewed. Financials Con’t

26. PDE-2006 Pro-forma Parent Company Financial Statement Proof of Capital * New School Financial statements must be audited or reviewed. Financial Reports for New School Applicants

27. Forms and instructions located at: ftp://ftp.state.pa.us/pub/PDE_PUBLIC/PLS%20Financial/ A guide for the FRC to assess the financial strength and solvency of a school / institute Measures the current condition and ability to operate in the future through: Income Statement (page 1) – Revenue and Expenses Balance Sheet (page 2) – Assets, Liabilities and Stockholder’s Equity Disclosure Information (page 3) – Methodologies, Terms of Significant Notes, Parent Company Information, Pending regulatory/legal Issues and Explanations Key Indicators (page 4) – Individual program information PDE-2006

28. All financial information must conform with Generally Accepted Accounting Principles (GAAP) The common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information. Imposed on companies so that investors have a minimum level of consistency in the financial statements they use when analyzing companies for investment purposes. GAAP cover such things as revenue recognition, balance sheet item classification and outstanding share measurements. Still Room for interpretation and different methodologies within GAAP. PDE-2006 and GAAP

29. Key concept of GAAP is Accrual Accounting An accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. The general idea is that economic events are recognized by matching revenues to expenses (the matching principle) at the time in which the transaction occurs rather than when payment is made (or received). This method allows the current cash inflows / outflows to be combined with future expected cash inflows / outflows to give a more accurate picture of a company's current financial condition.  Accrual Accounting

34. PDE-2006 – ACTUAL, REAL, income statement and balance sheet MUST balance May not be completely zeros At least 4 months of operating capital Finances

35. Financial statements provided for new school applications are expected to meet the following criteria: A current ratio of 1:1 (current assets to current liabilities) A positive net worth, accompanied by a reasonable debt to equity ratio Net profit in one of the last two fiscal years Sufficient cash reserves to support 4 months of operation without depending on tuition revenue. Accurate and realistic reflection of the revenue and expenditures anticipated prior to opening and the first 12 months of operation post opening. Financials Con’t

36. ftp://ftp.state.pa.us/pub/PDE_PUBLIC/PLS Financial/ Both form and instructions on this site Use Annual Form PDE-2006

37. All applicant schools must demonstrate the financial solvency of the owners.  If the school is a proprietorship (single owner) or partnership, the application should include personal financial statements.  If the school is owned by a corporation, corporate financial statements must be provided.  Audited or reviewed statements are required. Owner Financials

38. 4 Months of Operating Costs In Name of School Evidence of Capital

39. Projection for first 12 months of operation Be realistic – include all possible expenses Include the costs of advertising Include attrition It is ok if there is no profit immediately Pro-Forma Projection

40. Provide a pro-forma financial statement that accurately and realistically reflects the revenue and expenditures anticipated prior to opening and the first 12 months of operation (post opening.)  This pro-forma statement should include all costs associated with the operation of the school, including facilities, utilities, advertising, printing costs, staffing, staff benefits, insurance, and all other expenses.  Failure to accurately anticipate reasonable expenses or unrealistic revenue projections can result in deferral or denial by the Financial Review Committee.  Pro-forma Projections

41. PDE-2006 is the PLS form for your income statement and balance sheet – this is real Pro-forma – required projection of income and expenses for first year Reviewed or Audited Report Capital – evidence of capitalization of school Parent financials * New School Financial statements must be audited or reviewed. Financial Summary

42. Consult an accountant Attend quarterly financial seminar January 11, 2012 April 11, 2012 July 11, 2012 October 10, 2012 Additional Help

43. Information is provided to guide schools and applicants in financial planning and financial reporting.  However, the Board and the Financial Review Committee may look at any other indicator to determine stability and are not limited to or bound by the criteria outlined in this presentation. Disclaimer re Financials

45. Serious commitment Read carefully and comply Signed by owner or director Ethics Statement

46. Should be with another Private Licensed School in Pennsylvania Must have signature for both schools No fee may be required after closure Service fees may be charged to students Samples Records Repository

47. Sample Repository –NO FORM PROVIDED

50. For Director For Acting Directors Complete all sections Include documentation of qualifications PDE-340 Forms