Rethinking Sustainability Building a Better Budget Dr. Alan Pue, President The Barnabas Group m

Cost First Remember, the role of the chief school officer is to define excellence and give it a price tag. The role of the board is to decide how much excellence it wants to buy.

Begin With Cost Centers “A cost center is a distinctly identifiable department, division, or unit of a firm whose managers are responsible for all associated costs and for ensuring adherence to its cost budgets.” businessdictionary.com

Suggested Cost Centers Instructional costs Administrative/support costs Co-curricular costs Advancement costs Plant operation costs Institutionally funded financial aid costs Auxiliary-service costs

Categories/Sub-categories See handouts

Financial Reports Three levels of detail ▫The micro level – greatest level of detail including all the financial data for each sub-category ▫Mid level – will show all cost of each sub-category within each cost center ▫Broad level – a single sheet showing the complied costs for each cost center These three levels will allow you to determine true costs while providing a usable summary budget for public discussion. You can explode or collapse your budget to expose as much or as little detail as you desire for a particular conversation or discussion.

Your Biggest Investment: People 70-80% of the typical budget It is crucial to appropriately determine staffing needs ▫based upon your identified purpose and desired outcomes “talent to task” ▫appropriately defining roles and connecting “talent to task” ▫while understanding the concept of ROI Determine appropriate compensation ▫Develop a salary schedule (see chart) ▫Determine appropriate fringe benefits ▫Professional development

A Second Significant Issue The Cost of Place ▫Fixed expenses – rent, lease, mortgage, insurance ▫Fluctuating expenses – utility costs, cleaning, repairs/maintenance, landscaping ▫Re-model ▫Depreciation ▫Reserve funds Key Question ▫Do we rent, seek a long-term lease, purchase and re-configure, or build?

Now Set Your Price On the Horns of a Dilemma ▫The price for providing a quality education is increasing. ▫In the real world it is putting Christian schooling beyond the reach of many people. Somebody’s Got to Pay ▫The solution is not to discount the cost of education ▫It is to create additional revenue streams ▫How?

First, Identify Revenue Streams Income Categories ▫Net Tuition ▫Fees (as minimal as possible) ▫Net Auxiliary Revenue  Food service  Summer programs  Before/After school care ▫Resource Development Revenue  Fund raising activities  Annual fund  Capital campaign  Planned giving

Now, Connect Those Streams Hard Revenue Operational Costs Annual Fund Program Development/Enhancement Financial Aid Capital Funds Capital Projects Financial Aid Planned Giving Endowment Capital Projects/Targeted Operations/New Programs

Then, Develop Income Assumptions Most important – Enrollment assumptions ▫The enrollment funnel ▫Tracking the data ▫Early re-enrollment ▫A retention strategy Realistic resource development assumptions Realistic auxiliary program income ▫Your business plan ▫Net revenue

Now Set the Price A Simple Strategy (you won’t like)

A Necessary Reminder and Painful Reality Education is not affordable ▫People ▫Place ▫Programs ▫Perception so what can we do? But it must be accessible – so what can we do?

Key Strategies stewardshipPractice wise stewardship entrepreneurLearn to think and act like an entrepreneur partnershipsBuild transformative partnerships underground streamTap the underground stream

Think and Act Like an Entrepreneur Keys ▫Identify a need and meet it with excellence ▫Stay focused on the main thing ▫Staff wisely ▫Build a sound business model  Target audience  Pricing model  Marketing/Implementation strategy  Measures of success  Appropriate accountability

Think and Act Like an Entrepreneur Some Ideas ▫Full time day care ▫Extended care ▫Hot lunch program ▫Summer camps: music, fine arts, technology, sports, academic coaching ▫Music conservatory ▫Tutoring ▫English as a second language ▫International student program ▫Rental of facilities ▫Retail operations (unusual but possible)

Building Transformative Partnerships A Theological Foundations ▫A heart of gratitude (2 Corinthians 8:9) ▫Meeting genuine needs (2 Cor 8:13-14, 1 Jn 3:16-18) ▫Generous giving honors God (2 Cor 9:12-14) ▫Practice biblical stewardship (1 Timothy 6:17-19) ▫Begin by examining yourself ▫Practice organizational generosity ▫Pursue biblical partnerships (Phl 1:3)

Partnership Genuine, deepening relationships Common Purpose Trust

the underground stream Planned Giving – the underground stream A troubling reality ▫50% of Christians... ▫Only 8%...

What Next? Planned Giving – What Next? Broaden and deepen your understanding Identify a well qualified, respected coach With their help create clear guidelines Pursue partnerships with other schools/churches Develop a strategy for identifying and connecting