SAMPLE INDEPENDENT SCHOOL
Portsmouth, Pennsylvania
STRATEGIC FINANCIAL PLAN
September 15-17, 2006
CONSULTANTS’ REPORT
Resource Associates, Inc.
Seattle, WA 98101
SAMPLE INDEPENDENT SCHOOL
Portsmouth, Pennsylvania
STRATEGIC FINANCIAL PLAN
CONSULTANTS' REPORT
September 15-17, 2006
The Strategic Financial Planning Task Force (“Task Force”), comprised of Trustees Lin
Delaney (Chair of Board of Trustees (“BOT”) Finance Committee), Melissa Gibian, John Hines
(Assistant Chair of BOT), Jeff Jones (BOT), Cynthia McKee, Joe Miller (Treasurer of BOT), Curt
Moffat, Linda Dallas Reider; Jennifer Schauffler (BOT Finance Committee), Susan Taylor
(Chair,Parents’ Association), Jean Wilson; and Administrators Dana Harvey (Middle School
Head), David Steadman (Upper School Head), Mecha Elliott (Director of Admissons), John
Johnson (Assistant Head/CFO), Laura Miyoshi (Director of Operations), Lauren Smith (Head of
School), and Tina Drentell (Director of Advancement), met on September 15-17, 2006.
Additionally, administrator members of the Task Force (absent Lauren Smith) held a separate and
preliminary meeting with the consultants/facilitators prior to commencing the task force meeting.
The deliberations of the Task Force were facilitated by Sorrel R. Paskin, CMA, President, and Joan
C. Paskin, Vice President, of Resource Associates, Inc. The Task Force was charged with
considering Sample Independent School’s (“SIS”) present financial position, the extent to which its
present situation and operating patterns achieve its mission related goals, the advisability of
effecting certain strategic changes to embrace the School’s envisioned future, and enhancing the
means by which the School’s identified goals and objectives might be more effectively
accomplished.
This report summarizes the findings and recommendations of the Task Force as these
emerged from the three days of discussions.
1.0
Principal Objectives of the Strategic Financial Plan.
1.1
Strategic financial plan. A strategic financial plan seeks to identify the financial indices
and operating patterns that determine the present financial position of an organization,
explain the events and circumstances that resulted in that position, and project the probable
consequences of maintaining the status quo. Where the projected consequences of present
operating patterns would compromise the organization’s efforts to achieve its goals or to
instantiate its vision of a desired future, the planning process undertakes to formulate those
strategic goals and their related strategies deemed sufficient to the remediation of
constraints and to the achievement of that future state. Strategic planning is closely
associated with an organization’s efforts to instantiate its mission and to ensure its longterm survival and wellbeing. Because of these objectives, strategic plans may be broad
based or more narrowly focused, depending upon the institution’s view of its financial
situation and its goals. However, even where the focus is more narrowly structured,
strategic planning of necessity considers the full gamut of institutional operations and
seeks to synergistically coordinate these to more effectively respond to the goals of the
plan.
2
1.1.1
1.1.2
1.1.3
1.1.4
1.1.5
1.2
1.2.1
Formulating strategy is the process by which an organization wrestles a vision of the future
into the realm of reality. It is the act of orchestrating or harnessing the parts of an
organization so that they sum to more than the whole. The strategies determine and reveal
the objectives, purposes and goals of the organization, produce the principal policies and
plans to achieve those goals, and define the range of activities the organization is to pursue,
in a way that focuses resources to convert distinctive competences into competitive
advantage.1
In an effective strategic plan, the strategies adopted are (1) consistent with organizational
competences and resources, present and projected; (2) internally consistent with the major
policies and programs in place; (3) appropriate to the personal values and aspirations of the
organization’s key leaders, administrators and governors; (4) such as to constitute a clear
stimulus to organizational effort and commitment; and (5) such as to serve the long-term
interests and welfare of the organization, overall.
Strategic planning is an ongoing process. Once the goals are established and the strategies
sufficient to their attainment formulated, the plan must then be implemented by those
charged with the specific tasks associated with each strategy. The function of the Board of
Trustees during the implementation period is to monitor the implementation, assess the
progress of the desired changes, and determine the effectiveness of the strategies and
outcomes. In order to monitor progress and to evaluate outcomes, it is important that a
measure of accomplishment be associated with each strategy. In this manner, not only will
the School know where it is going, it will also know the extent to which it has arrived and
whether or not the outcomes instantiate the goals sought.
The continuing relevance of a strategic plan to the goals and wellbeing of the organization
it serves is dependent upon continuous monitoring and annual updating. The plan must be
updated on an annual basis; this process requires revisiting the goals and strategies
included in the plan, altering these to accommodate changes in the external environment
and emerging internal strengths and challenges (weaknesses), and measuring changes in
the indices of performance.
A financial projection model displaying planned enrollment, tuition pricing, operating
revenues, expenses, and transfers (for endowment reinvestment, equipment acquisition,
debt service, PPRRSM and other reserves funding) should be prepared that displays the
consequences of the adopted strategies. The model should project each year of the plan
time horizon (typically, five years). In this way, the model not only testifies to the
successful implementation of the strategies but also informs the annual budget. The
projection model is updated annually, as is the strategic financial plan, to reflect changing
circumstances and the associated consequences of these.
Objectives of the Strategic Financial Plan.
The agenda for the strategic planning exercise focused on the formulation of strategies
designed to achieve specific goals in ten key areas of operations:
Tuition and fees schedule;
Enrollment goals, management, marketing and admissions outreach activities;
Financial aid policies and practices;
Faculty compensation program;
Revenue and cost structure; financial equilibrium;
Development programs;
Human resource utilization: class size and administrative staffing by function.
1
Adapted from Kenneth Andrews, Harvard School of Business.
3
1.2.2
Consideration of facilities needs and the funding for these was deferred pending receipt of
specific information associated with the recently undertaken facilities audit. Additionally,
though discussed, the determination of objectives for, and the strategies associated with,
appropriate levels of reserve funding was deferred to a future meeting of the task force.
Finally, the topic of non-tuition sources of income was briefly discussed within the context
of development and fund raising but not definitively resolved with respect to other options
that might be or come to be available.
2.0
Findings of the Internal Scan: Strategic Indicators of Challenge
2.1
Financial Indices and Trends. Trends evident in Sample Independent School’s financial
operations for the period 2001-2006 reveal a pattern of specific challenges to its projected
long-term financial performance. Findings of the internal scan include these items; the
strategic goals and strategies adopted in this plan address these beginning in section 3 of
this report.
