CREATING COMMUNITY

1. CREATING COMMUNITY NYASIS CONFERENCE MOHONK April 27, 2006

2. FORUM STRATEGIC CHALLENGES AND OPPORTUNITIES FACING THE BOARDING SCHOOL COMMUNITY Pam Safford – Associate Head for Enrollment and Planning Concord Academy, MA (with credit to Leo Marshall Director of Admission and Financial Aid The Webb Schools, CA)

3. Goals • Explore the global strategic challenges facing U.S./Canadian boarding schools • Create a dialogue centered on each strategic issue The process of dialogue is a process of ‘awakening’, it entails a free flow of meaning among all the participants - David Bohm, Physicist

4. For every complex problem there is a simple solution that is wrong. George Bernard Shaw

5. WHINING

6. Questions What are the external challenges to the industry Are there any that are more threatening than others? Rising tuitions? Increased demand on financial aid? Changing family patterns? Increased rivalry? Is the industry responding collectively? National? Regional? Consortia? What are the opportunities?

7. Strategic Advantage Uniqueness Perceived by Customer Low-cost Position Overall Cost Leadership Industry-wide Differentiation Strategic Target Particular Segment Only Focus

8. Can change (Not easily) Can’t change • Birth Rate • Stock market/economy • Global instability • Mission • Price Would make a big difference Would make some difference Source: Erdmann Associates

9. Strengths Weaknesses Opportunities Threats Industry SWOT Analysis

10. INDUSTRY TREND # 1Enrollment

11. Boarding School Enrollment – 1994-2004 Source: NAIS StatsOnline

12. TABS Schools Enrollment 2001-2005 N=228 Source: The Association of Boarding Schools (TABS) Opening of School survey - 2005

14. GLOBAL TREND #1 Demographics "Failure to prepare is preparing to fail."— Mike Murdock

15. 500,000 400,000 300,000 Asian Latino African-American 200,000 100,000 - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 U.S. High School Graduate ProjectionsSource: Western Interstate Commission for Higher Education/Erdmann Associates

16. 1850000 1800000 1750000 White-Non-Latino 1700000 1650000 1600000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 U.S. High School Graduate ProjectionsSource: Western Interstate Commission for Higher Education

18. DemographicTrends of Interest • The U.S. population grew increasingly metropolitan each decade from 28% in 1910 to 80% in 2000 • The West grew faster than every decade throughout the century. • Most rural areas of the United States are now growing at the fastest rate in more than 20 years • The Hispanic population more than doubled in size from 1980-2000. • The white population grew more slowly than any other group in the 2nd half of the century. • Blacks along with Asians and Pacific Islanders have been the most regionally concentrated groups • The percentages of races other than white has been highest in the West since 1990. • The largest 5-year age groups were 35-39 and 40-45 years, a large segment of the baby boom generation. • AND….the mean center of our population is now in Phelps County, MO. Source: Census 2000 Special Report: Demographics in the 20th Century

19. Questions for conversation • Are our schools ready to pursue the emerging majority populations? (implications for recruitment & retention of faculty of color, students of color, cost associated) • In that we are mostly regional and international in composition, and regional is in decline, what is our plan for moving into new geographies (fairs in Vegas not enough…)? • Why do we travel to Asia? (did you know that there are more South Koreans attending bdg school in China than in the U.S.?) • Did you know that UK bdg schools collaborate, have an ad campaign and are recruiting in the U.S.? • Where else should we look?

20. Discussion observations • Do we know what bed capacity is at TABS schools? • What defines “full-enrollment”: beds or mission-appropriate beds? • We need demographic data for top 4% of income earners with children: where are the jobs, where is the $?

21. INDUSTRY TREND #2Cost of Education Business has only two functions -- marketing and innovation Drucker, Peter F.

22. School Median Tuition- Grade 12 Source: NAIS StatsOnline

23. Cost of Independent Education • Median day school tuition increased between 4.9% and 10.8% (depending on region) from 1999 to 2000. • Median day tuition for grades 9 - 12 was $13,450 in 2000. • Adjusted for inflation, median tuition in day schools increased 30 percent in the past five years. • Tuition increases have exceeded CPI on wages for the past decade Source: National Association of Independent Schools; Management Institute Series, TABS Conference, 12/1/2005

24. Questions for conversation • Currently, schools relying primarily on tuition increases and expansion of day population, and secondarily on campaigns for revenue --- can this continue indefinitely? • What are we doing to control/reduce cost? • What is implication for setting price annually vs. long-term financial model

25. Discussion observations • By definition, we want to remain “intimate” which doesn’t equal growth • Int’l population: mission-filler or bed-filler? • Day creep… as way to stay solvent – at what cost?

