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NBOA Financial Sustainability: Both Sides of the SPECTRUM Research Project ISACS Head of School Conference Chicago, Illinois January 2015 With generous.

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Presentation on theme: "NBOA Financial Sustainability: Both Sides of the SPECTRUM Research Project ISACS Head of School Conference Chicago, Illinois January 2015 With generous."— Presentation transcript:

1 NBOA Financial Sustainability: Both Sides of the SPECTRUM Research Project ISACS Head of School Conference Chicago, Illinois January 2015 With generous support from:

2 NBOA Jeffrey Shields, FASAE, CAE Brief Introduction More than 15 years of experience working with business officers in higher education and independent schools Has served as NBOA President and CEO since 2010 NBOA serves 1,150 independent schools nationwide, 13 FTE, $4 million budget, headquartered in Washington, DC Previously Senior Vice President, National Association of College and University Business Officers (NACUBO) Certified Association Executive (CAE) Fellow, American Society of Association Executives (FASAE) Trustee, Online School for Girls Trustee, Georgetown Day School

3 NBOA Program Goals Discuss the financial climate for independent schools leading up to, and including, the economic downturn in 2008 and 2009 Explore the prominent models promulgated throughout the community to address independent school financial sustainability Share insights on the methodology, definition and initial findings from the Spectrum Research Project along with other considerations to secure your school’s financial health

4 NBOA Tuitions up 30% (real dollars) over 10 years Overall staff up 32% over 10 years Student: teacher ratios getting smaller Financial aid grant dollars up 38% Enrollment up 20% Before the economic “winds” changed

5 NBOA “New Normal” Charge only what people can pay Design your program to that revenue number “Full Steam Ahead” Charge what it costs CPI + 2 or more when needed Prevalent Models

6 NBOA : The New Normal Increase enrollment without increasing staff “Sunset” an old program for every new one Right size: re-think class size, workload, # of teacher specialists, assistants, school size Devote 1/3 rd of each fundraising dollar raised to endowment

7 NBOA Decide whether you are a price, product, or process school (you can’t be all 3!) Acknowledge that the 20 th century “factory” model of education will not prepare students for the 21 st century Design a 21 st century school that individualizes learning using technology Dedicate 2% of your budget to faculty professional development : 21 st Century Model

8 NBOA 2013 NBOA Business Officer Survey In response to the economic decline, what strategies did you implement? Most popular strategies Increase average class size Increase teaching loads Increase employee contributions for benefits 26.4% were going to increase the average class size, but only 11.7% did 58.8% were going to decrease planned salary increases, but only 32.3% did Increase average number of students per classroom 9.9%11.6%10.7%11.7%5.5% Increase teaching load9.1%8.1%10.9%12.8%3.2% Eliminate student programs1.6%2.2.%1.4%2.7%1.0% Reduce the number of faculty FTEs7.4%7.9%11.5%18.0%4.9% Reduce the number of staff/administrative FTEs 8.0%11.0%14.4%17.8%6.7% Decreased planned salary increases 6.2%9.3%14.0%32.3%7.8% Reduce salaries0.6%2.0%2.3%4.0%0.7% Reduce benefits3.4%5.5%7.4%12.2%2.1% Increase the employee contribution for benefits 8.3%13.2%12.7%11.7%4.4% % of Respondents Who Implemented Strategy by Survey Year

9 NBOA Strategic Reactions ►Increase Number of Students Per Classroom PlannedImplemented 2010 Survey26.4%11.7% 2011 Survey19.9%10.7% 2012 Survey16.2%11.6% 2013 Survey17.9%9.9%

10 NBOA Strategic Reactions ►Increase Teaching Load PlannedImplemented 2010 Survey26.6%12.8% 2011 Survey18.4%10.9% 2012 Survey14.2%8.1% 2013 Survey14.8%9.1%

11 NBOA Strategic Reactions ►Increase Employee Contribution for Benefits PlannedImplemented 2010 Survey17.5%11.7% 2011 Survey20.7%12.7% 2012 Survey13.5%13.2% 2013 Survey18.1%8.3%

12 NBOA Strategic Reactions ►Same goes for: - Reduce Faculty FTE - Reduce Staff / Admin FTE - Decrease Planned Salary Increases - Reduce Salaries - Reduce Benefits Source: NBOA Business Office Survey

13 NBOA 13 Years of Tuition or…?

14 NBOA There is NO Silver Bullet

15 NBOA The Future…?

16 NBOA Source: NAIS and US Bureau of Labor Statistics Tuition Increases: CPI versus Reality ● Average yearly CPI increase for the past 12 years is 1.96%. ● Has your school had a tuition increase in any given year that was less than 2%? ● It’s not just about affordability, but about managing expectations.

17 NBOA We’re Adding Employees Source: NBOA Business Office Surveys

18 NBOA Independent School Revenue Streams In general, all operating revenues fall into one of four buckets, and you only have direct control over one of them - tuition. Tuition Fundraising Endowment Auxiliary Services

19 NBOA Independent School Expenses Greatest % of your budget, in descending order (typical school) Compensation and Benefits Facilities Financial Aid (actually a revenue offset, but for our purposes we will discuss it here) Technology Equipment and Supplies

20 NBOA SPECTRUM Project Overview Objectives and Methodology Definition of Financial Health Identification of High Performing Schools Common Traits Among High Performing Schools in the Project With generous support from:

21 NBOA Learn what great schools are doing that sets them apart. Investigate best practices in financial management of independent schools. Objectives Jim Collins “Good to Great” matched pair research. Compare high-performers to typical to learn what separates them apart. Approach

22 NBOA Background research Quantitative data collection Qualitative data collection Background research Define financial health of independent schools Identify high-performing school group & “others” Analysis

23 NBOA Process to Develop Definition of Financial Health Background Research NBOA Panel of Experts Financial Health of Independent Schools Defined Presented at Annual Meeting Spring 14’

24 NBOA Financially healthy schools have the resources to sustain their operations for the long term, relative to their individual missions. These schools have successfully developed and implemented financial plans for both operations and facilities. These plans, funded in part with tuition and fees, also maintain financial reserves which adequately cover all current and projected future obligations. NBOA SPECTRUM Research Project: Definition of Financial Health

25 NBOA SAMPLE Data Points to Distinguish HPS From Others Operating Cash Flow Margin Financial Aid/Gross Tuition Annual Giving Philanthropic Support Primary Selectivity Debt Burden Calculated Age of Facility Days Cash on Hand

26 NBOA Definition of financial health used as criteria in selecting 12 schools for “high- performing schools” (HPS) group Eight “typical” schools selected for comparison group (others) Identifying High-performing Schools

27 NBOA 1.Lean 2.Collaborative and focused on clarity and outcomes 3.Academically rigorous 4.Guided (not governed by strategic plan) 5.Debt-averse Common Traits Among High- Performing Schools in SPECTRUM

28 NBOA 6.Disciplined endowment draw 7.Focused on benchmarking 8.Top-down decision-making 9.Quality, not quantity, in budget training Common Traits Among High- Performing Schools in SPECTRUM

29 NBOA IMHO: Other Considerations to Help Secure Your School’s Financial Future 1.“Know where the mission lives in your budget” 2.Elevate and integrate the role of the business officer at your school 3.Increase classroom capacity without increasing cost…how? a.Use of Technology b.Classroom size c.Faculty professional development and support 4.Provide financial aid to support your mission and within your school’s resources 5.Reduce or eliminate dependency on annual giving and endowment…how? a.Charge what it costs or reduce your program or both? b.Fundraise for following year

30 NBOA Register now at


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