Coverage ratios. A school in financial equilibrium2 seeks to maintain the proportionate
share of total operating expense (inclusive of reserves funding and debt service) covered by
each revenue source. Independent school tuition and program service fees, net of financial
aid and tuition remission, typically comprise 65%-75% of revenues, the balance coming
from auxiliary programs, endowment investment return, annual giving programs and other
non-tuition revenue streams (plant rentals, summer programs, boarding fees, among
others).3 The budget for 2006-2007 at SIS indicates that tuition revenue net of financial aid
and tuition remission, and inclusive of mandatory fees, comprises 79% of total planned
revenue.4
Expenditures mix ratios. Typically 60%-65% of the total budget of an independent school
is committed to personnel costs, salaries and benefits. Depending upon situation, an
additional 10%-15% is applied to plant acquisition and renovation, and reinvestment in
endowment and other reserves accumulation. The remaining 20%-30% of budgeted
expenditures covers supplies, services and occupancy costs. The budget for 2006-2007 at
2.2
2.3
2
Determining the financial health of an independent school includes an assessment of the extent to which the
school is meeting its stewardship responsibilities, that is, the extent to which its financial, physical, human
and program resources are protected from erosion in value over time and can be expected to maintain or even
augment present service levels in future periods.
These measures of financial health can be “codified” into a set of six distinct criteria that identify financial
equilibrium; as criteria of institutional wellbeing, they should serve as essential goals to be sought in any
strategic planning process. At the same time, each annual operating and capital budget should be informed
by them and explicitly address their implementation. The six “canons” of financial equilibrium are more
fully discussed in the resource paper distributed to task force members.
1.
Annually, revenues equal or exceed expenditures including operating expense, transfers to plant for
routine renovation and adaption activities, equipment acquisition, and reserves funding, and transfers to
endowment for reinvestment.
2.
Year over year, the annual rate of growth in revenues equals or exceeds the annual rate of growth in
expenditures including transfers to plant and endowment, and reserves funding.
3.
The value of financial capital is preserved or enhanced
4.
The value and functional adequacy of physical capital are preserved or enhanced.
5.
The value of human capital is preserved or enhanced.
6.
The quality of the curriculum, programs and services to students is preserved or enhanced.
Because of the non-tuition revenue streams, each student in the school typically receives an “implicit
scholarship,” that is, the value received in the form of program services exceeds the price paid (the tuition).
4
The budget for 2006-2007 indicates an anticipated deficit after debt service and modest PPRRSM reserve
funding in the amount of $231,670.
3
4
2.4.
2.5
2.6
2.7
SIS indicates that compensation costs constitute 65% of total expense (inclusive of debt
service but before reserves funding); occupancy, 8%; debt service, 6%.5
Endowment support. The modest endowment contributes little support to operations.
There is an important need to raise endowment through major gift solicitation, additions of
large unrestricted gifts and bequests received, an aggressive planned giving program, and
through an alumni reunion class major gift program. In order to protect the functionality of
the portfolio, reinvestment of a prudent amount of endowment investment return, perhaps
at a level commensurate with the projected average rate of growth in the operating budget,
is a component of the exercise of fiduciary responsibility. Endowment per student was
$851 at June 30, 2005. At a payout rate of 4.5%, the contribution to operations per student
is $38 per year. If endowment per student in 2005 were $13,456, the payout rate would
have supported 5% of the operating expense per student (5% of total operating expense), a
reasonable goal. The School’s interest in reducing its reliance on tuition through
enhancing revenue flows from non-tuition sources suggests a high level of effort be
directed towards endowment growth.6
Facilities needs and funding. The facilities audit has identified a substantial backlog of
deferred maintenance; the cost of remediation over the recommended staged
implementation period, added to a reasonable level of PPRRSM funding to avoid further
deferrals of necessary improvements, exceeds the present financial capacity of the school.
Occupancy expense. The addition of new buildings substantially increased the square
footage under roof, thus adding incremental cost to occupancy expense. These additional
costs impact not only utilities consumption but also maintenance staffing, salaries and
benefits, maintenance services and supplies, and PPRRSM funding levels, among others.
Studies show that, over the long term, in the middle Atlantic region, estimated building
occupancy costs average $6 per square foot under roof, exclusive of depreciation and major
renewal and replacement. These additional costs will stress the operating budget further.
Admission statistics. The relatively low ratio of matriculants to admission acceptances (the
“yield”) may suggest compromised attractiveness of the School to candidates. The recent
completion of new construction may partially ameliorate this situation. However, even
though families have multiple choices of schools, both independent and well reputed public
alternatives in the area, and SIS may reasonably expect that admitted students have also
been admitted elsewhere and selected alternate placement, this situation does warrant
consideration with respect to the extent to which the School is successfully marketing its
distinctive competences, ensuring that prospective parents and students are fully aware of
the special character of this environment and the attendant opportunities it provides. In
2001, there were 553 applicants, 173 acceptances of which 112 enrolled, for a selectivity
ratio of 31% (of the 553 applicants, the School admitted 173) and a yield ratio of 65% (of
the 173 students admitted, 112 enrolled). In the 2007 school year, there were 379
applicants, 178 acceptances of which 109 students enrolled; in that year, selectivity was
47% and yield was 61%. During that same period, 2001-2007, total enrollment grew from
504 to 548. If, through this period, the qualifications of students in the applicant pool
5
These measures do not include expenditures for capital maintenance and repair nor for furniture and
equipment acquisitions.
6
The School’s interest in augmenting flows of non-tuition revenues may be advanced by consideration of the
available land for sale or for lease. If sold, the proceeds should be added to the quasi-endowment (long-term
investment portfolio) for investment to return an annual flow of income. If leased, the School retains the
land but permits development of it. For example, a developer may build condominium units on land leased
for 99 years with purchasers of the condos paying a monthly fee that includes the cost of the lease. In this
way, the lease functions as endowment. An attractive option for the development is to limit occupancy to
persons of age 55 and over, thereby providing a pool of volunteers for various areas of school operations
(library personnel, tutors, bookstore, etc.) and perhaps enrollment in evening classes.
5
2.8
2.9
2.10
remained fairly constant, year over year, the data suggest that admission selectivity is
declining along with the numbers of students who accept the School’s offer of admission.
While the academic program and school culture impose specific demands upon the
character, intellectual competences and academic skills of its students, the decline in
selectivity is of concern since it is an important factor in enabling the School to ensure that
its students meet its admission criteria and the performance demands of its program.
Continuing deterioration in the selectivity index may suggest more flexibility in
implementing admission criteria than would be desirable. Student attrition as a percentage
of total enrollment is about 10% on average and has remained relatively fixed from 2001
through 2007, a level that is well within the range experienced by comparable schools
across the country. Optimal enrollment at present is identified as 586 students, 240 in
grades 9-12, 144 in grades 6-8, 160 in grades 1-5, and 42 in PK and K.
Tuition coverage ratio and risk position. The relatively high tuition coverage ratio
increases the risk position of the School with respect to possible future declines in
enrollment; this possibility assumes special significance in a situation in which, nationally,
demographic changes may be expected to reduce the number of school-age children.
Tuition schedule. The four points of inflection in the tuition schedule (K-grade 1; grade 5grade 6; grade 6-grade 7; grade 8-grade 9) can create a financial problem for parents:
passing through an inflection point subjects the parent to two price increases
simultaneously – one associated with passage through the inflection point and the other
associated with the annual increase in the overall scale. Apart from the transition from
lower school to middle school, there is little cost justification for four points of inflection.
