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Governance and

School Sustainability

Dr. Jim Christopher


Monday October 19, 2015
11:00 12:00

21st
Century
Governance

Governance and School


Sustainability
Dr. Jim Christopher
SAIS Annual Conference Monday October 19, 2015

21st
Century
Governance

The Sustainability Crisis


2005-2015

21st
Century
Governance

Context:
o
In 2002 there were 35,895 private schools in
the United States
o
By 2004 the number had dropped to 34,681
o
By 2012 there were 30,861 (-15%)
o
During the same period the number of public
schools went from 94,112 to 98,817 (+5%)

21st
Century
Governance

Context:
o Independent/private school enrolments in decline
since the turn of the 21st century
o Pace of school closures increased by sub-prime
crisis
o In Canada and Great Britain the trends were the
same

21st
Century
Governance

Weston School closes after 90 years


Rising costs and fewer enrolled students mean the
Notre Dame de Grace school will close its doors
today.Vice-Principal Bob Orrock said the closing
came as no surprise when he found out two weeks
ago.
"You can see these things coming," he said. "We have
half the staff this year that we had last year.
Montreal Gazette June 20, 2007

21st
Century
Governance

Private School Closing


Bethany Hills School, a 28-year-old private, all-girls

school, has closed its doors. The Head of the school,


blamed the troubled economy and a sharp decline in
enrolment for yesterday's closure.
"The economic downturn, right across Canada, has hit
schools pretty hard," he said.
Peterborough Examiner, June 2009

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21st
Century
Governance

Century Governance

Hundreds of private school teachers


casualties of the credit crunch
Independent schools closing and making widespread
redundancies as parents in the City and in leisure
industry feel financial strain
The Guardian, April 2009

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21st
Century
Governance

Century Governance

Fifty private schools fold and


dozens more struggle as parents
feel economic squeeze
At least 50 private schools have folded and dozens more
are struggling as the economic squeeze drives away cashstrapped parentsand many more are on a knife edge.
The Daily Mail, November 2010

21st
Century
Governance

Private residential school closes, leaving Pinehurst


parents out $22,000 in tuition (Toronto Star, Jan.
25/14)

21st
Century
Governance

Elite private institutions are doing just fine, many besieged by more
applicants than ever before.The wealthiest Americans can easily afford
them and are ever more determined to secure for their children the
advantages that come with attending them
Because these elite schools are also highly visible, and where the
chattering classes want (and can afford) to enroll their own daughters
and sons they create a faade of private-sector vitality. Behind it,
however, like the Wizard of Ozs curtain and Potemkins building facades,
there is much weakness, a weakness that probably afflicts the vast
majority of todays private schools.
The Atlantic May 2013

21st
Century
Governance

Parochial Schools face same problem


2000-2013:

- 2,090 U.S. Catholic schools closed/


consolidated
- enrolments dropped by 24.5%

21st
Century
Governance

Why are all of these schools


closing?
Why do others survive?

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21st
Century
Governance

Century Governance

The reasons?
On the surface:
- enrolment issues
- financial mismanagement
Underlying:
- ineffective executive leadership
- weak Board governance

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21st
Century
Governance

Century Governance

What are you after?


Proactive strategy to maintain, enhance, and
eventually secure the stability, health and continued
existence of your own school.
What do you need?
Relevant and accurate data to track trends in key
areas such as admissions; revenue/expense balance;
and, advancement.

21st
Century
Governance

Todays Plan
School Stability and Sustainability
- what are the benchmarks?
Instability Markers
- measuring the health of your school
Building Sustainable Schools
- developing a plan and putting it to work

21st
Century
Governance

In 2015, the future of independent, non-public


schools faces serious challenges - demographics
- cost
- changing social attitudes
- emerging competition (Charter, Magnet
Schools)

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21st
Century
Governance

Century Governance

How do we sustain our current level of success?


- Business as usual?
- Scholastic Darwinism?
- Develop a new paradigm?

21st
Century
Governance

Stability and Sustainability


Unless your stakeholders (parents, staff, alumni,
foundations, etc.) perceive you to be stable and
sustainable
- Parents will send their children elsewhere
- Talented faculty and staff will desert or be poached
- Traditional donors will not contribute significant
(any?) funds to your school
- Stagnation or a downward spiral will become an
irreversible trend

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21st
Century
Governance

Century Governance

Stability and Sustainability


What are the benchmarks for gauging the stability and
sustainability of your school?

