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I realize this image is a bit on the nose…. Photo by Samuel Regan-Asante on Unsplash
Given current circumstances, it did not come as a huge surprise that a lot of people responded to Friday’s post on managing enrollment gaps. I hope some of the thoughts in there proved a little helpful. It is not an easy time to be running any organization.
And then I saw this sobering news about Sandy Spring Friends School in MD closing at the end of the year. My heart goes out to that community.
I’m not sure what the difference is between decisions such as the one made by the SSFS board or the one made by White Mountain School a few years ago and schools where they announce they are facing closure but then rally the troops and raise some money and don’t close. When you have a significant, persistent deficit, you are unlikely to fundraise your way out of it for long and we’re not in a time where it’s easy to grow your way out of it through enrollment increases. If there’s no or only a small amount of debt, I think that makes a difference. But it does make one wonder if it’s a strategy of moving forward as best you can now and then hoping some of your initiatives make the facts on the ground change. But the facts on the ground are tough to change in many circumstances. Today, that’s ultimately a dangerous game.
(Sweet Briar College is an interesting example for a deeper dive. They announced closure in 2015; alums rallied to save the school and then the board actively retrenched. Tuition revenue has climbed steadily each year since then, fundraising remains significant and expenses are well managed. But those alums have deep, deep pockets, the dedication to go through a court battle and college always have the advantage of students with access to federal student loan funds to meet tuition bills.)
But today’s top five isn’t about closure; it’s about budget management. Because in many instances, it’s long term, casual (and maybe overly hopeful) financial management that has led schools to these situations today.
When you’re looking at enrollment gaps, it’s dispiriting but once you have a reasonable way to move forward with a budget for the next fiscal year, you can think about other adjustments or shifts that may need to happen, both for the fall and for the moves that may need to be made to improve your enrollment outcomes.
When the CFO and I were talking at the outset of COVID, the world at that point was so unpredictable, we felt the only responsible option was to go very conservative and going very conservative means cutting where we may not have opted to cut before we were faced with a global pandemic.
There are many factors that have led the school to be in the situation many schools are in now, often the result of decades of compounding choices. Some schools have big endowments, robust and predictable annual funds and waiting lists - their choices are going to be different than other schools. They might be thinking about reaching deeper into the waiting list than they have before and perhaps hiring for additional student supports. And reaching deeper into the waiting list is probably taking candidates off the table for many other schools.
If the situation is serious enough, school leaders will have to think about cuts involving the workforce. There are a number of ways to do this, some less painful than others. But if your situation is serious, think about a gradual, strategic, humane reduction in force plan over a few years - ignoring this core problem of too much overhead can result in arriving in closure-land when it’s a particularly bad year. And then no one has a job.
Remember, even Harvard made cuts in 2008. It’s a matter of proportionality and degree and options. The average Harvard student probably didn’t feel the pinch but specific departments did. You need to be able to deliver on the promise you made to families.
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School leaders (outside of the CFO) should start with general budget literacy
The head for sure should have a general sense of where the biggest percentages of the budget are allocated and some understanding of the makeup of those big ticket items - financial aid, health care, distribution of faculty by years of experience, upcoming big ticket plant expenses. Ideally, at least several other members of the senior team also have this level of general fluency, if not all. If you’ve been in clean up mode in terms of financial management, this can take longer to get in place than it might otherwise, but it’s a worthy goal. You need to have a sense of what you’re working with to make strategic decisions.
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