Welcome to VisM’s “Reflections” for January 2021, and Happy New Year!
Half-way through the academic year, our thoughts, tuned to the calendar of schooling, turn to the financial challenges facing independent schools. The fall admissions initiatives are in the books, and everyone awaits the results. Those will not become clear until mid-March, and in the meantime the budgeting process for the coming school year must be undertaken. We discussed this conundrum from our varying perspectives, formed over years of experience at various independent schools: day, boarding, securely endowed, and living from year to year on tuition funds.
Harry Lynch: Dexter, I could never wrap my head around budgeting in February, when I still didn’t have a clear idea regarding fall enrollment! How are you supposed to choose the horse before you know the size of the wagon you have to ask it to pull?
Dexter Morse: Well, frankly I learned through the years that most schools pay too much attention to enrollment during the budgeting process. You have to use the budget cycle to plan your program, to enhance your offerings and to examine where you should consider “leaning down” because the interest or need is no longer there, or where the momentum of a program has caused it to demand increasing commitments of resources that might not be in the best long-term interests of the institution.
Bill Toomey: I believe the reality of the process is that in a way, you are always one year behind. You’re committed to programs and people, and those commitments should be honored whenever fiscally possible. But the budget cycle allows you to identify “ahead” areas that might have to be addressed because the justification for the expense is disappearing, or in fact has disappeared!
Dexter: Bill, you managed budgets and the budget cycle for different schools, what is your process?
Bill: Dexter, it has to be a collaborative process. We want to involve school personnel in a review of various categories of expenses, it has to look at major categories, but also get down to line-by-line discussions so that patterns can be identified. The key is for it to be collaborative so that the process can be productive and not provoke defensiveness among various constituencies.
Harry: The external challenges are significant for many schools. I am concerned that basic market factors: demographics, economic issues arising out of the pandemic, the high cost of college degrees, are all combining into a kind of “perfect storm” for some independent schools. In a growing market, the enthusiasm and expansive thinking is rewarded, but in a shrinking market, it’s discipline and realistic (versus wishful) thinking that prevails.
Bill: A healthy budgeting process studies, not just expenses, but also revenue sources. When revenue can be enhanced while expenses are being controlled or reduced, there can be a very positive effect on net cash flow on a near-term basis. This can be very powerful for a school, getting things quickly on an even keel and allowing for future growth.
Dexter: Exactly. Disciplined thinking is enhanced by testing ideas with objective outside advisors! We know this in our personal lives, we serve as counselors to our students during critical times during their passage through our schools and on to college. Trustees and senior administrators need to test their own thinking during challenging times, in order to assure that plans are realistic and provide for their institutions to not only survive, but in the future, to thrive.
A few words about our backgrounds...
Vital Independent School Management is a New England based consultancy composed of three experienced independent school leaders.
Dexter Morse led Worcester Academy for 15 years with a laser focus on enrollment growth, development and implementation of the school's student-centered strategic plan. During Dexter's tenure, enrollment increased from 317 to 655 students and the school completed its first two major capital campaigns- the first for $30,000,000 and the second for $50,000,000.Dexter graduated from Phillips Andover, Bowdoin College (BA), UVM (MEd) and UMass Amherst, (CAGS).Dexter resides in Holden Massachusetts, and is VisM’s Senior Partner.
Bill Toomey served for 22 years as Chief Financial Officer/Controller of Worcester Academy and other large New England boarding schools. Bill has a pragmatic insistence upon expense control and realistic budgeting. Bill resides in Bretton Woods, New Hampshire, and holds his BS in Accounting from New Hampshire College.
Harry Lynch served as Head of School at Boston’s The Newman School for 35 years, leading the institution through initial accreditation with NEASC/CIS in 1993, and the introduction of the school’s International Baccalaureate program. Harry lives in Plymouth, New Hampshire, and is a graduate of College of the Holy Cross (B.A.) and Northeastern University (M.B.A.)
VisM focuses on Strategic Mentoring of Boards and School Leadership teams. We are experienced, successful school leaders with years of service both as Board members and as administrators. We are sensitive to school budgeting realities and are focused on the success of YOUR school.
For information about how we can help your Board or your school leadership, contact Dexter Morse firstname.lastname@example.org