How Schools Confidently Navigate Facilities Expansion

While the design and construction of a new academic facility can be an ambitious and exciting undertaking, it may present financial challenges. To ensure project success and to mitigate risk, it is critical to proactively plan for accounting and financial implications before you break ground.

Take for example one of AAFCPAs’ independent school clients that realized it had outgrown its facilities when both management and the Board acknowledged they could no longer accommodate the increasing demand for student enrollment. As a result, they embarked on an ambitious plan to add additional grades to its existing middle school. This involved the design and construction of new facilities to help meet increasing community demand.

Key Considerations in Facilities Expansion

• As you evaluate various sites for future expansion, as in this situation, AAFCPAs advises that clients seek guidance on financing and the proper accounting treatment for initial feasibility and early-stage site costs. As you do, your finance team may collaborate to discuss cost allocations and to present future financial statements and tax filings in the most appropriate and accurate manner possible.
• To fund school construction, our client’s Board of Directors and management launched a comprehensive capital campaign. In the silent phase of this campaign, AAFCPAs advises that our client’s fundraising team tailor their ask language to ensure optimal financial flexibility regarding the ways in which funds could be used and tracked going forward.
• As you settle on a site for your future home, AAFCPAs advises that clients evaluate any associated leases, such as long-term land and any remaining lease on its current facility to ensure proper accounting treatment. As the school enters the public phase of its campaign, internal and audited financial statements must be adjusted to ensure the clear presentation of campaign results and operations to donors and other key stakeholders.

How We Help

Understanding accounting, tax, and financial reporting implications when designing and building a new academic facility is crucial for project and long-term strategic success. Our comprehensive approach ensures that our clients are well-equipped to handle the financial reporting complexities involved. By partnering with AAFCPAs, school administrators may stay focused on their mission to provide exceptional education within the community.

AAFCPAs works with education clients to develop financial plans, offer guidance on real estate development projects, and advise on tax-exempt bonds and other tax credit financing programs to support campus expansion. We also advise on fundraising campaigns, assist with complex endowments, and help clients fund new capital initiatives using various tax credit programs.

If you have questions about how AAFCPAs can help your school navigate financial reporting complexities, please contact David Kelleher, CPA, CGMA, Partner at 774.512.4042 or dkelleher@aafcpa.com—or your AAFCPAs partner.