Rethinking SustainabilityBuilding a Better BudgetDr. Alan Pue, PresidentThe Barnabas Groupwww.thebarnabasgroup.com/[email protected]
Cost First
Remember, the role of the chief school officer is to define excellence and give it a
price tag. The role of the board is to decide how much excellence it wants to
buy.
Begin With Cost Centers
“A cost center is a distinctly identifiable department, division, or unit of a firm
whose managers are responsible for all associated costs and for ensuring adherence to its cost budgets.”
businessdictionary.com
Suggested Cost Centers
•Instructional costs•Administrative/support costs•Co-curricular costs•Advancement costs•Plant operation costs•Institutionally funded financial aid costs•Auxiliary-service costs
Financial ReportsThree levels of detail
▫The micro level – greatest level of detail including all the financial data for each sub-category
▫Mid level – will show all cost of each sub-category within each cost center
▫Broad level – a single sheet showing the complied costs for each cost center
These three levels will allow you to determine true costs while providing a usable summary budget for public discussion. You can explode or collapse your budget to expose as much or as little detail as you desire for a particular conversation or discussion.
Your Biggest Investment: People
•70-80% of the typical budget• It is crucial to appropriately determine staffing
needs ▫based upon your identified purpose and desired
outcomes▫appropriately defining roles and connecting “talent to
task”▫while understanding the concept of ROI
•Determine appropriate compensation▫Develop a salary schedule (see chart)▫Determine appropriate fringe benefits▫Professional development
A Second Significant Issue•The Cost of Place
▫Fixed expenses – rent, lease, mortgage, insurance
▫Fluctuating expenses – utility costs, cleaning, repairs/maintenance, landscaping
▫Re-model▫Depreciation▫Reserve funds
•Key Question▫Do we rent, seek a long-term lease, purchase
and re-configure, or build?
Now Set Your Price
•On the Horns of a Dilemma▫The price for providing a quality education
is increasing.▫In the real world it is putting Christian
schooling beyond the reach of many people.•Somebody’s Got to Pay
▫The solution is not to discount the cost of education
▫It is to create additional revenue streams▫How?
First, Identify Revenue Streams
Income Categories▫Net Tuition▫Fees (as minimal as possible)▫Net Auxiliary Revenue
Food service Summer programs Before/After school care
▫Resource Development Revenue Fund raising activities Annual fund Capital campaign Planned giving
Then, Develop Income Assumptions•Most important – Enrollment assumptions
▫The enrollment funnel▫Tracking the data▫Early re-enrollment▫A retention strategy
•Realistic resource development assumptions
•Realistic auxiliary program income▫Your business plan▫Net revenue
A Necessary Reminder and Painful Reality
Education is not affordable▫People▫Place▫Programs▫Perception
But it must be accessible – so what can we do?
Key Strategies
•Practice wise stewardship•Learn to think and act like an entrepreneur
•Build transformative partnerships•Tap the underground stream
Think and Act Like an Entrepreneur
Keys▫Identify a need and meet it with excellence▫Stay focused on the main thing▫Staff wisely▫Build a sound business model
Target audience Pricing model Marketing/Implementation strategy Measures of success Appropriate accountability
Think and Act Like an Entrepreneur
Some Ideas▫Full time day care▫Extended care▫Hot lunch program▫Summer camps: music, fine arts, technology, sports,
academic coaching▫Music conservatory▫Tutoring▫English as a second language▫ International student program▫Rental of facilities▫Retail operations (unusual but possible)
Building Transformative Partnerships
A Theological Foundations▫A heart of gratitude (2 Corinthians 8:9)▫Meeting genuine needs (2 Cor 8:13-14, 1 Jn 3:16-
18)▫Generous giving honors God (2 Cor 9:12-14)▫Practice biblical stewardship (1 Timothy 6:17-19)▫Begin by examining yourself▫Practice organizational generosity▫Pursue biblical partnerships (Phl 1:3)