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
 Plant
 Financial Aid
 Program
 Technology
Budgeting
 Budgeting is the allocation of resources
required to achieve the School’s mission
Top Down
Bottoms Up
Strategic Indicators for
Independent Schools
 Revenue
 Financial aid
 Expenses
 Faculty profile
 Budget excess/deficit  Demographics
 Enrollment data
 Deferred maintenance
 Student/faculty ratio
 Annual Fund
 Debt
 Endowment
 Capital projects
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
Fiscal year usually July 1-June 30
Oct/Nov
Dec/Jan
Jan/Feb
April/May
or Aug/Sept
• Input, define assumptions
• Preliminary budget approval for tuition setting
• Appointment renewals, contracting, budget
setting
• Budget finalization
Operating Income
2013-14 Actual Operating Income
3% 5%
Tuition
6%
($13,788,323)
Endowment
($970,001)
86%
Misc. Income
($414,356)
Annual Fund
($879,623)
Operating Expenses
2013-14 Actual Operating Expenses =
$13,599,761
5%
6%
Instructional Salaries
6%
Adminstrative Salaries
Instructional Materials
8%
47%
11%
17%
Maintenance Expense
Lunchroom Expense
Adminstrative Expenses
Technology
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 highperforming 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 Salaries
11-12
Lowest
11-12
Median
11-12
Highest
Graland
$36,885
$53,438
$77,976
NAIS Day School
(50th percentile)
$37,743
$52,275
$76,556
Denver Public Schools (Step 1 with BA): $37,551
THEN A
MIRACLE
OCCURS
Alumni Program
 Part-time Alumni Director
 Alumni Expenses
 Total Investment
$35,000
$21,250
$56,250
 Return on Investment:
 Annual Fund – 8% Participation
 Alumni Speakers – 6 Visits
 7 Alumni Kindergarten Students
 Total Return
$128,000
$6,000
$136,500
$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?
Questions?
Balance Sheet
Total Assets = Total Liabilities and Total Net Assets
OR
What you own = What you owe plus what you are worth
Assets
 Cash
 Accounts Receivable (Tuition and Fees)
 Contributions Receivable
 Equipment
 Property
Liabilities
 Accounts payable (your bills)
 Accrued Expenses (e.g. salaries and
benefits of employees)
 Deferred Revenue
 Registration Deposits
 Notes Payable (Loans, Mortgages, LOC, etc.)
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
2013-14 2013-14 Favorable/
Budget Actual (Unfavorable)
ENROLLMENT
681
683
FTE - Instructional
97.8
97.8
Student/Teacher Ratio
FTE – Admin and Staff
TUITION AND FEES PER STUDENT
6.97
37.6
20,164
6.98
37.6
20,188
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
Benefits
All Other
7,860
2,116
3,632
7,830
2,121
3,648
30
(5)
(16)
Year by Year
Budget
From a school in
New York City
2001-02
Actual
2002-03
Actual
2003-04
Actual
2004-05
Actual
2005-06
Actual
2006-07
Actual
2007-08 2008-09
Actual Actual
ENDOWMENT
Endowment fund, beginning of year
Gift income
Realized gains/(losses)
Unrealized gains/(losses)
Transfers to/from Operating
Endowment fund, end of year
39,363
354
(976)
(1,373)
991
38,359
38,359
2,683
(142)
1,955
2,068
44,923
44,923
4,446
1,181
1,346
230
52,126
52,126
5,260
344
2,705
179
60,614
60,614
2,823
550
2,723
203
66,913
66,913
1,299
416
9,904
(3,685)
74,847
74,847
67
1,056
(7,986)
(1,634)
66,350
66,350
180
(3,575)
(9,439)
(751)
52,765
DEBT
Outstanding balance, June 30th
18,238
16,684
16,022
15,369
14,687
18,965
18,503
17,701
520
1,097
0
555
1,074
0
620
774
0
610
755
0
640
726
0
680
694
0
720
659
300
760
623
137
320
0
387
0
389
0
301
0
345
0
557
9,542
522
124
880
79
20,774
20,212
19,664
19,036
18,474
27,049
26,947
26,448
Principal payment - Bond
Interest Expense - Bond
Interest Expense - Loan
CAPITAL EXPENDITURES
Capital Expenditures - 20 East 92nd
Capital Expenditures - Other
FACILITIES
Property and Equipment, net of depreciation