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21st
Century
Governance

Century Governance

Stability and Sustainability


Prior to the 2008 crisis, Independent School
Management (ISM) identified key stability markers
to measure the health of an independent school

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21st
Century
Governance

Century Governance

Stability and Sustainability


Stable schools have:
! Substantial cash reserves
! Strategic Boards of Governors
! Growth oriented faculty cultures
! Competitive faculty/staff/admin salaries, benefits,
working conditions

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21st
Century
Governance

Century Governance

Stability and Sustainability


Stable schools are:
! hard income driven
! characterized by carefully tended and nurtured
major gift programmes
and characterized by:
! an endowment building strategy
! a faculty recruitment/retention strategy
! student demand outstripping supply
! a parent education plan

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21st
Century
Governance

Century Governance

Stability and Sustainability


Stable schools are characterized by:
!
!
!
!

a strategic plan and a strategic financial plan


excellence in next level placement of
students and student success record at next
level
long range leadership and faculty renewal plans
faculty evaluation systems

21st
Century
Governance

Stability and Sustainability

Depressed yet?

21st
Century
Governance

Stability and Sustainability

Times have changed

21st
Century
Governance

Stability and Sustainability


In 2011 ISM published its 3rd iteration of its stability markers:

New factors include:


!Executive leadership
!Profiled Board/Board Leadership
!Board member education/Faculty PD budget

21st
Century
Governance

Stability and Sustainability


In 2011 ISM published its 3rd iteration of its stability markers:

New factors include:


!Development office management
!Quality of facilities/facility plan
!Effective internal marketing (retention)

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21st
Century
Governance

Century Governance
The New Challenges

1.
2.
3.
4.
5.

Changing and shifting student demographics


Tuition push back credit crunch
Generational leadership changes
Activist Boards and school shopping parents
24 hour communications cycle pressure to stay
connected

21st
Century
Governance

6.
7.
8.
9.
10.

The New Challenges


Demands: more technology, online courses,
character education, community service, green
schools
Increased competition for high performing faculty
and administrators
Increased competition for advancement dollars
Improved public education/specialized competition
New research on teaching and learning

21st
Century
Governance

The New Challenges

11. Ever-rising expectations


from parents.

21st
Century
Governance

The Sustainability Challenge


How can you identify and address those factors which
threaten the health and sustainability of your school?

21st
Century
Governance

The Sustainability Challenge


Most Boards and Heads maintain a dashboard of
key performance indicators
High performing Boards and Heads actually use
them to inform decision-making
The critical issue is to ensure that you are
measuring the right things!

21st
Century
Governance

A Sampling of Useless Data

Year over year enrolment numbers; class sizes; full/


empty beds in boarding; website hits; etc.
%age of students accepted in the university of
their choice; scholarship winners; ivy league
placements
Qualifications/pd hours of faculty and staff

21st
Century
Governance

Data with more utility

Enrolment funnel information; student retention


rates; PTR vs. Class size comparisons; soft service
#s; etc.
Hard income vs. operating costs; advancement cost
per gift dollar; tuition increases vs. inflation; etc.
Faculty/admin. salaries as %age of operating.

21st
Century
Governance

So what should you be looking for?

Instability Markers:
Signposts on the road to ruin!
21st Century Governance

21st
Century
Governance

Instability Markers
How were they developed?
- Accreditation reviews of over 150 schools in
Canada, the United States and Europe
- 10 year trends in the CAIS benchmark statistics
- 10 year trends and issues identified through NAIS
Stats-Online (now DASL)

21st
Century
Governance

The Sustainability Challenge


Three Key Areas of Potential Instability

Market Share
Financial stability
Executive Leadership

21st
Century
Governance

The Sustainability Challenge


1. Market Share
Are there too many schools for the market to
support?

21st
Century
Governance

21st Century Governance

The Sustainability Challenge


Trends in the independent school market
SAIS
2004/5
167 schools
102,999 students
2014/15
175 schools
119,485 students
NAIS
2004/5
1,086 schools 518,924 students
2014/15
1,098 schools 556,643 students

21st
Century
Governance

The Sustainability Challenge


Declining Admissions Funnel Ratios: SAIS
Application Acceptance Enrolment
2004/5

2.7

1.9

1.0

2014/15

1.7

1.3

1.0

(NAIS)

2.1

1.4

1.0

21st
Century
Governance

The Sustainability Challenge


Expanding Resource Support
2004/5
2014/15
- Teacher PTR
10.1/1
10/1
- Inst. support PTR 155/1 (6%) 63/1 (11%)
(NAIS)

150/1

61/1

21st
Century
Governance

21st Century Governance

The Sustainability Challenge


Indicators of instability (all schools):
!
!
!
!

