Rethinking SustainabilityBuilding a Better BudgetDr. Alan Pue, PresidentThe Barnabas Groupwww.thebarnabasgroup.com/apuetbg@aol.com

Cost First

Remember, the role of the chief school officer is to define excellence and give it a

price tag. The role of the board is to decide how much excellence it wants to

buy.

Begin With Cost Centers

“A cost center is a distinctly identifiable department, division, or unit of a firm

whose managers are responsible for all associated costs and for ensuring adherence to its cost budgets.”

businessdictionary.com

Suggested Cost Centers

•Instructional costs•Administrative/support costs•Co-curricular costs•Advancement costs•Plant operation costs•Institutionally funded financial aid costs•Auxiliary-service costs

Categories/Sub-categories

See handouts

Financial ReportsThree levels of detail

▫The micro level – greatest level of detail including all the financial data for each sub-category

▫Mid level – will show all cost of each sub-category within each cost center

▫Broad level – a single sheet showing the complied costs for each cost center

These three levels will allow you to determine true costs while providing a usable summary budget for public discussion. You can explode or collapse your budget to expose as much or as little detail as you desire for a particular conversation or discussion.

Your Biggest Investment: People

•70-80% of the typical budget• It is crucial to appropriately determine staffing

needs ▫based upon your identified purpose and desired

outcomes▫appropriately defining roles and connecting “talent to

task”▫while understanding the concept of ROI

•Determine appropriate compensation▫Develop a salary schedule (see chart)▫Determine appropriate fringe benefits▫Professional development

A Second Significant Issue•The Cost of Place

▫Fixed expenses – rent, lease, mortgage, insurance

▫Fluctuating expenses – utility costs, cleaning, repairs/maintenance, landscaping

▫Re-model▫Depreciation▫Reserve funds

•Key Question▫Do we rent, seek a long-term lease, purchase

and re-configure, or build?

Now Set Your Price

•On the Horns of a Dilemma▫The price for providing a quality education

is increasing.▫In the real world it is putting Christian

schooling beyond the reach of many people.•Somebody’s Got to Pay

▫The solution is not to discount the cost of education

▫It is to create additional revenue streams▫How?

First, Identify Revenue Streams

Income Categories▫Net Tuition▫Fees (as minimal as possible)▫Net Auxiliary Revenue

Food service Summer programs Before/After school care

▫Resource Development Revenue Fund raising activities Annual fund Capital campaign Planned giving

Now, Connect Those Streams

Then, Develop Income Assumptions•Most important – Enrollment assumptions

▫The enrollment funnel▫Tracking the data▫Early re-enrollment▫A retention strategy

•Realistic resource development assumptions

•Realistic auxiliary program income▫Your business plan▫Net revenue

Now Set the Price

A Simple Strategy

(you won’t like)

A Necessary Reminder and Painful Reality

Education is not affordable▫People▫Place▫Programs▫Perception

But it must be accessible – so what can we do?

Key Strategies

•Practice wise stewardship•Learn to think and act like an entrepreneur

•Build transformative partnerships•Tap the underground stream

Think and Act Like an Entrepreneur

Keys▫Identify a need and meet it with excellence▫Stay focused on the main thing▫Staff wisely▫Build a sound business model

Target audience Pricing model Marketing/Implementation strategy Measures of success Appropriate accountability

Think and Act Like an Entrepreneur

Some Ideas▫Full time day care▫Extended care▫Hot lunch program▫Summer camps: music, fine arts, technology, sports,

academic coaching▫Music conservatory▫Tutoring▫English as a second language▫ International student program▫Rental of facilities▫Retail operations (unusual but possible)

Building Transformative Partnerships

A Theological Foundations▫A heart of gratitude (2 Corinthians 8:9)▫Meeting genuine needs (2 Cor 8:13-14, 1 Jn 3:16-

18)▫Generous giving honors God (2 Cor 9:12-14)▫Practice biblical stewardship (1 Timothy 6:17-19)▫Begin by examining yourself▫Practice organizational generosity▫Pursue biblical partnerships (Phl 1:3)

Planned Giving – the underground stream

A troubling reality

▫50% of Christians . . .

▫Only 8% . . .

Planned Giving – What Next?

•Broaden and deepen your understanding•Identify a well qualified, respected coach•With their help create clear guidelines•Pursue partnerships with other

schools/churches•Develop a strategy for identifying and

connecting