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Breakthrough school modelsA preliminary assessment of NGLC Wave IIIa grantees

April 2013

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Included in this document are:

1. An overview of NGLC financial and operational expectations

2. Comparison of spending trends from 12/2011 – 09/2012 forsuccessful Wave IIIa applications vs. national benchmarks(including human capital, space, and other financial andoperational data points)

3. Software usage and school design options for Wave IIIa grantees

The following analysis is meant to provide information to Wave IVapplicants as they finalize their financial and operating plans

Trends and data: NGLC Wave IIIa grantees

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Before you review the ensuingdata and findings, please note:

Unless otherwise noted:(1) Sample set for analysis contains 19 schools; excludes one school that did not submit a complete business plan(2) Tertiles are sorted in ascending order of metric evaluated(3) All data in this analysis reflects Year 5 of each school’s operation

NGLC Wave IIIa Grantees

• Afton Partners' analysisleverages data provided byWave IIIa grantees at the timeof their application submission.It does not reflect any actualresults.

• Afton is currently participating ina study to obtain actual financialand operational results forschools that have launched,and will update this analysis ona regular basis. This documentprovides directional informationon criteria used to identifysuccessful applications underWave IIIa.

Notes on data & findings

Round School Name LocationGradesServed

District, CMO,or OtherOperator

Opened in Fall 20121 Alpha PS CA 6 - 8 CMO1 Leadership CA 9 - 13 CMO1 USC CA 9 - 12 CMO1 KIPP - Chicago IL 5 - 8 CMO1 Touchstone NJ 6 - 12 CMO2 Schools for the Future MI 8 - 12 CMO2 Academy 21 VT 9 - 13 CMO2 EAA MI K - 8 District2 Cornerstone MI 9 - 12 CMO3 Generation CO 6 - 12 Non-Profit

Opening in Fall 20132 Venture Academies MN 6 - 12 CMO2 DaVinci Schools CA 9 - 13 CMO2 Summit CA 6 - 12 CMO2 MATCH School MA 6 - 8 CMO3 Intrinsic IL 6 - 12 CMO3 Aspire TN K - 8 CMO3 Fayette County KY 9 - 12 District3 iCan SC 6 - 8 District3 Matchbook TN 5 - 8 Non-Profit

Opening in Fall 20143 Foundation IL 6 - 12 CMO

1

1

1

1

1

2

2

2

2

2

2

2

3

3

3

3

3

3

3

2

2

4

BreakthroughSchoolDesign

SustainableCost

Structure

• A breakthrough school design• Personalized learning to help students learn more rapidly and deeply• Financially sustainable• The ability to scale

NGLC: What are they looking for?

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Student :Teacher

RatioStudent :Total Staff

Ratio

SquareFeet /

Student

Salaries &Facilities as% of Total

Revenues &Budget

IT cost perpupil

Human Capital

Space

Cost Structure

Cost toBreakeven

Analysis: Sample financial and operationalbenchmarks

6

10.5

14.5

21.3

9.2

15.2

1st Tertile 2nd Tertile 3rd Tertile

Grantees Benchmark GranteeAvg

Assessing Human Capital: Student-Staff Ratios

Student : Instructional Staff Student : Total Staff

Note: Additional grantee home officepersonnel (other staff) may be included in“CMO fees” or home office expense, andnot reflected in this analysis.

Source: (1) IES FY2011 Enrollment & Staffing; (2) Council of the Great City Schools Urban School Statistics 2009 – 10

34%higherthanState

Averages65%

higherthan StateAverages

Grantees projected higher student-teacher and student-total staff ratiosthan existing schools operating in their respective states.

Note: Tertiles are sorted in ascending order of the metric being evaluated, unless otherwise noted(1) Figures represent difference between each school’s average ratio vs. their respective state averages, aggregated intotertiles based on this variance

Note: Grantee averages exclude aides,paraprofessionals, lab technicians, and othernon-core teaching positions

Student : Teacher

3%higherthanState

Averages

Note: For this analysis, grantee data includesall staff designated as “instructional”;benchmark average shown for comparisonpurposes only

12.2

18.4

25.7

17.918.4

1st Tertile 2nd Tertile 3rd Tertile

Grantees Benchmark GranteeAvg

16.0

22.0

35.2

17.9

24.0

1st Tertile 2nd Tertile 3rd Tertile

Grantees Benchmark GranteeAvg

7

0.3%

1.3%

5.2%

2.2%

1st Tertile 2nd Tertile 3rd Tertile

Grantees GranteeAvg

1.5% 1.9%

3.3%

2.2%

1st Tertile 2nd Tertile 3rd Tertile

Grantees GranteeAvg

Human Capital: Professional Development (PD)

Prof. Dev. (% of Total Expense) Yr. 1 Prof. Dev. (% of Total Expense) Yr. 5

Note: Tertiles are sorted in ascending order of the metric being evaluated, unless otherwise noted

Grantee investments were projected to stay relatively constant. Mostschools began spending less by Year 5, but one-third spent more.

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Human Capital: Instructional Staff Salaries

Notes(1) Figures represent difference between each school’s average teacher salary vs. their respective state averages, aggregated into tertiles based on this variance.(2) Grantee averages exclude aides, paraprofessionals, lab technicians, and other non-core teaching positions(3) Grantee Year 5 average is projected to be $61K, while state average (adjusted for inflation) is projected to be $67K. The collective salary of all instructional

staff for Wave IIIa grantees is projected to be $54K.