Moreover, as a result of historical circumstances associated with the past merger of SIS
with a neighboring lower school, tuitions in the SIS lower school are substantially submarket compared to the peer group. In the middle and upper schools, SIS is similarly
adversely positioned (but the extent of this positioning depends upon the selection of
comparable schools). The present tuition levels along with non-tuition revenues do not
cover the full cost of operations, inclusive of reserves funding and required debt service.
Thus, the School has foregone or traded-off appropriate attention to deferred maintenance,
desirable improvement in compensation programs, necessary additions to equipment and
technology resources (for both instructional and administrative use), and certain
instructional program support and enhancements (academic department budgets are
suboptimal, calling upon teachers to utilize their “creativity.”). Studies show that the
factor most influential in determining independent school enrollments is population
demographics and perceived value and the quality of the educational experience provided,
not price. Access and affordability goals are best achieved through the skillful use of
financial aid resources not deliberate revenue diminution through costly subsidies.
Annual giving results. The modest per student annual giving receipts and the pattern in
annual giving through the recent past – no consistent increase in receipts even though the
enrollment has increased – place undue burden on tuition revenues to close budgetary gaps;
moreover, these gift levels also constrain desirable growth in operating costs (representing
service efforts). The impact of that constraint finds expression in suboptimal faculty
salaries (though the benefits program is very rich – and expensive), in adequate reserves
funding, in necessary facilities maintenance, in publications and outreach activities, in
levels of financial aid awards, in upgrading and extending technology equipment and
resources, in administrative function, and in certain elements of academic program. Case
statements for annual giving programs do not specifically and compellingly discuss the
objectives of such gifts in terms that induce high levels of participation and substantial
receipts. Gifts for operations per student grew from $724 in 2001 to $810 in 2005, a
compounded annual growth rate of 11.9% and an average annual growth rate of 3.0%. As
a percentage of total operating expense per student, unrestricted gifts provided 6% in 2001
6
2.11
2.12
2.13
2.14
2.15
2.16
2.17
2.18
falling to 4% in 2005. In comparable schools, per-student unrestricted annual giving
averages about 10% of operating expense per student. The School’s budgetary goal for
annual giving is 8% to 10% of the operating budget.
Major gifts programs. There is not a well articulated program for soliciting major gifts.
Identifying gift opportunities and prospects, qualifying prospects with respect to interests
and financial capacity, activating successful cultivation protocols and then soliciting such
gifts in accordance with known successful strategies are not regular activities of the
development office.
PPRRSM funding. The level of reserves funding for plant (PPRRSM) does not match the
presently identified and anticipated future needs, thus increasing the risk position of the
School.
Faculty salaries. Faculty salaries are not competitive within the peer group, nor consistent
with the cost-of-living in the immediate and adjacent geographical areas. As a result, they
are not sufficiently attractive to warrant nationwide recruiting of veteran teachers or to
attract outstanding and experienced teachers from the public sector.
Benefits program. The benefits program and its delivery systems are generous, expensive
and, with respect to health, dental and vision insurance and the tuition remission program,
unintentionally but inherently discriminatory. The tuition remission program discounts a
large percentage of the tuition and eliminates fees for children of employees; such
generosity carries the opportunity cost of forgoing revenue for the seats thus occupied.
The health, dental and vision insurance benefits include amounts paid by the School at the
same percentage of premium for all levels of participation (four tiers). Thus the cost to the
School for family participation far exceeds the cost it bears for individual
participation. (Individuals not enrolled in the health insurance plan receive an annual
stipend which is $1,200 in 2006-2007.) This incremental cost along with the opportunity
cost of the remission program are met through reduced faculty salaries, constrained
program services to students, insufficient attention to plant, and other cost-saving
accommodations. The health insurance delivery system conspicuously provides greater
benefit to family participants than to individuals thus providing enhanced compensation to
those participants without expectation of enhanced performance “return” on that
“investment.” The same is true with respect to those employees who elect to enroll their
children in the School.
Debt service. Debt service on the tax-exempt bond issue and the additional borrowings
subsequent to that issue add to the expenditures burden and, at present, are accommodated
only through tuition revenues and cost curtailment. Both means of servicing debt limit the
ability of the School to fulfill its mission objectives and constrain maintenance of financial
equilibrium.
Administrative staff. Administrative staffing levels and function may suggest
appropriateness of undertaking a productivity audit to ensure: congruence of incumbent
staff qualifications with assigned responsibilities and tasks; appropriate levels of staffing
for the responsibilities assigned to the department; effective utilization of technology;
efficient and effective work flows; usefulness of work products both to the department and
to the School; and the extent to which necessary undertakings are in fact provided.
Student-faculty ratios; class size. Low student-teacher ratios allow for highly
individualized attention on the part of teachers interacting with students. However, such
ratios (US: 8.9 students per teacher [average class size is 11 though there are classes with
as few as two students]; MS: 13.9 [average class size is 15]; LS: 14.3 [average class size is
16]) are not necessary to effective learning experiences nor are they required to ensure
favorable interactions between students and teachers; they are inherently cost ineffective.
Financial aid. Policies on financial aid limit access and affordability for families in
difficult economic circumstances; in the case of tuition remission, the policy may benefit
7
2.19
2.20
certain employees beyond need. The financial aid policy may limit the school with respect
to its ability to enroll highly desirable but impecunious students, while, as noted above, the
tuition remission program constrains financial capacity with respect to salaries and
program services. From 2001-2006, financial aid awarded to non-employee children rose
from $526,935 to $928,720 while tuition remission grew from $412,947 to $646,300.
Financial aid awards inclusive of tuition remission represented 14.6% of gross tuition
revenue in 2001 rising to 15.2% in 2006, a period during which the weighted average
tuition price for day students increased 7.6%. In 2001, tuition remission was 44% of the
total of financial aid and remission; in 2006, it accounted for 41% of the total.
Cash Position. The ratio of cash to deferred revenues (prepayments of tuition applicable to
the ensuing school year) remains above 100%, (144% at June 30, 2001) but has declined
through the projection period (to 128% at June 30, 2004). The high ratio at June 30, 2005
(405%) reflects receipt of the proceeds on the bond issue. If the ratio falls below 100%,
the implication is that the school is spending cash applicable to next year to meet this
year’s operating expenses. This constitutes a loan made by parents to meet current need.
Continued deterioration in this index would signal a situation warranting immediate
corrective action.
Admission Indices and Marketing.
Marketing and promotional materials for admissions and outreach activities include a view
book conveying in text, photos and other graphic media descriptive material concerning the
nature of the School, its mission and the typical experience of students in attendance.
While professionally prepared, Consultants did not feel that the materials sufficiently
conveyed the “feel” and “excitement” of the School, its people and its work.
3.0
Identified Strategic Goals
3.1
Strategic goals. The Task Force identified the following strategic goals for the five year
planning horizon.
Faculty compensation goals.
(1)
To increase the SIS median faculty salary to the level of the median faculty
salary at the 75th percentile of schools in the mid-Atlantic region.