Decline in Applications
Shrinking/disappearing waiting lists
Growth of soft services
Growth of competitive marketing

21st
Century
Governance

21st Century Governance

The Sustainability Challenge


!
!
!
!

Indicators of instability (all schools):


Depth of the teacher pool
Advancement dollars drying up
Growth in number of transient students
Performance gap widening in schools

21st
Century
Governance

The Sustainability Challenge


!
!
!
!
!

Instability Markers (your school?):


Decline in mission appropriate applicants
Low application to acceptance ratio
Wide net acceptances
Tutor requirements
Poor retention rates

21st
Century
Governance

The Sustainability Challenge


!
!
!
!

Instability Markers (your school?):


Growth in soft services counseling,
resource, etc.
Increase in behavior issues
Decline in student performance
Staff turnover and burnout

21st
Century
Governance

The Sustainability Challenge


!
!
!
!

Failed strategies to improve market share:


running loss leader programmes
redefining your niche
artificially depressing tuition
more of the same marketing blitz

21st
Century
Governance

The Sustainability Challenge


Where does your school stand in its quest to
maintain its market share of Mission
Appropriate students?

21st
Century
Governance

The Sustainability Challenge


Enrolment Analysis
Key Questions:
- Do you have an enrolment management plan?
(admissions, retention, removal)

21st
Century
Governance

The Sustainability Challenge


Enrolment Analysis
Key Questions:
- Are you tracking your application/offer/
acceptance/enrollment ratios?

21st
Century
Governance

The Sustainability Challenge


Enrolment Analysis
Key Questions:
- Have you identified the attributes of a mission
appropriate student?
- Are you only accepting students who will
benefit from your prog./services?

21st
Century
Governance

The Sustainability Challenge


Enrolment Analysis
Have you got your student recruitment and
retention act together?

21st
Century
Governance

The Sustainability Challenge


2. The Growing Cost of School
Are we pricing ourselves out of the market?

21st
Century
Governance

The Sustainability Challenge


Over capacity in the 1990s
- population bubble artificial growth
Growing Price Point Gap
- tuitions rising 2 to 3 times faster than the rate
of inflation
- shrinking target domestic market

21st
Century
Governance

The Sustainability Challenge


Growing Price Point Gap SAIS
Tuition and Fees (Day) 2004/5
2014/15
CPI 2004/5 2014/15
AFI 2004/5 2014/15

$11,385
$17,158 (+50%)
+21%
- 4.6%

21st
Century
Governance

The Sustainability Challenge


For every 1% that you increase tuition, a
familys after tax income must increase by 0.5%
to keep pace.

21st
Century
Governance

The Sustainability Challenge


The issue for most families is not whether they
an afford you today, but rather, given your track
record, will they be able to afford you 5 or 10
years from now.

21st
Century
Governance

The Sustainability Challenge


- Operating Costs per student - SAIS
median 2014/15

$17,180 ($17,158 tuition)

median 2004/05

$13,145 ($11,385 tuition)

Moving in the right direction

21st
Century
Governance

Dependence on Unpredictable Income


Key Factors:
- Median %age of students on Financial Aid
SAIS 2004/5
2014/15

11%
19.1%

(5.6% revenues)
(9.3% revenues)

NAIS 2014/15

20.8% (day) (11.7% revenues)


34.4% (bdg) (19.6% revenues)

21st
Century
Governance

Predictable Expenditures/Unpredictable
Income
Key Factors:
- Salary costs as a %age of operating
2004 Day schools 54% (30% teacher)
2014 Day schools 55% (30% teacher)
- Teacher salary expenses per student
2004 Day schools $4,484
2014 Day schools $5,236

21st
Century
Governance

Dependence on Unpredictable (soft)


Income
Where does your school stand?
Are you tracking?
! Fundraising cost per gift dollar
! Success with primary donor groups

21st
Century
Governance

Fundraising cost per gift dollar


CAIS median

$0.39 (2015)
$0.40 (2007)
$0.31 (2004)
NAIS recommends a maximum of $0.35
Range: $0.03 - $8.42 (2015)
On average single gender girls schools spend 30%
more per dollar raised than boys schools and
10% more than co-ed schools.

