So, this is not where I want to be: I want to be attending; I want to be at one of the two sessions this hour on 21st century curriculum.   But, though that is where my heart is, my head has persuaded my I need to focus on finance.  The curse of school leadership.

So here I am, at Pat’s session on school finance sustainability and survivability, to be better prepared as I assume the leadership of a school that has its own (just like nearly every other school) financial challenges.

PB: Here is the perfect storm:  Six factors in confluence:

  1. Enrollment shaky or worry about next year.
  2. Financial Aid Demand Growing (Families cannot rely on home equity to balance household budgets).
  3. Debt Service Rising/Endowment Income Falling.  (Even the big dogs get fleas).
  4. Demographics Changing (promotion of NAIS Demographic Center, which this blogger has used effectively; it is a good tool, and remarkably easy to use.)  College educated women have to be our demographic market target.  Women make ALL the decisions for families.   PB on Heath: Features rather than benefits– consumers want the data driven benefits.   Critical to track alumni!
  5. Affordability Disappearing as Tuitions Skyrocket.   Analogy to Porsche; PB doesn’t even go to test drive porsches, even though he knows they are the best of breed, because he just knows they cost too much.  Lot of families feel the same way.
  6. Wealth Declining, chilling effect on Annual Giving.   Great video at Oakwood school.

Never had all six at once; hence, perfect storm.   But our schools are harbors in the storm; you might have to sacrifice, but it is worth it.   Nice shout-out here for video on websites, and he is right: our school websites must feature video!

School enrollment has remained stable during recessions, but financial aid has spiked, so schools must be highly strategic about financial aid.

PB: Build three financial scenarios: Best Case (+/- 3-5% in gross revenue),  Worst Case (Down 20% or more), Most Likely (Down 5-10%).

Build a 10 rung ladder of contingencies; the following is one example, but each school should/must create for oneself.

1. Cut expenses (except increases for financial aid).  Freeze “non-defense spending” but put a hold on discretionary spending: {shout outs: christmas card, curriculum budget, travel, summer projects, summer stipends, professional development}

2. Postpone capital expenditures, renovations, etc.   Not replacing the fraying carpets, not pulling the weeds.

3. Double up assignments to cover staff attrition rather than hiring replacements.

4.  Go Green Fast, using recommendations from NBOA and NAIS listserves etc. 100 ways to go green on NAIS website.

5.  Cut more from everything but “defense.”

6. Consider for multiple years: Moderating tuition increases over several years; moderating or making conditional compensation contingent upon achieving enrollment goals.

7.  Use net tuition discounting to grow enrollment without adding staff.  Enrollment should be fixed, financial aid should be variable.  Expand variable for full enrollment.   A college model.  Come May 1st, you are looking at 20 empty seats, it is way better to have 20 kids at half-tuition than to have twenty empty seats.

8. Strengthen advancement messaging.

9. Fully utilize physical campus for after-school and summers.

10. Exploit school’s intellectual capital.

About number 7; I have heard Pat talk about this before, I endorse the concept in principle, and I have tried, vigorously to practice it.  But it is much harder to do than he makes it sound.   First,  there is never a list of people hanging around, or still in your inquiry pool, who are still eager to come to your school.   They are settled somewhere else.   Second, the full-payers who joined your school on-time are not so happy about discounting the late arrivals.  Third, you taint your value when you start slashing.   Now, I think it can be, and I say this from successful practice, applied very surgically, very tactically, very narrowly, on tight targets.   .  But although you can do this, in surgically narrow ways, it is really hard to scale.  Do you advertise in the paper: Tuition now half price!   No.  But how will families find out?

The analogy to the practice of this approach at colleges is misleading too, because the parents of college students are much, much less likely to be in community with each other than K-12 parents, and so are much less like to learn about what other families are paying for tuition, and even if they do, less likely to experience the feeling of unjust treatment and inequity if learning that another family in a similar circumstance receives a greater discount.   It is really a matter of apples and oranges, this comparison.

Again, schools should open their minds to this, they should experiment with this– Pat is right about all that.  But he should explicitly state too how very complex and awkward it is.