In a dynamic funding and enrollment environment, the Financial Analysis Report (FAR) serves as the sector’s shared reference point for understanding school financial health over time. Each year, DC PCSB produces the FAR to disclose the combined financial health of the sector and the individual financial health of every local education agency (LEA), translating complex audited financials into consistent, comparable insights. This enables leaders, board members, and the public to see both financial strengths and emerging risks with clarity.
The FAR is a critical tool for informing decisions on monitoring and support, ensuring that oversight and sector-wide dialogue are grounded in shared data, consistent thresholds, and a transparent, equitable process. At the school level, leaders and governing boards use the FAR to plan, benchmark performance, and address potential issues proactively—well before challenges escalate into crises.
The FAR process begins only after audited financial statements are finalized. This means each LEA has completed its independent audit, addressed any audit adjustments, and responded to any internal control findings. Once audits are complete, DC PCSB maps the audited financial statements into standardized templates and conducts analyses of audited financial data across all LEAs, including the review of multi‑year trends. DC PCSB also reviews any audit findings, debt covenants noncompliance, and information about LEAs’ management organizations and related parties. Internal quality checks ensure the methodology is applied consistently and accurately.
Schools also play an important role in the process. Each LEA is given the opportunity to review its draft Financial Analysis Report Card and provide factual clarifications or additional context before finalization. This step supports accuracy and fosters shared understanding of the data.
Financial health within the FAR is assessed using a combination of Key Financial Indicators (KFIs). These KFIs include liquidity, cash generation, and operating sustainability measures. No single indicator defines financial health. Financial concerns become more significant when multiple indicators point in the same direction, especially over time. Schools with stronger financial health often show solid cash reserves, strong enrollment, manageable debt and/or lease payments, and no internal control findings. Schools with greater financial risk may see persistently low cash balances, continued enrollment declines, and/or findings in internal controls over financial reporting.
DC PCSB’s approach emphasizes early course correction. Support strategies include targeted financial conversations tied to FAR indicators, clear expectations connected to specific risks, and more frequent data review when appropriate. The FAR does not predict future enrollment, management decisions, or funding, and it does not capture academic performance. The goal of the FAR is to disclose and support the financial health of LEAs.
Key Insights from FAR 2024 (SY 2023–24)
FAR 2024 reflected strong combined financial health for the sector and differentiated financial health profiles across schools. Importantly, the analysis reinforces that financial health is multidimensional—it cannot be reduced to a single surplus/deficit number.
Schools with stronger financial health often demonstrated:
- Positive or stable operating margins over multiple years
- Adequate liquidity and a meaningful cash runway
- Predictable enrollment patterns that align with budgeting
- Manageable debt relative to assets and revenues
Schools with elevated financial risk often exhibited:
- Repeated operating deficits
- Low days of cash on hand
- Enrollment volatility without timely cost adjustments
- High leverage and/or pressure meeting debt compliance
- Unresolved audit or internal control issues
The key lesson from FAR 2024 is the value of looking at multiple indicators over time rather than focusing on any single metric in isolation.
What’s New for FAR 2025
We heard the feedback: timeliness and usability matter. For FAR 2025, we are turning that feedback into action. We are streamlining our internal reviews and engaging with finance leaders earlier in the cycle to ensure we issue the report when it is most useful for planning and decision-making. Beyond just moving faster, we are also refining our methodologies and guidance to link financial indicators to tangible next steps, making the FAR a more actionable tool.
To learn more about the FAR and view FAR reports, visit our website.