1. Will This Upward Spiral Ever End? Tackling the Affordability Issue With increasing pressures on operating budgets on the one hand, continued economic uncertainty, unemployment, and family financial pressures on the other, in the face of an alternative, affordable public school education option, can independent schools continue to increase tuition at the current rates? Spring Business Conference –Wednesday, April 30, 2014 Elizabeth Jick Zions First National Bank Jim Skrumbis Sierra Canyon School Moderator: Panelists: Carolyn Flammey SSDS of Greater Boston, Inc. Timothy Parson Beaver Country Day School Bernice Bradin Lesley University 1

2. Framing the Dilemma 2

3. Tuition levels are steadily rising - - with no end in sight! Educational institutions today face a BIG problem… 3

4. The Problem for Independent Schools: Total Operating Costs continue to rise Salaries/Benefits Health Care/Insurance New Programs Capital Expenditures Deferred Maintenance 4

5. The Theoretical Solutions: These costs can be covered through a combination of: Raising Tuition Levels Fundraising/Development Efforts Increasing Endowment Spending Reducing Other Expenses 5

6. Average Annual Increase Over Last 10 Years: Average Annual Tuition - - Traditional Day Students *Data provided by AISNE and NAIS. AISNE: 5.28% NAIS: 4.32% CPI: 2.36% 6

7. Full Paying Families Full Paying “Middle Tier” Families Financial Aid Families 30% 40% Have Get Who is Paying the Tuition? 7

8. Independent School Average Tuition Levels: 2003-042012-13% Increase AISNE Independent Schools $ 17,450 $ 27,70059% NAIS Independent Schools $ 14,132 $ 20,61246% Public School Tuition $ - N/A *Data provided by AISNE and NAIS. 8

9. What Are The Key Financial Drivers Other Than Tuition Levels? Revenues Expenses Number of Students Fundraising Endowment Draws New Income Sources % Budget Allocated for FA Operating/New Programs Capital Expenditures Program Expenses 9

10. More Aggressive Approaches to Increasing Tuition Levels Proactive Marketing to New Families Launching Capital Campaigns Identifying Facility Rental Opportunities Outsourcing Services to Reduce Overhead Eliminating Operating Inefficiencies Postponing Projects/Cap Ex/Reserve Allocations 10

11. “The world we have made as a result of the level of thinking we have done thus far creates problems we cannot solve at the same level of thinking at which we created them.” “A new type of thinking is essential if mankind is to survive and move to higher levels.” - Albert Einstein 11

12. Presented by: Carolyn Flammey Director of Finance & Operations Solomon Schechter Day School of Greater Boston 12

13.  Founded in 1961  Located in Newton, MA  Nursery School through 8 th Grade  Co-Ed Conservative Jewish Day School SSDS of Greater Boston 13

14.  2014 Enrollment: 508  2014 Budget:$13,000,000  2014 Tuition:$24,400  FA % of Tuition Revenue:26% SSDS of Greater Boston 14

15.  In June 2009, Schechter’s major feeder preschool closed  At risk:  $250,000 rental income  9-12 kindergarten students  Vacant rental property The Problem 15

16.  Market research suggested interest in  High quality preschool  Judaic and Hebrew curriculum  Full day  Starting at 15 months  Parents from former preschool and current SSDS parents also strongly in favor The Research 16

17.  Support of Board and administration  Financial risk  Start up costs  Loss of rental income  Bandwidth  Community reaction  Feeder schools  Synagogues Considerations 17

18.  Kindergarten feeder vs. income maximization  Governance  Integration with SSDS  Admission policies  Financial aid  Curriculum Decisions 18

19.  Opened September, 2011  Full preschool enrollment  Strong kindergarten feeder  Generates annual surplus (though less than previous rental income)  Feeder preschool relations improving slowly Results 19

20. Presented by: Timothy Parson Director of Finance and Operations Beaver Country Day School 20

21.  Founded in 1920 (as All–Girls School)  Located in Chestnut Hill, MA  Grades 6 th through 12 th Grade  Co-Ed Progressive Day School Beaver Country Day School 21

22.  2014 Enrollment: 458  2014 Budget:$19,700,000  2014 Tuition:$39,950  FA % of Tuition Revenue: 19.7% Beaver Country Day School 22

23. Background: Fall, 2009 School Financially solid 425 students; campus at capacity Wants to pursue more hands-on project-based learning NuVu MIT graduate student venture exploring “studio” learning model Limited financial resources Looking for secondary school to pilot with Beaver – NuVu (MIT) Partnership 23

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25. Winter 2009-10:Board and internal discussion Spring 2010:Pilot with 20 seniors in space rented from MIT Media lab decision to do full-year for FY11 made in late spring Concerns:Integration with curriculum, cost, logistics Some fundraising to blunt initial costs “Make glorious mistakes!” Start-up Phase 25

