Federal form 990 and financial statements

The federal form 990 is our yearly tax return as a 501(c)(3) tax-exempt organization, specifically as a public educational charity… meaning that we run with a Board of Trustees and no one is an owner. The Board hires as its sole employee the Head of School – Dr. Lou Ellen Kay, since 2007. She hires the teachers and custodian.

The form 990 covers our fiscal year, which is 1 July 2022 through 30 June 2023, as is standard for non-profit organizations. It has to be filed by 15 November; ours was filed on 6 November. The lengthy process of creating it was done by our tax accountant, Fristoe & Company, as every year since we started. We provided to Norm’s firm our QuickBooks company file that records of all transactions, along with copious supporting documents such as bank and credit card statements, records of tax payments both state and federal, and more.

The form 990 is a detailed document, about 55 pages long. We reviewed all of it before submitting it to the IRS, assuring that it’s accurate. The parts that may be most useful to anyone outside the school include these:

  • The Return Summary, right at the beginning. It shows our income and expenses and, thus, our assets
  • The core return, starting on p. 5
  • Part IV checklist beginning on p. 7 – all the care we take to meet our obligations and federal regulations
  • Part VII officers list on p. 11; see also Officer Information starting on p. 42. Note that none of us are paid anything for our work on the Board or any other way. Vince, the Board Chair, also teaches, does the bookkeeping, maintains the website, and does the publicity without pay.
  • Schedule E, Part I on p. 30 – more showing how we meet regulations
  • Possibly the Federal Asset Report beginning on p. 40 – physical items we hold

The full form is a PDF document linked here.

Our financial statement is a separate document, much shorter at 4 pages. We note several things:

  • Our total assets are substantial.  We have been accumulating funds for key purposes:
    • Preparing to buy the great building that we currently lease from our beneficent landlords, Preston Wisconsin.  We wish to avoid the intense disruption that would ensue from the building being sold out from under us and our having to find a new location, taking years of effort as did finding our first location to operate in the Las Cruces Downtown Mall. While we have assurances for the near term, the long term is our focus. The asking price for the building is $1.2M. We need a down payment and coverage of transaction costs. We also have to ensure that we have continuing income to service the mortgage and to pay teachers and cover other expenses. We are not there, yet, but hope to be within several years.
    • Preparing to hire paid administrators for running the school long-term.  Lou Ellen and Vince do the administration (and bookkeeping, website maintenance, publicity) as unpaid volunteers. They foresee their retirement, with the need to hire paid employees (possibly supplemented by volunteers).  We have estimated the running costs.
    • Getting accredited with the premier agency, Independent Schools Association of the Southwest. There are one-time costs of documenting all our work, about $11K, a full audit ($5K), and a site visit ($5K?).  There are annual costs of maintaining membership and accreditation.
  • The assets are counted differently under cash vs. accrual methods of accounting. We have some complex tidying-up to do with old tuition payments not tied to specific invoices.
  • We exercise due diligence. We mover $440K from a single account at FirstLight Federal Credit Union to two accounts, one a Bank 34 and another at its IntraFi partner.  We now have three accounts, all under the $250K NCUA insurance limit.

The statement is a PDF document linked here.