(2)
To increase equity among all employees and eliminate the unintended
discriminatory consequences of the tuition remission and health and welfare
benefits programs.
(3)
To assess whether campus housing provided to faculty constitutes a benefit of
employment (not a contractual condition of employment) or is for the convenience
of the School (a contractual condition of employment) given the on-campus
boarding program. In the event that the housing constitutes a benefit of
employment, to determine the level of rent to be paid by the occupant (not less
than 5% of the fair value of the housing – i.e., if the housing is assessed at
$100,000, then 5% X $100,000 = $5,000; distributed monthly, the rent is
$416.677).
Tuition fee schedule.
(1)
To eliminate two of the inflection points in the tuition schedule, retaining only
those at the transition from K to grade 1 and grade 5 to grade 6.
(2)
To apply differential rates of tuition increase with the higher rate applied to the
tuition schedule for grades PreK to grade 5.
3.1.1
3.1.2.
7
The IRS criterion is 5% of the fair value of the housing; if not paid by the employee, that amount is
accounted as ordinary W-2 income and is subject to FICA and income taxes. The tax burden would also
transfer to state and local income tax.
8
(3)
3.1.3
3.1.4
3.1.5
3.1.6
3.1.7
To increase the tuition in all grades to achieve 100% of the median tuition price for
lower school and middle/upper schools as compared to the selected peer group
over the five-year planning horizon.
(4)
To include the incremental fee for intersession programs in the tuition price except
for those programs that are held off-campus and bear significant incremental cost
to the School (foreign and domestic travel, participation in special projects such as
serving on the staff at an archeological dig site, use of special and expensive
materials and supplies not part of the regular curriculum, etc.).
Financial aid and tuition remission.
(1)
To ensure that financial aid awards made to non-employee children achieve the
School’s access and affordability goals.
(2)
To allow the financial aid budget – i.e., awards to non-employee children – to
increase to 14% to 22% of gross tuition revenue.
(3)
To eliminate the tuition remission program (automatic financial aid awards made
to employees independent of needs qualification) over the five-year time horizon
of this plan.
Admissions and marketing goals.
(1)
To increase community awareness of the opportunities afforded by the School and
to more effectively market the School to increased numbers of qualified applicants.
(2)
To identify distinctive competences and to convert these to competitive advantage
within the School’s markets.
(3)
To achieve the optimum enrollment of 586 students from the current 548 students.
(4)
To develop a “deep” waiting list of qualified applicants across all grade levels but
particularly at the PreK, K, and entry points to each division: grades 6 and 9.
(5)
To increase admissions selectivity and yield.
Financial goals.
(1)
To develop unrestricted reserves at the level of 50% of the annual operating budget
and to maintain or grow these annually.
(2)
To strengthen the balance sheet and to recalibrate operating performance to
achieve an annual operating surplus after reserves funding.
(3)
To adopt targeted coverage ratios for each revenue stream and to establish annual
tuition prices to achieve the targeted goals when non-tuition revenue flows permit.
(4)
To align the annual budget process to the financial projection model accompanying
this plan and to ensure that annually the School makes demonstrable progress
towards attaining a position of full financial equilibrium.
(5)
To examine alternative strategies for financing the bond and ancillary debt service
requirements to reduce reliance upon tuition revenue flows.
International Student Program.
(1)
To evaluate the School’s commitment to the International Student Program with
respect to a determination of optimum enrollment, program (academic and cocurricular) and staffing.
(2)
To evaluate and revise if necessary current international student recruitment
strategies.
Development and fund raising.
(1)
To enhance the effectiveness of fund raising activities to achieve the annual goal of
8% to 10% of the operating budget (inclusive of transfers and reserve funding).
(2)
To explore available resources for identifying and qualifying major donor
prospects.
(3)
To establish and pursue a major gifts program (capital gifts for endowment,
facilities and program).
9
(4)
3.1.8
To develop policies for gift acceptance and for establishing named endowment
funds.
(5)
To mount and deliver a full planned giving program; to develop materials and
cultivation activities to support planned giving initiatives, particularly bequests,
charitable gift annuities and pooled (life) income funds.
Class size and faculty workload.8
(1)
To establish optimal class sizes for the three divisions (lower, middle and upper
schools) taking into account facilities limitations and other constraints.
(2)
To determine optimum faculty assignments and to establish a metric for assessing
departures therefrom.
(3)
To establish a minimum class size for faculty assignment.
4.0
Recommended Strategies.9
4.1
4.1.1
Faculty compensation.
The School will increase faculty salaries by 4% per year over and above the estimated
growth rate in salaries in the School’s peer group. The median faculty salary for 20072008 should be set at 60% of the estimated peer group median for that year. At present,
the median salary is 55% of the peer group median. The increase in salaries
throughout the five year planning horizon will be funded by decreased cost
incurred in the delivery of the health, dental and vision (hereinafter “health”) insurance
benefits, the phasing out of the tuition remission program, and enhanced development
activities (see below for specific strategies).
For employees whose term of service began prior to October 1, 2006 or to
whom the promise of tuition remission was made prior to October 1, 2006, in
advance of employment, the remission benefit will be “grandfathered.” That is,
present employees of the School will continue to receive remission benefits under
the present program for their children currently enrolled and for those children who
may become eligible to enroll and do enroll in the future. The benefit will
continue for so long as the child’s parent remains in the employ of the School.
The increment of premium cost borne by the School for those employees electing
the health insurance benefit, and who enroll at levels above individual only, will be
reduced to zero over the five-year time horizon, in equal annual amounts. During that five
year period, the School’s contribution level for all participants will be increased to achieve
4.1.2
4.1.3
8
Productivity audit. The School may wish to undertake a process of assessment designed to ensure that
administrative and faculty staffing levels are appropriate to the needs of the School, that the qualifications of
incumbents are consistent with their assigned tasks, and that the production in each unit of operation
importantly serves institutional mission. This assessment would include the deployment of both instructional
and administrative technology, work flows in administrative areas, and outputs and outcomes and their costs
of production. A consequence of this assessment in the administrative area is the identification of
advantageous opportunities for outsourcing specific functions. An advantageous outsourcing opportunity
exists where the outcomes of the arrangement exceed the quality that could be produced in-house at a cost
less than in-house production would incur.
A reasonable principle governing all administrative function is that the value of the work products
should equal or exceed their costs of production.
9
As noted, strategies describe particular initiatives, undertakings and changes in existing patterns of
operation deemed sufficient to the attainment of the strategic goals. Formulating strategies usually requires
the synergistic contributions of various areas of institutional operations. Thus, in describing any particular
strategy, the entire range of institutional operations is scanned to identify those initiatives and changes that
will, in combination, support the strategic goal. As a result, specific strategies may or may not be linked to
particular goals and objectives.