26. INDUSTRY TREND #3Financial Aid “You don't drown by falling in the water; you drown by staying there."— Edwin Louis Cole

27. Financial Aid Facts • 30%+ of students in boarding schools receive need-based grants compared to 16.5% in day schools • Boarding-day schools provide highest percentage of full need-based aid at 10.5% of students. • Between 1994 and 2004 there has been an 18% increase in number of students receiving aid at all NAIS schools. The number of students of color receiving aid increased 46%. • Regarding no-need merit-based awards, 811 students received over $2.7m in 2004-05 compare to the inflation adjusted $2.3m awarded to 663 students in 1994-95. • Average merit awards in the SE increased 75% adjusted for inflation; decreased in the West by 46%. Source:Financial Aid Statistics in NAIS Member Schools. 2004-05

28. Questions for conversation • It appears that race/high need are more intertwined than ever at our schools --- are we OK with this and, if not, what are we doing to change this? • Some suggest that we should drop need-based approach and turn to system that determines price point for each family (sliding scale) --- implications for industry if we do so?

29. Discussion observations • Is the net revenue model, vs. full beds, the model of future? • Merit awards increasing at higher ed --- what does this mean for us? • What is the middle class? @50K a family needs full assistance; at 125K, a family needs full to partial assistance

30. INDUSTRY TREND #4 INTERNAL COMPETITION "If you chase two rabbits, both will escape"— Unknown

31. INDUSTRY ANALYSIS Threat of Independent Day Schools Threat of Intensity of Bargaining power of Parochial/Diocesan Christian Schools Homeschools Distance Learning Rivalry Buyers + Standards • Public School Substitutes • IB • Charter Schools • Magnet Schools • Schools w/I schools Threat of Resource: Porter’s 5 Forces +

32. Rivalry is stronger when • There are a large number of competitors and they are of similar size and power • The industry is growing slowly • There are high fixed costs • There are high exit barriers Source: N. Friedman, Claremont Graduate University

33. Questions for conversation • We are currently fighting over same small pool of kids --- are we content simply to offer more, and more innovative, revisit days, hoping to yield vs. the guy next door (competition for “hockey players” as mirror of what’s to come)? • What other solutions exist (work together to expand the pool…)?

34. Discussion observations • New int’l regions for interest/recruitment: So America? Russia? China?

35. Global Trend #2The REAL Competition "It's as BAD as you think, and they ARE out to get you." - Bumper sticker

36. Public Education • New York City--Hired 6,300 new teachers this year, only 43 percent of whom are certified. On August 7 still had 1,700 vacancies to fill. • In the U.S., 54 percent of history students in grades 7 - 12 are taught by teachers who have neither a major nor a minor in history. • “High Schools in U.S. are not adequately preparing American young people for college.” National Commission On the High School Senior Year, 2001

37. Confidence in Public Education According to the Gallop Organization: • In 1993, 39% reported they had a “great deal of confidence” in public schools; 23% reported they had “very little confidence.” • In 1998, 36% reported they had a “great deal of confidence’ in public schools; 26% reported they had “very little confidence.”

38. Discussion observations • Are boarding schools really making their case (vs. day schools)? • Boarding schools should “walk the walk” --- require day kids to board for a year? • Our schools include the cans, wills, shoulds, musts --- segment your own population --- is if where you want it to be, where it should be via your mission? Who needs bdg school? • Our job is to create need

39. WHAT’S NEXT? "Courage is doing what you're afraid to do. There can be no courage unless you're scared."— Eddie RickenbackerWorld War I hero

40. Questions for conversation • Are YOU (enrollment manager) sitting at the right table at your school to share this information and introduce strategic thinking? • Are you and your Head understanding these issues and prepared to educate others? • Are your trustees engaged/educated enough to rise to these challenges? (Do they go to these kinds of conferences?)

41. Essential Readings • Bennis, W. & Biederman, P.W. (1997). Organizing Genius: The Secrets of Creative Collaboration. Reading, MA. Perseus Books. • Csikszentmihalyi, M. (1997). Finding Flow: The Psychology of Engagement with Everyday Life • Csikszentmihalyi, M. (2003). Good Business: Leadership, Flow, and the Making of Meaning • Collins, J. (2001). Good to Great. New York. Harper-Collins. • Drucker, P.F.(2002), The Effective Executive. New York. Harper Collins

42. Essential Readings • Drucker, P.F.(2001). The Essential Drucker. New York. Harper Collins • Hellerman, B. (2004). Bad Leadership. Boston. Harvard Business Press • Kouses, J.M. & Posner, B.Z. (1997). The Leadership Challenge. San Francisco. Jossey-Bass. • Kotter, J. (1996). Leading Change. Harvard Business School Press. Boston. • Lipman-Bluman, J.& Leavitt, H.J. (1999). Hot Groups: Seeding Them, Feeding Them, & Using Them to Ignite Your Organization. New York. Oxford University Press.