Strategic Financial Planning

Reengineering to Secure School Stability Part I

Helping to Re-Shape a School’s Future by Re-Shaping its

Finances

Harry Bloom
Rheua Stakely

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 Definition: Financial Reengineering
• A fundamental reconsideration of the
financial model of school,
– From a long term perspective,
– To reflect a school’s
• Core value proposition in light of its market
and the institutions within it
• Desired strategic positioning for long term
future success.

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 Financial Reengineering
When?
• *Immediately, in times of crisis
• *Every other year, to avoid crisis
Who
• Schools in financial trouble
– Little schools
– Big schools
• Everyone else!
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Who: Big Schools with Financial
Challenges
Total Tuition Prior to Scholars
Scholarship( 15% of Net Tuition)
630
620
Enrollment

610

Net Tuition Income

600
590
580
570
560

Less Uncollectible Tuition(1% of Ne

550
540
2005/6 2006/7 Budget 2007/8 Projected 2007/8

State Reimbursements
Net Fund Raising
Donations/Grants 4
Small Schools With Challenges
2007-2008

Budget
SUMMARY
Hard Income $1,485,500
Annual Fundraising $550,000 Enrollment
Grants $101,250 140
Total Revenue $2,136,750 120

100
Expenses 80
Personnel $1,691,853 60
Other than Personnel - Facilities $381,252 40
Other than Personnel - Other $224,234
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Total Expenses $2,297,339
0
Act.2005/6 Act.2006/7 Budget 2007/8 Actuall 2007/8 Projected 2008/9
Operating Surplus (Deficit) - hard income ($811,839)
% hard income coverage of expenses 64.66%

Operating Surplus (Deficit) - all income ($160,589)

% all income coverage of expenses 93.01%

cost per student $22,745.93

Surplus (deficit) per student - all income ($1,589.99)

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 Foundation=Know What Your School’s Positioning Is… and
Program and Process Performance Implications

Product Must Be
Leadership Strong on
C X 1-2
And
X=Our School Ballpark
A=School A On the
B=School B 3rd
C=School C
U=Unserved Population
U

B A

Operational Customer
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Excellence Intimacy
Learning Acceleration, LLC. All Rights Reserved. 2008
 Financial Planning for the Long
Term
• Develop a financial plan that mirrors your
school’s strategic plan
• Engage in more creative annual budgeting
– The norm is incremental budgeting
– The problem: Incremental budgeting reinforces
incremental thinking
• Many of school’s challenges and opportunities require
longer time perspective
• What is a “given” in the short term is amenable to
change in the longer term

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 A Long Term Perspective is Necessary,
When
– Significantly realigning tuition with cost to approach the cost of
education
– Renegotiating a union contractual obligation so that it better
promotes program improvement
– Renegotiating expensive long term real estate leases when
underlying needs shift
– Building a new building
– Reducing operating expenses when enrollment declines
permanently due to new school start ups or fundamental population
shifts…to try to maintain program integrity and quality
– Making virtuous cycle investments, e.g., in the Arts, Math and
Science, Special Needs

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 Required Budgeting
• Process-driven budgeting, e.g.,
– Recruitment process?
• Faculty?
• Student?
– Professional development process?
– Communication process?
• Program-driven budgeting
– E.g., virtuous cycle investments in Hebrew
language or math/science curriculum
enhancements
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 The School’s Processes

THE WORK OF THE S

Tuition Setting
Financial Aid Process
Expense Mgt
Cash Flow Management

What is desired investment posture for each process?

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 Taking Control

3-5 Year Investm

Tuition Setting
Financial Aid
Process
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 In Summary
• Know your school’s value proposition
• Understand the implications of that value proposition for
process and program spending
• Take a long term prospective to financial planning
• Utilize creative budgeting: Process and Program
budgeting to shape a more positive future
• Respect the Virtuous Cycle wisdom

Note: Please do not miss Part II Session:

STRATEGIC FINANCIAL PLANNING:
Dealing with Financial Moments of Truth (2:15pm;Back Bay C)
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Contact Information:
Email: harry@harrybloom.com
Telephone:617-212-4910
Harry Bloom is an
Mail: 200 Cotton Street, Suite 18, Newton, MA 02458
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 Rheua S. Stakely
Consultant
225 Washington Street
Marblehead MA 01945
rheua@hotmail.com • 781-631-0255
BIO
• Rheua Stakely is a consultant from Marblehead, MA who specializes in
independent school admission, recruitment, attrition, and financial aid. After
working in admission and financial aid at Phillips Exeter Academy for 12
years, she formed her own consulting company working with nonprofits, for
profits, and management training institutes, as well as schools. Some of her
other consulting work includes: board professional development and retreat
facilitation, as well as short and long range planning. Over the past 22
years she has worked with more than 350 schools and nonprofits including
more than 90 Jewish day schools coast to coast. Rheua is a senior coach
for PEJE.
• In addition, Rheua has plenty of coaching and performing experience as an
Outward Bound instructor, a tennis pro, a nationally ranked squash player,
and an amateur musician. She also learned much about thinking quickly in
difficult situations while climbing the Matterhorn, Mont Blanc, Kilimanjaro,
and other mountains around the world.

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