10
4.1.4
4.1.5
4.1.6
4.1.7
4.2
4.2.1
4.2.2
4.2.3
90% of the then applicable health insurance premium for individual participation in the
sixth year (2012-2013).10
Employees not participating in the health insurance benefit will continue to receive
a stipend amount as determined by the Finance Committee. The goal for that
stipend amount is to achieve 90% of the individual premium for health insurance
in 2012-2013. In this manner, the School will adopt a full “Cafeteria” plan (IRC
§125) in 2012-2013 with School funding of the plan for each full-time employee
set at 90% of the individual premium for health insurance. The funding level for
years subsequent to 2012-2013 will be determined by the Finance Committee as a
part of the annual budget process. In this manner, not only are all employees treated
equitably, but the “umbilicus” linking increases in health insurance premiums to the
contributions made by the School on behalf of its employees is effectively severed.
Employees hired after October 1, 2006 will receive contribution towards the health
insurance premium at the level of 90% of the premium for individual participation,
notwithstanding level of enrollment.
In order to protect the interest of employees and to avoid the consequences of
adverse selection, every employee will be required, as a condition of employment,
to participate in a plan of health insurance providing benefits satisfactory to the
School.
All benefits of employment will be available to full-time employees and to those parttime employees whose term of service is expected to aggregate at least 80% of full-time. If
not proscribed by the insurance carrier, employees whose expected term of service is
expected to aggregate between 50% and 79% of full time may purchase the health
insurance program through the School’s plan but without employer subsidy.
Tuition fee schedule.
Points of inflection in the present schedule between grades six and seven and
between grades eight and nine will be eliminated over a three-year period
commencing with the school year 2007-2008.
The tuition price at each grade level will be increased over the five year planning
horizon to achieve a median tuition equal to the median prevailing in peer group
schools. Insofar as this strategy confronts a “moving target,” it will be achieved
through annual rates of increase that outpace the competition through the
imposition of a “surcharge” on the rates of increase in peer schools.
In order to “market” the increases in tuition to the parent body, the School will
conduct a series of town meetings in which the following topics will be discussed:
(a)
the content, importance and effect of this strategic financial plan
with special emphasis on issues of paramount importance to
parents, such as the benefits to students to be gained through
higher tuitions:
(i)
access to a larger pool of highly qualified faculty for recruitment
(ii)
enhanced program services
That is, while the increment for coverage levels above individual is declining, the School’s contribution to
each participating employee’s health insurance increases to achieve 90% of the individual premium in effect
for 2012-2013. It is expected that the increase in cost associated with increasing the contribution level for
individual coverage will be more than offset by the decline in the increment paid for non-individual
participation. Initially, in the early years of implementation of this strategy, the increase in faculty salaries is
funded by the decline in health insurance benefits, an exchange and replacement transaction. In later years,
when salary goals are achieved, the restructured benefit will result in an overall decline in compensation
costs. Moreover, in those years, an increase in equity results insofar as all employees receive the same
benefit.
10
11
(iii)
(iv)
(v)
4.2.4
4.2.5
4.3
4.3.1
4.3.2
4.3.3
improved facilities
increased commitment to socio-economic diversity
enhanced student recruitment efforts, both domestic and
international
(vi)
enhanced co-curricular programming
(b)
the importance of financial aid as the means of achieving the School’s
access and affordability goals and its function as a “safety net” for those parents of
limited financial means as they face heretofore unprecedented tuition
increases.
(c)
It will be critically important to communicate the rationale for the increased
tuition fee clearly and succinctly. Few parents understand the financial structure of
an independent school nor the financial constraints that are unique to school
operations.
In addition to the several town meetings, the School will engage a professional
marketing consultant to prepare a brochure containing a letter from the Clerk of the
Board and the Head of School describing this strategic financial plan, the
methodology of its undertaking, and the benefits that will be derived from its
implementation (as in the town meeting described above). The brochure will
discuss the resulting changes that parents may expect in the experience of their children,
and explain the rationale for these changes. The brochure will also include color pictures
of “happy” students eagerly engaged with attending faculty, individually and in small
group settings, and attractive photographs of the newly constructed facilities. The
text of the brochure should be brief but comprehensive and its tone persuasive.
The extensive use of outlining techniques and graphics will be important to ensure
reader attention and understanding. The brochure should be sent also to alumni, nonparent donors, alumni(ae) parents, grandparents and friends of the School.
The School will meet also with small groups of parents, particularly those who
initially may be less disposed to the increased fee structure, in small group settings,
perhaps at the home of a parent with after-dinner dessert and coffee. The Head of
School will be in attendance along with the Clerk of the Board and perhaps one or
two faculty. The point of the meeting is to provide an opportunity for discussion
of the coming changes and to facilitate school-home communications in general.
Members of the Finance Committee and the CFO should not be in attendance.
Financial aid.
The annual budget for financial aid will be increased to ensure that families in need of
assistance, as indicated by the SSS calculation, Form 1040 with accompanying schedules,
and any additional information provided by the parent or known by the financial aid
administrator (e.g., grandparent payment of tuition), will receive awards at realistic levels,
i.e., awards that permit the student to attend SIS with only reasonable compromises to
family lifestyle. Awards made at realistic levels should reduce both bad debts expense and
student attrition. Additional adjustments to the assessment of need may reflect the
imputation of income based upon one spouse remaining at home without compelling need,
excessive contributions to parent retirement plans, payment of tuition through a business,
and participation in expensive luxuries – trips abroad, costly summer vacations and camps,
among others.
Financial aid policies will not include “caps” on awards made.
Awards made to employees may be more generous than those made to non-employee
families, depending upon family circumstances. Employees requesting financial aid
should complete the same application and assessment process applicable to nonemployees.
12
4.3.4
4.3.5
4.3.6
4.3.7
4.3.8
4.3.9
4.4
4.4.1
The School will administer the financial aid program in accordance with Board policy
concerning order of recipient priority: faculty and staff children, continuing students,
siblings, children of alumni, legacies, etc.
Financial aid should be administered to promote the implementation of the School’s
commitment to diversity in all manifestations, socio-economic, ethnic, religious, etc.
A small segment of the total financial aid budget, as indicated by past experience, will be
set aside in a “contingency fund” to support changed parent circumstances. Depending
upon the nature of the change, it may be appropriate to offer a promissory note (repayment
due in one to three years with only a nominal rate of interest) or an extended payment plan,
as opposed to utilizing outright grants.
In the event that a student is admitted after the budget has been exhausted, and the family
of the student requires financial aid to achieve affordability, the School will consider the
merits of exceeding the financial aid budget in view of the small incremental cost
associated with the enrollment and the benefit to be derived from the receipt of partial
tuition.
The School will assure parents that once financial aid has been awarded, there exists an
implicit commitment on its part to continue financial aid through the balance of the
student’s enrollment, provided that the parent’s financial circumstances continue to merit
support. This commitment does not eliminate the need on the part of the parent to
undertake the financial aid application process annually.
The annual financial aid budget will be increased sufficiently to accommodate increases in
tuition, reflecting the fact that the average need for financial aid may be expected to
increase 1.5%11 over the increase in tuition in the long-run.
Admissions and Marketing.
