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School Budgets in a Tough Financial Climate

School Budgets in a Tough Financial Climate. Linda Dennison AISGW March 11, 2010. Agenda. Quick history 2009 survey results Discussion Building the Bridge as You Walk on It Parting thoughts. National Prosperity. The ten years before the crisis:

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School Budgets in a Tough Financial Climate

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  1. School Budgets in a Tough Financial Climate Linda Dennison AISGW March 11, 2010

  2. Agenda • Quick history • 2009 survey results • Discussion • Building the Bridge as You Walk on It • Parting thoughts

  3. National Prosperity • The ten years before the crisis: • Tuitions up 30% in real dollars over 10 years • Overall staff up 32% over 10 years • Student teacher ratios getting smaller • Financial aid grant dollars up 38% • Financial aid recipients up 2% • Enrollment up 20%

  4. Historical Tuition Increases

  5. Tuition vs. Income

  6. Started in the housing market Increased mortgage defaults Cuts in household spending Financial market crisis Unemployment Our families are not out of the woods. (2010-11 and 2011-12 could be worse) The Crisis

  7. Immediate Impact Declining endowment values, reduced spending or higher spending rates Tighter cash flow Bond interest rate fluctuations, covenant violations, loss of letters of credit, banks out of business

  8. NBOA survey 2009

  9. Trends Enrollment challenges Increased attrition Decrease in applications Increased demand for financial aid Reduction in giving Reduced staff/faculty attrition Hold off on capital projects/campaigns

  10. Anticipated Future Trends More enrollment challenges Parents held on for a year. Can they hold on longer? Strain on financial aid Reduced endowment draw based on 3 year rolling average Impact on operating budget? Multi-year Financial Plan

  11. Mid-Atlantic Financial Aid

  12. Mid-Atlantic: Aid Applications

  13. Mid-Atlantic: Aid Allocations

  14. Mid-Atlantic: Aid Funding Sources

  15. Strategy #1

  16. Strategy #2

  17. Strategy #3

  18. Strategy #4

  19. Strategy #5

  20. Strategy #6

  21. Strategy #7

  22. Strategy #8

  23. Strategy #9

  24. Summary • Not reducing non-essential programs • Increasing class size (number of students taught) • Increasing teacher load (number of preps/sections) BUT… • Decreasing salaries and benefits • Increasing employee contributions to benefits

  25. Advice from NAIS and ISM

  26. ISM and NAIS ISM and Tuitions: • Charge what it costs • CPI + 2 or more when needed Pat Bassett and the “New Normal”: • Charge only what people can pay • Design your program to that revenue number

  27. What is a school supposed to do?

  28. Discussion • What new or different things are you doing at school because of the economic crisis? • Have you changed your budget cycle to allow more flexibility? • What issues are you facing that have you stuck? We could move forward if only…..

  29. Parting thoughts

  30. Building the Bridge as You Walk on It “When we commit to a vision to do something that has never been done before, there is no way to know how to get there. We simply have to build the bridge as we walk on it.” Robert E. Quinn

  31. Building the Bridge “To remain in the normal state, refusing to change while the universe changes around us, is ultimately to choose a slow death. To enter the fundamental state of leadership is to reverse the process by making deep change.” Robert E. Quinn

  32. The Normal State • Self-focused: ego-driven, putting self interests ahead of the common good • Comfort centered: live in a reactive state • Internally closed: stay in comfort zone, denying external signals for change • Externally directed: define myself by how I think I am seen

  33. Fundamental State of Leadership • Temporary psychological condition • Other-focused: transcending one’s own ego and puts the common good first • Purpose centered: clarify the result(s) you hope to create • Externally open: experimenting, seeking real feedback, adapting • Internally directed: values and behavior are aligned

  34. Leadership in Difficult Times • Authenticity to self • Passion for the purpose/mission • Act in accordance with values • Know and preserve “timeless principles” • Take care of self • What else?

  35. Facilitating Change Create a culture that embraces “courageous conversations” and depersonalizes conflict Create common language to discuss sensitive issues Create an environment that allows for experimentation (without recourse) Distribute leadership Mobilize the community to generate solutions

  36. Parting Thought “Embrace Disequilibrium. Without urgency, difficult change becomes far less likely. But if people feel too much distress, they will fight, flee, or freeze. The art of leadership in today’s world involves orchestrating the inevitable conflict, chaos, and confusion of change so that the disturbance is productive rather than destructive.” Harvard Business Review, July/August 2009

  37. Contact Info Linda Dennison, CPA Associate Director NBOA linda@nboa.net Office: 410.923.0972 Business Officer Survey: www.nboa.net

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