21st
Century
Governance

Where does your school stand?


Median Endowment per student
SAIS

$11,211

NAIS

$18,863 (day $14,413; boarding $65,878)

21st
Century
Governance

Where does your school stand?


Median Debt per student
SAIS

$11,082 (91.4% of Endowment)

NAIS

$13,991 (66.2% of Endowment)


(86.9% in day schools)

21st
Century
Governance

Predictable Expenditures/Unpredictable
Income
The new budgeting process:
! What will you need to charge to deliver
essential programs and services?
! What is the ability of your community to pay?
! Are there other potential profit centres that
can enhance revenues?

21st
Century
Governance

Predictable Expenditures/Unpredictable
Income
The new budgeting process:
! Base your expenditure of fundraising dollars on
last years actuals (i.e. save this years donations
for next year)
! Eliminate revenue negative programmes
! Dont plan to spend more than you can earn

21st
Century
Governance

The Sustainability Challenge


Growing trend to price ourselves into a smaller
and smaller niche market.
Increase in competition for students and
parents shopping around for the best deal.

21st
Century
Governance

Are you over-dependent on soft income?


Instability markers:
! Tuition revenues do not meet expenses
! Tuition increases are not linked to an actual
cost analysis but rather to the myth of what
the market will bear.
! Tuition increases are erratic flat then big jump

21st
Century
Governance

Are you over-dependent on soft income?


Instability markers:
! Lack of cost controls or artificially depressed
tuition revenue and expenses out of balance
! Perception of the inelasticity of fees. Gut vs.
research.

21st
Century
Governance

Are you over-dependent on soft income?


Instability markers:
! Declining response to annual giving and capital
campaigns.
! Scaling back on capital expenditures.
! Downsizing of administrative staff
! Selling off of assets (land, art, etc.)

21st
Century
Governance

21st Century Governance

Are you over-dependent on soft income?


Instability markers:
! Fundraising used to supplement operating not
augment programme.
! Monies invested in short term sexy initiatives
without revenues to sustain them.
! Downloading frill costs on parents (field trips,
laptops, books, etc.)

21st
Century
Governance

Are you financially sustainable?


Remember:
Your mission is in the margin

21st
Century
Governance

21st Century Governance


3. Executive Leadership

Stability in your Executive Leadership is a


key to school sustainability.

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Century
Governance

21st Century Governance

Factors affecting sustainability


1. Leadership Change
The average length of Head tenure is on the
decline.

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Century
Governance

21st Century Governance


Leadership Change

Indicators: Schools in Transition


95% of Good to Great companies are led
by internal appointments
15-20% of North American schools are led
by internal appointments

21st
Century
Governance

Leadership in Crisis

!
!
!
!

Indicators:
The candidate pool for Head searches is
drying up
Long-serving Heads are being asked to
extend their terms due to lack of suitable
replacements
Growing number of schools hiring interim
Heads
High rate of turnover and transfer for
younger Heads

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Century
Governance

21st Century Governance

Result: Institutional Inertia:


- Typically the change process grinds to a
halt during the last six months of a Heads
tenure and the first six months of her
replacements term.
- Add 6 months 2 years of interim
leadership and you have a school that is
dead in the water.

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Century
Governance

21st Century Governance

Why the delay?


- second most important job a Board
has (often mistakenly considered the
most important!) is hiring a Head
- overdependence on head-hunters
- perceived lack of suitable internal
candidates

21st
Century
Governance

21st Century Governance

Key Questions:
Has our school developed a sustainable
leadership model that will give our
stakeholders (parents, faculty/staff, donors,
etc.) confidence?

21st
Century
Governance

21st Century Governance


Key Questions:

Is your school currently on hold until a


new Head is appointed and/or broken in?

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Century
Governance

21st Century Governance


Key Questions:

Have any of your recent Heads (including


current) been asked to stay on until a
campaign was completed?