Publication of the view book. In order to better represent the character and quality of the
School and to give graphic emphasis to its compelling advantages, the School will publish
a new view book to be ready for the 2008-2009 admissions season. The book will
incorporate descriptive text, student and parent testimonials, photographs and other graphic
devices, and will be professionally prepared utilizing marketing specialists, school
personnel, professional photographers, graphic artists, and layout specialists. The book
will seek to distinguish SIS from its peer group competitors by emphasizing its distinctive
competences. Among these, and warranting special attention, are: the School’s focus on
student self-realization and self-actualization, assisting students to develop an
understanding of their unique intellectual abilities, and creative, artistic, athletic and other
talents, and how to instantiate these to live a satisfying, personally rewarding and
productive life;12 a climate that celebrates the individual over the school; the goal of
encouraging and empowering students to author and promote social change for the
betterment of all; and the fact that students take pride in their peers, proud of each other’s
successes, in addition to their pursuit of academic excellence. The means by which these
goals are pursued will be described. The book will cover a three-year period and include
an insert to provide necessary supplementary information and annual updates. To further
its admission marketing interests, in addition to the view book, the School will prepare a
professional DVD video to be sent in response to all inquiries along with the other
promotional and application materials now in use. Also included in these mailings should
be a booklet containing examples of student essays that address issues of national or global
significance and student art work.
11
A paper demonstrating and describing this factor is included in the resource manual distributed to task
force members.
12
In the words of the Greek poet, Pindar: “Be who you are.”
13
4.4.2
4.4.3
4.4.4
4.4.5
4.4.6
4.4.7
4.4.8
Distribution of marketing materials. The view book will be distributed to real estate
agents, corporate HR departments, and to elementary feeder schools in quantity to provide
interested parties the opportunity to take a copy home for further study.
Parent coffees. The School will use parent coffees as means to inform potential applicant
families of the opportunities afforded by SIS. Presentations at these small social
gatherings will include admissions professionals, academic leaders and the Head of School.
The DVD promotional video should be shown with added commentary underscoring the
distinctive character of the School.
Open house programs. An annual open house will market the School to potential enrollees
and their parents utilizing academic leaders to present elements of the academic program
and other student services that represent the special contributions of the School to quality
education. Such occasions will not include reference to expected philanthropy or
volunteerism.
Applicant tours. A small cadre of junior and senior students will be trained in the “art” of
providing campus tours to prospective students entering grades 5-12. No adult will
accompany these tours which will include one or two families at most to promote intimacy.
The point of the tour is to provide parents and applicants the opportunity to question
present students and to interact with them in gaining a favorable impression of the School,
its people and its special character – a tour of the experience of the School as seen through
the eyes of a student, not those of an adult, and not just a view of classrooms and facilities.
Additional marketing activities. Following upon the receipt of an admissions inquiry and
subsequent to the initial mailing, the School should follow-up on the expression of interest
by periodically mailing, to the applicant, photo postcards, copies of student essays that
focus on national and international topics of interest (middle and upper school applicants),
and other promotional materials, as appropriate. Applicants, admission prospects and their
families will be invited to special programs at the School including musical and theatrical
performances as ways to display the range and quality of programs and activities available
to students.13 Present parents will be asked to call prospective parents to describe the
experiences in the School of their children and to make available the opportunity for
questions. This activity will be most effective if the parents making the call have children
in the grades in which the prospective student will enroll. At the time that prospective
students visit the School, they will be “buddied” with a student in their present grade in
order to spend a day visiting classes and participating in activities. The student “buddy”
may then invite his/her new friend to events at the School.
Newspaper acclaim. The School will endeavor to utilize its contacts to ensure that its
innovative programs and accomplishments (athletic contests, special programs, student and
faculty art displays, theater productions, etc.) are included in the Sunday editions of the
Baltimore Sun in its local news and ideas section, and in local area newspapers. Notices of
open houses and of the School’s non-discriminatory policy and other matters placed in the
local press should be viewed as marketing opportunities and constructed accordingly.
Photographs and graphics enhance the image conveyed.
“Where We Stand: Perspectives on Education Today.” The School should inaugurate a
monthly column in the Baltimore business journal under the banner of “Where We Stand:
Perspectives on Education Today.” The column may be written by the Head of School,
other administrators, a trustee and faculty, alternately. A well-written and informative
column addressing, perhaps, controversial issues of local and national interest will draw
attention to the School in a favorable way. The column will constitute paid advertising.
13
There may be advantage to inserting notices into the newspaper and inviting the general public to attend, if
feasible.
14
4.4.9
4.4.10
4.4.11
4.4.12
4.4.13
4.5
4.5.1
4.5.2
Radio advertising. The School will sponsor a regular segment on NPR (National Public
Radio) at a time calculated to reach the largest group of listeners – during commutation
hours. The brief message to be conveyed should be written by the School’s marketing
professional.
Targeted mailings. The School will consider utilizing targeted mailings that place its
informational brochures and its view book in the homes of parents of school-age children
likely to consider SIS as an educational resource for their children. Included in these
mailings should be a booklet containing examples of reflective student essays that address
issues of national or global significance, and student art work.
Programs and marketing. The School will utilize elements of its programs as venues for
marketing its programs. For example, students who perform significant community service
as a program requirement or voluntarily (contributing labor to Habitat for Humanity,
cleaning up polluted waterways, tutoring in schools with underserved minority
populations, etc.) should wear clothing that identifies them as SIS students. Such programs
warrant newspaper coverage.
International students. The task force convened to study the International Student Program
will include in its agenda consideration of strategies to market the School to international
students. The recommended strategies will include budgetary appropriations for travel and
other activities necessary to achieve successful outcomes.
Letters of acceptance. Different letters of acceptance should be mailed to both the parents
of the student and to the student, grades 1-12. In each case, the letter mailed to the student
should be tailored to the age of the student – i.e., one letter each for students entering
grades 1-5, grades 6-8, and grades 9-12, paralleling the three divisions. Along with the
student letter of acceptance, a T-shirt, baseball cap, ballpoint pen or other similar item
emblazoned with the name of the School will be included.
Fund raising and development – institutional outreach programs and activities.
Annual retreat. Each year, in August, prior to the opening of the school term, the
development office staff will hold a retreat (preferably, off-campus) to: evaluate the current
program with respect to determining what works and what has not worked over the prior
year; develop a five-year plan describing goals and strategies to achieve the goals; review
fund raising solicitation materials, cultivation strategies, and opportunities for the major
gifts program and planned giving programs. Initiatives included in the program developed
for the year should be prioritized with estimated costs. An important component of each
annual retreat is a presentation made by a professional fund raiser, a development officer
from another independent school, or a university development specialist. The Directors of
Admission, Institutional Outreach, and the Chief Financial Officer may attend these
retreats with added benefit.
