Presentation on theme: "Head’s Network - Women’s Leadership Seminar Finance… what school leaders need to know October 18, 2014."— Presentation transcript:
Head’s Network - Women’s Leadership Seminar Finance… what school leaders need to know October 18, 2014
You are a finalist in a Head Search. You are wondering about the financial stability of this school… What questions would you ask? What sources of information would you seek? How would you evaluate the data you receive? Where do you begin?
Graland Mission Statement Achieve intellectual excellence Build strong character Enrich learning through the arts and athletics And prepare our students to be Engaged citizens and thoughtful leaders.
Graland Strategic Plan 2011-17 Provide a program that brings the Graland Mission to life Create a dynamic learning community composed of highly effective teachers, administrators and staff Foster an inclusive community focused on supporting Graland’s Mission and Guiding Principles Ensure financial sustainability and maintain campus and facilities that optimize Graland’s program Implement Board governance practices that serve Graland’s Mission
Basic Assumptions Finance is a key component in achieving the school’s mission It is a reflection of the school’s true priorities The Head must be actively involved in all phases of the budget
The critical question is: Does the school have or can the school generate the resources needed to meet the mission? Staffing Financial Aid Technology Plant Program
Budgeting Budgeting is the allocation of resources required to achieve the School’s mission Bottoms Up Top Down
Strategic Indicators for Independent Schools Revenue Expenses Budget excess/deficit Enrollment data Student/faculty ratio Debt Capital projects Financial aid Faculty profile Demographics Deferred maintenance Annual Fund Endowment
Who is Involved? Budget Managers *CFO* Head Finance Committee Board What Happens Know goals from planning processes and multi-year financial plan Gather input Start budget building and prioritizing
Timeframe Oct/Nov Input, define assumptions Dec/Jan Preliminary budget approval for tuition setting Jan/Feb Appointment renewals, contracting, budget setting April/May or Aug/Sept Budget finalization Fiscal year usually July 1-June 30
Financial Aid and its sources FA as a % of tuition income / benchmark Mission based Discounting to fill seats Financial Aid Endowment Restricted Annual Giving
Faculty Class sizes Student/Teacher ratios Class size studies public school – Tennessee, Texas Gains with smaller class size early grades No impact after grade 5 Workload Student facing hours Prep hours Extra Capacity - Schedule
Graland Compensation Philosophy Graland Country Day School commits to attracting, retaining and rewarding high- performing employees – those that demonstrate the qualities of innovation, collaboration, professionalism, leadership and actively contribute to further the mission of the School.
Compensation Compensation Philosophy to drive decisions Understand marketplace National benchmarks Local benchmarks Demographics of faculty and staff Family health insurance coverage Retirement Employee childcare
Faculty Salaries Benchmark Faculty Salaries11-12 Lowest 11-12 Median 11-12 Highest Graland$36,885$53,438$77,976 NAIS Day School (50 th percentile) $37,743$52,275$76,556 Denver Public Schools (Step 1 with BA): $37,551
Alumni Program Part-time Alumni Director$35,000 Alumni Expenses$21,250 Total Investment$56,250 Return on Investment: Annual Fund – 8% Participation$128,000 Alumni Speakers – 6 Visits$6,000 7 Alumni Kindergarten Students$136,500 Total Return$270,500
What to look for Are there any unexplained significant trends evident in the historical financial summary Does the school have reserves? Does the school have sufficient funds to pay the debt service? Is there a strategic plan to retire the debt? Cash Flow? Does the school pay this year’s bills with next year’s money?
What to look for continued Does the school have any standards violations in its accreditation report? What is the ratio of debt to endowment? What is in the most recent Management Letter? Is there any “going concern” issue due to unexpected losses, failure to meet loan covenants or mismanagement?
What to look for continued Are checking accounts reconciled quickly and systematically? Are vendors paid on a timely basis Are IRS 990’s filed on time? Are audits done smoothly and efficiently on a regular schedule Has the school done financial projections of income and expenses?
Net Assets Unrestricted Temporarily Restricted Permanently Restricted Total Net Assets = What you are worth
Almost nothing can be accomplished in one year!
Remember: Just because we are “not for profit,” it does not follow that we are “for loss.”
Financial Forecast-Key Drivers Operating Enrollment Annual Tuition Increase Financial Aid Staffing Salary & Benefits Non-Operating Annual Fund Endowment Capital Expenditures Debt Service
Drivers and Dynamics in School and Financial Models Size of school Dependence on tuition for income Endowment Debt Deferred Maintenance Salaries and Benefits (labor intensive)
Drivers, continued Financial Aid and its sources Endowed Financial Aid Restricted Annual Giving FA as % of tuition income Mission based financial aid v. financial aid as discount to tuition
Other Drivers Technology Specialized program needs Athletics and transportation And so many more…
Budget vs. Actual Graland Country Day School ENROLLMENT681683 FTE - Instructional 97.8 Student/Teacher Ratio 6.976.98 FTE – Admin and Staff 37.6 TUITION AND FEES PER STUDENT 20,16420,188 FINANCIAL AID AS % OF TUITION & FEES 12.6%12.9% SALARIES & BENEFITS AS % OF TOTAL EXP. 73.5%73.2% OPERATING EXPENSES (Excl. Fin. Aid, Cap Campaign & New bldg) Salaries 7,8607,83030 Benefits 2,1162,121(5) All Other 3,6323,648(16) 2013-14 Favorable/ BudgetActual(Unfavorable)
2001-022002-032003-042004-052005-062006-072007-082008-09 Actual ENDOWMENT Endowment fund, beginning of year39,36338,35944,92352,12660,61466,91374,84766,350 Gift income3542,6834,4465,2602,8231,29967180 Realized gains/(losses)(976)(142)1,1813445504161,056(3,575) Unrealized gains/(losses)(1,373)1,9551,3462,7052,7239,904(7,986)(9,439) Transfers to/from Operating9912,068230179203(3,685)(1,634)(751) Endowment fund, end of year38,35944,92352,12660,61466,91374,84766,35052,765 DEBT Outstanding balance, June 30th18,23816,68416,02215,36914,68718,96518,50317,701 Principal payment - Bond520555620610640680720760 Interest Expense - Bond1,0971,074774755726694659623 Interest Expense - Loan000000300137 CAPITAL EXPENDITURES Capital Expenditures - 20 East 92nd320387389301345557522880 Capital Expenditures - Other000009,54212479 FACILITIES Property and Equipment, net of depreciation20,77420,21219,66419,03618,47427,04926,94726,448 Year by Year Budget From a school in New York City