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The Debatable Propositions:Why whispered questions deserve
constructive conversations
Genevieve MadiganNational Business Officers Association (NBOA)
• How many of you are familiar with ‘The New Normal’ and ‘Full Steam Ahead’?
• We will be:
– Updating Financial Sustainability– Defining Debatable Propositions– Working together to generate constructive
conversations
Financial Sustainability Update
Smooth sailing, or at least relatively so as compared to what was coming.
The Decade Before the Economic Climate Changed
The Decade Before the Economic Climate Changed
• Tuitions up 30% (real dollars) over 10 years• Overall staff up 32% over 10 years• Student: teacher ratios getting smaller• Financial aid grant dollars up 38%• Enrollment up 20%
12th Grade Tuition (All NAIS Median)
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
1980 1985 1990 1995 2000 2005 2010
Actual
1981+CPI
1981
Historic Tuition GrowthHistoric Tuition Growth
Different Ideas Emerged
“New Normal” National Association of Independent Schools
(NAIS)
“Full Steam Ahead”Independent School Management
(ISM)
The New Normal (NAIS)
• Charge what people can pay
• Design your program to that revenue number
• Moderate tuition increases, cut expenses
The New Normal (NAIS)
• Increase enrollment without increasing staff
• “Sunset” an old program for every new one
• Right size: re-think class size, workload, # of teacher specialists, assistants, school size
• Devote 1/3rd of each fundraising dollar raised to endowment
Full Steam Ahead (ISM)
• Identify Value Proposition
• Charge what it costs (CPI + 2% or more when needed)
Full Steam Ahead (ISM)
• Decide whether you are a price, product, or process school
• Acknowledge that the 20th century “factory” model of education will not prepare students for the 21st century
• Design school to individualize learning using technology
• Dedicate 2% of your budget to faculty professional development
Tuition Continues to Rise
Source: NAIS Facts at a Glance
Faster than CPI
Source: US Bureau Labor Statistics, NAIS Stats Online
We’re Adding Employees
Source: NBOA Business Office Surveys 2008-12
Perceived Financial Health
Strategic Reactions
Increase Number of Students Per ClassroomIncrease Number of Students Per Classroom
Planned Implemented
’09 & ’10 Surveys 26.4% 11.7%
’10 &’11 Surveys 19.9% 10.7%
’11 &’12 Surveys 16.2% 11.6%
’12 Survey 17.9%
Strategic Reactions
Increase Teaching LoadIncrease Teaching Load
Planned Implemented
’09 & ‘10 Surveys 26.6% 12.8%
’10 & ‘11 Surveys 18.4% 10.9%
‘11 & ‘12 Surveys 14.2% 8.1%
‘12 Survey 14.8%
Strategic Reactions
Eliminate Student ProgramsEliminate Student Programs
Planned Implemented
’09 & ‘10 Surveys 6.7% 2.7%
’10 & ‘11 Surveys 5.0% 1.4%
‘11 & ‘12 Surveys 2.3% 2.2%
‘12 Survey 2.2%
Same goes for:
• Reduce Faculty FTE• Reduce Staff / Admin FTE• Decrease Planned Salary Increases• Reduce Salaries• Reduce Benefits
Strategic Reactions
Source: NBOA Business Office Survey 2009-12
Strategic Reactions
Increase Employee Contribution for BenefitsIncrease Employee Contribution for Benefits
Planned Implemented
’09 & ‘10 Surveys 17.5% 11.7%
’10 & ‘11 Survey s 20.7% 12.7%
‘11 & ‘12 Surveys 13.5% 13.2%
‘12 Survey 18.1%
Tuition Growth Trends
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
80-8
183
-84
86-8
789
-90
92-9
395
-96
98-9
901
-02
04-0
507
-08
10-1
113
-14
16-1
719
-20
22-2
325
-26
28-2
931
-32
34-3
5
Tuiti
on
Average Boarding Tuition
Average Day Tuition
Average Boarding @CPI+3%
Average Day @CPI+3%
Average Boarding @CPI
Average Day @CPI
Affordability
Day TuitionIncome needed for
one childIncome needed for
two children
$25,000 $148,088 $234,460
$35,000 $182,000 $312,000
Source: NAIS 2012-13 Trendbook, as calculated by SSS
NOT Adjusted for Cost of Living in NY/NJ/CT
Financial Aid
Source: NAIS Facts at a Glance
Demographics
2012 projected 2017Connecticut 6,407 10,330 New Jersey 15,094 25,180 New York 23,290 38,415
Families with one or more children aged 14-17 and income over
$350,000
Source: NAIS Demographic Center
Productivity Problem
• In classical economics, as workers’ productivity increases, they produce more, and can be paid more, without charging the consumer more.
•In many social services, no increase in productivity of labor means that prices must rise in order to give wage increases. E.g. string quartet.
“Real Life” Game Changers
“Real Life” Game Changers
• Fork Union Military Academy (VA) one Subject Plan
• The Online School for Girls, Global Online Academy virtual learning with multiple schools
• Buckingham Browne & Nichols tuition growth model tied to CPI
• Drew School YES: fixed tuition for each student
• Flipped classrooms• Khan Academy• Banded Faculty Compensation
DEBATE THE PROPOSITIONSDEBATE THE PROPOSITIONS
“Creative thinking comes from making connections across fields
of thought.”Steven Johnson, author of “Where Good Ideas Come From, A Natural
History of Innovation”
Debatable Propositions
• Purposely Controversial
• Can take a stand: for or against
• Spark new thinking around both long-held beliefs or revolutionary concepts
• Eradicate “cherished theories”: things you believe, but have no evidence to support
Critical Thinking Process
For example…
1. The value of the smaller class experience is not as great as the cost.
or…
2. Financial aid should only be used in service of mission, not to increase enrollment.
and…
3. The cost of technology exceeds the value it provides.
how about…
4. Schools need to fully fund depreciation in order to ensure the long-term sustainability of their facilities instead of relying on philanthropic donations.
With that proposition, ask:
With that proposition, ask:
a. What assumptions underlie the proposition?
b. How can we test those assumptions?
c. What data do we have that supports or refutes the proposition?
d. What are the qualitative pros and cons?
e. What other alternatives can we generate? Is there a “game-changer” in the proposition for OUR school?
f. What are the next steps?
Example
• The cost of technology exceeds the value it provides.
The Challenge
Put one proposition on the agenda of your next leadership team meeting or
trustee retreat
Put one proposition on the agenda of your next leadership team meeting or
trustee retreat
Contact Information
Genevieve MadiganDirector, Research and Online [email protected]
www.nboa.net@NBOAnet