School publications: magazine. The present major publication, the magazine, is published
by the School two times each year. The publication schedule for this outreach piece will be
increased to three times per year (fall, winter and spring issues). The magazines will
include, in addition to the present content, profiles of faculty members, profiles of students
and their special talents and activities, interesting projects undertaken by faculty
(professional development) or by classes or individual students, review of major capital
projects underway and those planned for the near future, and development marketing
literature (e.g., nature and effect of an endowment gift, nature of a planned gift and planned
giving opportunities, memorializing gift opportunities, the role of special gifts in a school,
etc.). In addition, each issue will profile an alum whose achievements are significant and
worthy of professional or public attention, is an actively engaged and recognized member
of a profession or who has achieved (positive) notoriety in some other respect. These
magazines with enhanced photographs and graphics should be seen as essential cultivation
15
4.5.3
4.5.4
4.5.5
14
and marketing tools. This publication provides an opportunity to market the various giving
programs and to briefly describe the case for both annual giving and major gifts programs.
However, the marketing of these programs should not include explicit solicitations (except,
perhaps, by way of a tear-out card included in the magazine). Finally, the publication
should contain a column written by an alumnus(a) of the School.
School publications: parent newsletter. In addition to the divisional newsletters, the School
will produce a parent newsletter four times per year (September, December, March and
May). The newsletter will be a glossy piece of not more than six pages. Content will
include a column written by the Head of School on a timely topic of interest to parents;
news about the School; profile of a newly appointed faculty member or administrator; a
description of special events planned or completed (theater productions, art exhibits,
athletic events, special projects); a column written by a faculty member describing some
element of curriculum, an important curricular innovation or special project; honors
received by faculty and students. The newsletter should be regarded as an additional
opportunity to “get out the message” about the School, its distinctiveness, its culture and its
values: who we are – the Sample Independent School story. The focus of the newsletter is
the whole school as opposed to divisional newsletters. The newsletter is also an
opportunity to market giving programs – each issue should address one giving program in
detail: annual giving, gifts to endowment, the major gifts program, and planned giving
programs. The School’s calendar for the upcoming period should appear on the first page
in order to gain attention to the publication. The goal of all publications is to improve
parent understanding of the School and to increase their satisfaction with the experience of
their children through effective communications.
Alumni cultivation – annual and major gifts. The school’s major and special gifts
programs will be strengthened with renewed attention to alumni cultivation activities.
Among the options to be considered are the following: (1) increased communications with
alumni including specific information concerning changing programs and facilities,
projects underway, planning for the future, faculty appointments, retirements,
accomplishments, and financial and development data; (2) bringing alumni back to campus
to participate in special programs and projects – e.g., alumni college; (3) inaugurating a
role for local area alumni in career counseling with sophomore, junior and senior students;
(4) alumni receptions; (5) developing a reunion class gift program – i.e., the 15th, 25th and
50th year reunion classes each select a special capital project, either a gift of plant or
endowment, to which the members of each class contribute over a multi-year period to
ensure a sufficiency of funds to undertake the project. With appropriate “ceremony,” the
reunion class gifts are presented to the Head of School and Clerk of the Board during the
graduation exercises. Classes donating gifts to endowment may elect to support
scholarships, faculty chairs of distinguished teaching (salary subsidy), faculty professional
development, or program (e.g., endowment to support new performing and graphic arts
programs), depending upon class interest, school needs, and fund raising results. Much
beloved former teachers represent opportunities for stimulating gift receipts by establishing
named endowments and funding major capital improvements.
Qualification of major prospects. The School will enhance its resources to facilitate better
identification and qualification of major donor prospects. Cultivation activities associated
with major gifts solicitations will begin and proceed in accordance with policies and
procedures known to be effective in stimulating such gifts.14 The School recognizes its
interest in “bonding” such donors to the institution and the need to furnish competent case
statements as an important solicitation tool.
Development counsel may be called upon to address this matter.
16
4.5.6
Gifts acceptance policy statement. The School will prepare a gifts acceptance policy
statement15 to assist with solicitation, acceptance criteria, classification and processing of
gifts.
4.5.7 Pooled income fund. Following upon its marketing of planned giving, by July, 2007, the
School will undertake the formation of a pooled (life) income fund with a gift in an amount
not less than $5,000 from one or more donors. Publication of receipt of this gift and the
advantages to the donors, their beneficiaries and the School will be stimulative of similar
future gifts. Developing charitable trusts more extensively than presently exists will be
viewed as a future activity following upon the successful formation and growth of the
pooled income fund.
4.5.8 Case statements. The School understands that success in cultivation and solicitation is
closely linked to the extent to which the donor understands the case for voluntary giving.
The School will undertake annually to develop a compelling case for philanthropic support,
detailing the extent to which unrestricted gifts and operating restricted gifts contribute to
the School’s “margin of excellence,” and the ways in which capital support contributes to
endowment, and facilities additions, enhancements and improvements. These cases will be
made in print and orally to the appropriate constituencies. Follow-up activities advising
donors of the impactful difference their gifts made is an effective cultivation activity
ensuring even greater bonding and future gift inflows. In the case of endowment gifts, an
annual report to the donor concerning the financial performance of his/her endowment fund
and the benefit the School derived from utilizing the investment return on that fund in
accordance with the donor’s direction are important communication tools that can be
expected to stimulate additional gifts.
4.5.9 Challenge gifts. The School will add to its fund raising efforts individual and group
“challenge” gifts. Under this strategy, donors offer to make a substantial gift if other
donors give, in the aggregate, a specified dollar amount within a specified period of time.
Such “challenge” gifts not only motivate others to give, they also multiply the amount
raised. Thus, each donor who makes a gift under a challenge grant has his gift doubled or
tripled just because of the challenge.
4.5.10 Phonathon strategies. Parents and trustees who make phone calls to potential parent
donors during the annual giving campaign will receive specific information concerning the
parents to be called. This information will include the prior history of giving, the name of
the parent’s student, and specific favorable information concerning that student, perhaps a
humorous anecdote. The caller should have a child in the same grade as the parent’s
student so that reference can be made to the experience of the caller’s child. In each case,
the parent should be asked to reasonably but aggressively increase his/her gift over the
prior year with the caller suggesting the gift level for the current campaign. Prior to
engaging in telephone solicitation, each caller will be professionally “trained” in the art of
communicating need and soliciting gifts.
4.5.11 Education marketing. In telephone contacts and in written pieces, it is important that the
School recognize that parents not involved in independent schools have little understanding
of the financial structure of such schools nor of the role that tuition and annual giving play
in covering expense. However, while it is fair to point out to parents that “annual gifts
represent the tax-deductible component of tuition,” this is not an effective technique with
which to solicit gifts. Instead, the School should prepare a case statement for the annual
fund that points out how such gifts have benefited students in the prior year, and in years
before. The case should not be based on remediation of deficiencies – whether program or
facilities – nor on the need for better qualified faculty; instead the emphasis is on how such
gifts make possible enhancements that directly benefit students: more field trips, special
15
Consultants can provide an example of such a statement to the School upon request.
17
4.5.12
4.5.13
4.5.14
4.5.15
assemblies, unusual learning opportunities, expansion of programs with new services
added, support for the International Student Program, among others.