Variance from State Avg. ($) Variance from State Avg. ($ by Region)

On average, grantees projected lower instructional staff salaries thantheir respective state average teacher salaries (adjusted for inflation).

# of schools 7 6 6 # of schools3 7 63

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Source: www.teacherportal.com/teacher-salaries-by-state, whose data comes from the Bureau of Labor Statistics. Assumes 2% annual increase through Y5

($20,576)

($2,905)

$7,722

($6,060)

1st Tertile 2nd Tertile 3rd Tertile

Grantees GranteeAvg

$5,097 $5,003

($8,537)

($14,280)

Northeast South Mid-West West

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Use of Space: Facility Square Footage

Notes(1) Does not include information from three grantee applications that did not have estimates available at the time of submission.(2) Tertiles sorted in ascending order of metric evaluated, unless otherwise noted.

Benchmark source:School Planning & Management 2012 Annual School Construction Report

Grantees projected to utilize less space than traditional schools.

57.1

88.1

152.3137.5

165.3

96.5

1st Tertile 2nd Tertile 3rd TertileGrantees Nat'l - MS

Nat'l - HS GranteeAvg

42% lessthan

NationalMS

Average

71% lessthan

NationalHS

Average

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Grantee IT Spending

Year 1 Year 5

Notes:(1) IT costs include hardware, software, digital content, and infrastructure(2) Tertiles are sorted in ascending order of metric evaluated, unless otherwise noted.

Benchmark source:Managing for Results in Americas Great City Schools, 2012

$220

$457

$828

$147

$487

1st Tertile 2nd Tertile 3rd Tertile

Grantees Nat'l GranteeAvg

$500

$1,119

$1,858

$1,125

1st Tertile 2nd Tertile 3rd Tertile

Grantees GranteeAvg

Year 5 IT spending is projected to be more than 3x greater than thecurrent national average.

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Information Technology: Most popular providers

19 grantees included 121software options in theirapplications (80 of them

unique)

19 grantees included 121software options in theirapplications (80 of them

unique)

The top four softwareproviders mentionedwere: Khan Academy,Compass Learning,Apex Learning, and

Achieve 3000

Number of projected software options

Most popular software and digital content providers for Wave IIIa grantees

121

single occurrence

two occurrences

three occurrences

> three occurrences26

12

22

61

#

khanacademy,

11

compasslearning, 6

apexlearning, 5

achieve3000, 4

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Total Per Pupil Cost: Year 5 Projections

By Operator Type

By Total Cost By Region

$6,844

$9,434$11,731

$9,069

1st Tertile 2nd Tertile 3rd Tertile

Grantees GranteeAvg

$9,070

$11,344

$5,183

$9,069

Charter District Non-profit

Grantees GranteeAvg

$12,152$10,550

$9,514

$6,941$9,069

Northeast South Mid-West West

Grantees GranteeAvg

Note: Tertiles are sorted in ascending order of the metric being evaluated, unless otherwise noted

# of schools 15 3 1

# of schools3 7 63

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Total Per Pupil Cost: Year 5 Projections (cont’d)

By School Size(at full enrollment)

School size 200 – 484 522 – 564 576 – 1,050

$9,428$9,688

$8,357

$9,069

1st Tertile 2nd Tertile 3rd Tertile

Grantees GranteeAvg

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

0 200 400 600 800 1,000 1,200

Per pupil spending varied even among schools with comparable enrollment

Per Pupil Spendingby School Size

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Projected Salaries and Facilities Costs

Salaries and Facilities Expenses

63%

66%

67%

72%71%

73%

1st Tertile 2nd Tertile 3rd Tertile

% of Revenue % of Budget

Notes(1) Represents personnel included in each school’s budget. Does not account for salaries that may be included in their CMO or

Home Office fees.(2) Tertiles are sorted in ascending order of metric evaluated, unless otherwise noted.

Grantees projected spending by their 5th year of operation:

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($1,554)

($1,204)

($471)

($1,383)

Charter District Non-profit

Grantees GranteeAvg

Cost to Breakeven: Average of Grantees

Notes(1) Represents total investment required before each school generates cash net income. Per pupil calculations reflect the

school at year 5 enrollment(2) Tertiles are sorted in ascending order of the metric being evaluated, unless otherwise noted

By Operator Type By School Size

# schools 15 3 1 school size200 – 484 522 – 564 576 – 1,050

The average per pupil cost to breakeven, projected by all Wave IIIagrantees:

($1,816)

($1,534)

($978)

($1,383)

1st Tertile 2nd Tertile 3rd Tertile

Grantees GranteeAvg

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Cost to Breakeven (cont’d): how many years didgrantees project cash deficits?

By Operator Type By School Size

# schools 15 3 1 school size200 – 484 522 – 564 576 – 1,050

Notes(1) Represents the time period, in years, before each school is projected to generate cash net income(2) Tertiles are sorted in ascending order of the metric being evaluated, unless otherwise noted

2.9

1.0

2.0

2.5

Charter District Non-profit

Yrs to BreakevenGrantee Avg (Yrs)

2.9 2.8

1.8

2.5

1st Tertile 2nd Tertile 3rd Tertile

Yrs to BreakevenGrantee Avg (Yrs)

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