Budget Creation For 18-19 Is Just Around the Corner

If you haven’t started working on your school’s budget for the 18-19 school year, you will very soon. For the past few years, some schools have experienced higher enrollment than the previous year, with many schools experiencing increased growth in their Kindergarten applications and acceptances. How can this be, because schools continue to lament the fact that their overall enrollment is declining?

If you haven’t started analyzing your school’s enrollment data from year to year yet, you need to do it, and do it before you start your budget planning. Many schools will simply look at their year to year overall enrollment, and try to guess where they’re going to be when 18-19 starts. Other schools look at grade by grade enrollment, thinking, “We had 12 children in third grade last year and 10 this year, so maybe we’ll have to consider combining third and fourth grade.” But what happens if there are 20 children in second grade? Does that mean that in the following year, third grade will be “unbundled,” and fourth and fifth grade will still be combined? Will the same teacher teach the combined fourth and fifth grade? I know of one school where parents disenrolled their children because they had the same teacher for 3 years in a row.

Rather than examining the grade-level enrollment from year to year, analyze the “cohort-drop” from year to year.  In other words, examine your 5th grade enrollment this year, and compare it to 4th grade last year, 3rd grade the year previous, 2nd grade the year before that, etc. One of the non-researched trends that I’ve seen is that K-8 schools see about a 50% drop in the “cohort” of the grade by the time kindergarteners reach 8th grade. The interesting thing is that I entered 1st grade in 1966-1967 (before there was a kindergarten in the local Catholic school), and that statistic still was true in 1973-74 for our 8th grade class.  That was 40+ years ago…even when the Dominican Sisters filled more than half of the teaching positions in our elementary school.

If you’d like a tool to effectively plan for your enrollment next year, send an an email to schooladvancement@gmail.com and use the phrase “enrollment estimator” in the subject line.

For those schools that are already using this planning strategy, this is the year to learn from last year’s lessons. This will be yet another year of unprecedented change for many private and faith-based schools, so why not consider making an even greater change – a new year’s resolution, if you will.  Resolve to plan not only for next year, but for five years down the road!

Many successful non-profit organizations raise their operating revenues in the year before they use it. Catholic, as well as other faith-based schools, seem to raise funds from development, fundraising and tuition during the year they’re using it. Failure of families to pay tuition results in a deficit situation, which can then lead schools down the path to closure. Those decisions are being made as you read this.

So let’s be bold and look five years down the road, with an idea for discussion at your next “thinking outside the box” meeting. If you’d like to raise the funds your school will operate on the year before you actually use them, take five years to raise a year’s worth of operating revenue. Consider increasing your school’s operational income for the next year by (get ready for it) 20%, as well as the revenues of the next four years of operational income by 20%. Put the excess 20% in a fund that you don’t touch until 5 years down the road. At that time, you’ll have a year’s worth of operating income, and then revenues collected during that year are utilized as the following year’s operational income.

Since you’ve been raising 20% more of what you need for the previous five years, a “next practice” would be to do the same for the next five years. However, rather than using that second five years of increases for operating income, use it for the basis of your school’s educational foundation, using half of it for financial aid, and the other half to begin or invest in an endowment.

If five years is too ambitious, then think ten years into the future, and rather than increasing tuition by 20%, increase it by 10%, still putting the increase on the side to become the operating budget for year 11.  Then, during year 11, the tuition collected for that year will fund the following school year’s operating budget.

Is this easy? No. Will some folks think it’s impossible? Yes. But it may have merit just to see the potential. If you simply raise tuition, it may be outrageous. But, if you increase enrollment, increase development revenue, and communicate the plan that you’re enacting to solidify the school’s financial foundation, it might be something which can be planned for. Sharing your plan with others can generate hope for the future.

Analyze the potential, too.  If your tuition is at $4,000, a jump to $5,000 sounds huge. But if you’re collecting tuition over 11 months, $364 a month becomes $455 a month – an increase of $91 . If you still think that’s a tough sell, and you have 180 days of school a year, that’s about $6 a day. If that’s still a tough sell, and 990 hours comprises a legal school year, the increase amounts to a little more than one dollar per hour.  The result is indeed huge, but breaking it down into smaller amounts makes it not seem that huge.

But let’s just focus on next year for now. What does that look like in terms of real numbers?

Say your school’s budget this year is $1,000,000, and you have 250 students in your school with a tuition/cost per education of $4000 per student. If you have a 10% decrease in enrollment, you’ll have 225 students. If you want to increase your school’s operational income for strategic planning purposes as described above, your budget will be $1,2000,000 (an increase of 20%). Your cost per student will go from $4000 to $5333…an increase of $1333 per student, or a 33% increase in the cost of education.  These increase would also need to be offset by development – not fundraising – strategies and revenue.  Therefore, if you don’t have an advancement or development director at your school, hiring one would be the necessary first step in order to put all elements of the system in place before trying to make the system function properly.  Since you’re also looking at increasing enrollment, there needs to be someone responsible for that task as well.  It’s no longer acceptable for a school to say “We need to increase enrollment,” and then have no one that “owns” that goal, or have it assigned to a current staff member or administrator who has “no time” for all the strategies that need to be put in place and acted upon to make increasing enrollment a reality.

If that still sound a bit radical as a first step, here’s an idea.  Perhaps your school is receiving a subsidy from your parish or church at this time. This would be a good time to rethink that practice, and rather than using it for subsidy to reduce the amount of tuition across the board, use it as a financial aid pool to help families afford the full tuition amount, if not the full cost of education.

You’ll also have to educate your parents as to why this change is necessary at this time, presenting this scenario, as well as a “best case” scenario (an enrollment increase in a cost-based tuition structure with additional development revenue ) which could make the tuition actually decrease for some students, especially those that have financial need.

If you’re afraid of confronting these facts, and confronting your families with this information, remember the first words of the papacy of St. John Paul II – “Be not afraid.” Schools need charismatic and visionary leadership – not people to “turn out the lights.” At this time in history, perhaps more than any other, faith-based schools must offer people hope.

As for enrollment planning five years down the road, if you’d like a preview of a tool to help you see that far ahead based on the enrollment trends in your school, send an email to schooladvancement@gmail.com and use the phrase “5 years down the road” in the subject line.

Another resource is for “thinking outside the box” is the eBook “Shift” which is available on this site.  Its highlight is a tuition collection timeline shift that can also help to put your school on a firm financial foundation.

A “Happy New Year” to you and yours, and may it be a peace-filled one for all of us!

© Michael V. Ziemski, SchoolAdvancement, 2006-2018