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Century
Governance

21st Century Governance

2. Academic Leadership
Growing demand for accountability with
respect to student performance and
learner outcomes.

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Century
Governance

21st Century Governance

Academic Leadership
In Canada all accredited schools are required to
track performance of graduates
Currently only 45% of the schools have formal
tracking systems in place
In NAIS only ISASW requires it.

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Century
Governance

21st Century Governance

Academic Leadership
Schools that are not proactive in this area may
find themselves facing pressure by parents and
government to engage in high stakes testing.
Schools that cannot demonstrate excellence
may find donor dollars going elsewhere.
Parents gravitating towards schools with
demonstrable standards (e.g. IB, AP, etc.)

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Century
Governance

21st Century Governance


Academic Leadership

What are some of the indicators of instability in


academic programmes?

21st
Century
Governance

Academic Leadership
Instability Markers:
! Lack of clearly defined student outcomes
! No tracking of graduate performance
! Growing need for learning resource and
tutoring programme

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Century
Governance

21st Century Governance


Academic Leadership
Instability Markers:

!No Curriculum Map


!Faculties personally collegial but not
professionally collaborative
!Too many lighthouse programmes

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Century
Governance

21st Century Governance


Academic Leadership

Instability Markers:
! No consistent assessment policies and
procedures
!Little recognition of diversity of learners
! Rising retention issues (disconnect between
admissions and programme)

21st
Century
Governance

Academic Leadership
Key Questions:
- Is your academic programme Mission based?
- Are academics a priority of the Board and
Leadership Team?

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Century
Governance

21st Century Governance


Academic Leadership

Key Questions:
- Do you have the data you need to assess the
performance of your grads?
- Are you using that data for programme/school
improvement?

21st
Century
Governance

Academic Leadership
Good rule of thumb for parents and potential
donors:
Value =

Quantifiable Outcomes
Price
Dont throw good money after bad!

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Century
Governance

21st Century Governance

Where does your school stand?


What are the threats to your sustainability?

21st
Century
Governance

21st Century Governance

So now that we have identified all of the


potential problems you may be facing,
what should you go home and do about
it?
(Besides resign!)

21st
Century
Governance

21st Century Governance

Sustainability Solutions
1. Market Share
! What would be the data components
needed to establish an enrolment
management plan (admissions, retention,
removal)?
! Identify the attributes of a mission
appropriate student, could you survive if
you only accepted students whom you can
currently serve?

21st
Century
Governance

21st Century Governance

Sustainability Solutions
Market Share
! How can you accurately track your
inquiry/ application/offer/acceptance
ratios.
! Determine your optimum school size.

21st
Century
Governance

21st Century Governance

Sustainability Solutions
2. Sustainable Financial Position
! What are the first steps to building a
hard income strategy?
- strategic financial plan
create an endowment pool of funds to
secure sustainable programming

21st
Century
Governance

21st Century Governance

Sustainability Solutions

Sustainable Financial Position


! What components would you assess in a
cost effectiveness audit?
Can you afford to be all things to all people?
Soft services: cost vs. return

21st
Century
Governance

21st Century Governance

Sustainability Solutions

Sustainable Financial Position


! What can you do to reconnect with your
alumni market and create a new one with
your recent grads?

21st
Century
Governance

21st Century Governance

Sustainability Solutions
3. Executive Leadership
! What strategies can you use to support/
promote/be a leader with passion about
the school, its learners and its
programmes.
! What would be indicators that you lead
with an eye on the Mission, not on the
operations manual.

21st
Century
Governance

21st Century Governance

Sustainability Solutions
3. Executive Leadership
! What can you do to build a strong,
sustainable second tier leadership group?
! How can you make your school more
that just a one-person show?

21st
Century
Governance

21st Century Governance

Sustainability Solutions
3. Executive Leadership
! What are you doing to improve learner
outcomes how can you measure them?
! What, in Jim Collins words, are you best
at?
! What would donors be willing to invest
in?

21st
Century
Governance

21st Century Governance

Sustainability Solutions
Future practice:
Option 1: More of the same OR
Option 2:
A proactive, pre-emptive strategy to
construct the future rather than
merely attempting to survive it

Beyond the Manual

21st
Century
Governance

Available on iTunes
https://itunes.apple.com/ca/book/beyondmanual-realists-guide/id785038936?
mt=11

or Smashwords
https://www.smashwords.com/books/view/
388729

as a free download

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