Director of Communications and Publications. The School should consider the addition of
a professionally qualified Director of Communications and Publications. The director
reports to the Director of Development (Institutional Advancement). To this individual is
delegated full responsibility for all written communications from both the development and
admissions offices. The director should also review the periodic newsletters that are
prepared by administrators and mailed to parents and others.
Alumni reception program. The School will increase the number of receptions held in
cities where there are sufficient alumni(ae) living in the area to warrant the cost. Attending
these receptions are the Head of School, faculty of tenure sufficiently long that many
attending alums will remember their work with them and the Director of Development.
These occasions are not an opportunity to solicit gifts; they are, instead, an opportunity to
informally gather and exchange reminiscences of past “good” experiences. At these
functions, the Head of School should deliver a “state of the school” message in which the
progress made over the recent past – in program, facilities, co-curricular offerings, and
other significant steps forward (this strategic financial plan, for example) – is described. It
is not inappropriate to mention how annual giving and major gifts programs have
succeeded and contributed much to the progress described. On this occasion, also,
alumni(ae) should be invited back to the campus, perhaps to participate in a career day
program or to address the student body on a topic of interest to the alum and to students. A
visit to the campus and the opportunity to meet with former teachers is a pleasant
experience, it increases “bonding” and is likely to translate into giving. Alumni(ae) who
earn important distinctions, earn additional degrees, accept a new position, marry, or in
other ways change their position in life should receive a congratulatory note from the Head
of School, thus reminding the alum that the School cares about his/her progress even after
graduation.
Alumni(ae) parent cultivation. Communicating with parents of alumni(ae) is an important
component of a school development program. They should receive the magazine and the
parent newsletter regularly and notes of congratulation as their children are recognized in
some manner or simply change their life position in some major way. Having achieved
financial security and empty nest status, parents of alums are often a source of major gifts,
particularly if their children enjoyed their time at SIS and were well-prepared for their
future endeavors. Recognizing the effectiveness of internet communication and the
interests of alumni(ae) parents in the on-going progress of the School, the School will
expand its web page to include information of interest to alumni(ae) parents, e.g., progress
of alums following graduation. The option to make gifts via the web page and a credit card
should also be available.
Major gifts program. Key to administering a successful major gifts program (gifts of
endowment and gifts of facilities) is aligning donor interest with school goals and needs.
Extensive cultivation is also a requirement. Typically, cultivation activities are one-on-one
occasions – luncheon with the Head of School in his office, luncheon with a small group of
trustees and the Head of School in a convenient upscale restaurant, a cocktail party with
several major donor prospects, the Clerk of the Board and the Head of School in
attendance. While social in nature, each of these occasions provides the opportunity to
increase donor interest in the School; to discuss the progress of the School, its programs
and its people; the plan that the School has constructed to map its future; and to discuss
how the donor’s interests can be aligned with School goals and needs. A donor interested
in providing perpetual support for faculty excellence may be interested in establishing an
endowment for: named chairs of distinguished teaching (recognizing distinguished service
to the School and his/her students, perhaps rotated every three years), an incentive for
18
excellence fund providing annual recognition for accomplishment and serving as an
incentive for even greater future accomplishment; a named scholarship supporting students
who meet specific criteria; program support, perhaps in the graphic or performing arts;
support for the International Student Program; among others. A parent interested in
making a major gift may wish to provide support for an aspect of the School’s programs of
particular significance to the parent’s student’s experience there. Prior to the period of
cultivation, it is important to qualify the prospect with respect to financial capacity, prior
philanthropic experience, specific interests, and the nature of the relationship between the
donor and the School. The size of the gift necessary to fund the selected project must be
determined; that determination should be made based on the level of annual support
required for implementation of the project.16 Only with that information available is it
possible to target the cultivation activities to that particular individual. When it is time to
solicit the gift, a specific proposal – the case statement for the gift – is made to the donor,
in writing and in person. Follow-up on that proposal occurs after a brief interval during
which the donor can study the case for his/her gift.
4.6
Class size. Class size is a conspicuous factor in assessing faculty “productivity.”17 The
internal scan revealed that class sizes and student/faculty ratios in the middle and upper
schools are small, below NAIS averages. A few classes enroll very small numbers of
students. While sub-average class sizes allow for enhanced individualized attention,
studies show that such individuation does not necessarily translate into more effective
learning. In order to decrease cost per student, it is necessary to increase class size. While
the School offers specialized and advanced level courses which attract few students,
offering these as a component of a full faculty schedule is inherently costly. Accordingly,
the School will research opportunities for alternative instructional methodologies for such
courses (increasing the option for independent study, use of technology resources as a
conduit for delivering course content, use of tutorial programs in which two or three
students meet with an instructor weekly and complete extensive assignments in the interim
periods) and outsourcing instruction for these low demand courses (other independent
schools and colleges). A goal of these measures is to increase faculty “productivity” and
reduce per student instructional cost.
4.7
International fund raising. Parents of international students represent an opportunity to
augment resources contributed to the annual fund. Such solicitation may be made by mail
via individually targeted letters from the Head of School and by telephone with a parent
placing the call (see phonathons, above). Such solicitations will be more effective if the
call is placed by the parent of an international student who is resident in the country of
origin. International major gift prospects require the same kind of cultivation and
solicitation strategies, though in a shorter time frame, as do domestic donors. Again, donor
qualification and one-on-one contact are critical components of cultivation. The annual
School budget will include appropriations committed to foreign travel by the Head of
School and to the production of marketing and solicitation materials associated with
international giving programs.
If the endowment is invested to earn a total return of 9% over the long run and if the School’s budget
increases by 5% a year, then reinvestment of 5% per year is necessary to preserve the functional value of the
endowment. Thus, just 4% of the gift principle is available to support the project. For example, if the
endowment is established for $1,000,000, total return in the first year will be just $40,000.
17
For many parents, small class sizes function as a (misguided) proxy for the quality of instruction and the
value of the educational experience for their children.
16
19
5.0
The tactical plan and responsibility centers.
5.1
This strategic financial plan report chronicles the deliberations of and the decisions taken
by the Sample Independent School Strategic Financial Planning Task Force.
Consultants/facilitators have reduced those decisions to writing which forms the substance
of this document. The success of the plan will depend directly upon the efforts of
incumbent and future trustees, administrators and faculty to implement the strategies
contained herein, to monitor progress, and to update the plan from time-to-time as
changing circumstances warrant. Though the responsibility for preparation of the tactical
plan falls to senior administrators who will be largely responsible for its content and
implementation, the extensive and enthusiastic support and participation of trustees are
essential to the success of the undertaking.
Though many tactics are included in the statement of strategies or clearly implied by those
strategies, School administrators must construct the detailed tactical implementation plan
including identification of the responsibility centers for implementation activities and the
timeline through which the strategies included in this plan will find concrete expression.
Upon Board review and approval of the tactical plan, implementation should proceed. In
this way, the School’s future will be secure, its viability assured, its mission confirmed and
its vision of that future instantiated.
5.2
20