26. Where We Are Now NuVu is in its own rented space in Central Square Changing array of guest “inspirers” lead studios on different topics 20 Beaver students (or more) per term go to NuVu by bus each day Some students from other schools also attend Covered by school tuition for Beaver Students (we pay NuVu a fee per student) Beaver enrollment is 25 students higher 26

27. Benefits Huge programmatic success – changes to curriculum, school facilities & mindset Has bolstered Admissions demand College list more innovative, tech-y – Stanford, Carnegie Mellon And has boosted bottom line! (enabling more internal funding of projects) 27

28. Presented by: Jim Skrumbis Head of School Sierra Canyon School 28

29.  Founded in 1978 (as For-Profit School)  Located in Chatsworth, CA  Grades Kindergarten through 12 th Grade  In 2006, converted to a Non-Profit and added a High School  Co-Ed College Preparatory School Sierra Canyon School 29

30.  2014 Enrollment: 990  2014 Budget:$31,800,000  2014 Tuition:$29,400  FA % of Tuition Revenue: 20% Sierra Canyon School 30

31. Presented by: Bernice Bradin Vice President and Chief Financial Officer Lesley University 31

32.  Founded in 1909 (as All-Female College)  Located in Cambridge and Boston, MA  Co-Ed University with Graduate Programs  Specializes in teacher education, psychology, and the arts Lesley University 32

33.  2014 Enrollment: 5,195  2014 Budget:$118,535,000  2014 Tuition:$32,000  FA % of Tuition Revenue: 15% (40% for under graduate students) Lesley University 33

34. Budget must always be balanced with a small surplus Graduate schools vs. Undergraduate schools Declining enrollment trends Steps to reverse trends Lesley University 34

35. Four distinct schools serving unique markets 1. LUCLAS undergrad -- College of Arts and Sciences Was all female until 2005; now 20% male; enrollments up 2. LUCAD undergrad and grad – College of Art and Design Merged with LC in 1998; enrollments down 3. GSOE – grad – School of Education For 20 years had a near monopoly on National cohort model added hybrid/low residencies/on-line; enrollments down 4. GSASS --grad school of Arts & Social Sciences Counseling Psych and Expressive Therapies Israel Program phased out by government; other enrollments up 5. Threshold Program –non-degree for young adults with learning disabilities; Enrollments stable. Given nature of program, cannot grow Lesley University 35

36. Steps to reverse trends of declining enrollments and lower revenue Branding study Identify causes Revamped website Build on strengths Marketing and Advertising Campaign Expense reductions Cabinet Review Board for vacancy reviews Systematic program reviews to determine if program should be sunset Faculty retirement programs Lesley University 36

37. Undergrads Tuition reset—align price with what paid Urban Scholars Initiative Partnerships with Community Colleges 2+2 3 year degree Retention focus Addition of majors New Art Center in Porter Square Added internships to LUCAD Engaged 3rd party to market on-line programs and recruit students Lesley University 37

38. Graduate Programs GSOE On-line marketing Certificates and professional development Sunsetting of low enrollment programs GSASS International programs like Guyana – intensive low residences New programs in areas like Mindfulness Revamped Intercultural into International Education Lesley University 38

39. Results Tuition reset – too soon to know, but inquires have been up Hybrid programs are a huge success at grad level New Art Center still under construction In CLAS, student numbers have stabilized Lesley University 39

40. Summary SSDS of Greater Boston Replaced lost revenues Established its own feeder school Increased enrollment Beaver Country Day School Created innovative program with MIT Accommodated 25 additional students Increased revenues Sierra Canyon Increased enrollment Created a more diverse student body Identified new revenue stream Lesley University Engaged marketing firm for online recruiting Eliminated operational inefficiencies Enrollment - - Stay Tuned! 40

41. All Four Pioneering Institutions: Faced the affordability problem in varying degrees Thought creatively and BIG Took calculated risks over approximately two years Added extra costs to implement new programs Through patience and perseverance, they succeeded to: Identify new, non-traditional revenue sources Enhance their reputations through their entrepreneurial visions Alleviate a portion of the affordability burden Summary Conclusions 41

42. Q & A For more information please call Elizabeth Jick ejick@zionsboston.com (617) 969-3400 42

43. Will This Upward Spiral Ever End? Tackling the Affordability Issue With increasing pressures on operating budgets on the one hand, continued economic uncertainty, unemployment, and family financial pressures on the other, in the face of an alternative, affordable public school education option, can independent schools continue to increase tuition at the current rates? Spring Business Conference –Wednesday, April 30, 2014 Elizabeth Jick Zions First National Bank Jim Skrumbis Sierra Canyon School Moderator: Panelists: Carolyn Flammey SSDS of Greater Boston, Inc. Timothy Parson Beaver Country Day School Bernice Bradin Lesley University 43