5 Trending Topics No Elementary School Leader Should Miss: New Financial Models

Five trends no elementary school head should miss: this is the assignment my colleague Mary Menacho gave me for my remarks to Elementary School Heads Association (ESHA) members and prospective members gathering at Trinity School in Menlo Park, CA, early next month.  I’ve tweaked the focus from “trends” to “trending topics” to give myself the latitude to address issues on which there’s buzz, even if we’re not yet seeing considerable traction.  So, one at a time, here are the big five from where I sit, along with a sixth topic that I believe we need to kindle.

#1: New Financial ModelsDependence on Tuition Revenue lg2

Heads of independent schools throughout the country are talking about new financial models, particularly new ways of thinking about generating operating revenue. They’re worried that tuition can’t continue to climb at its current rate, that schools can’t afford the increasing amount of need-based financial aid that seems to be required, and that endowments are not generating revenue like they once did. Data would suggest that there is cause for concern: we are becoming increasingly dependent on tuition dollars to fund our programs.

Enter John Farber, Head of School at Old Trail School in Ohio, with an important article in Independent School magazine, “The Independent School Financial Model is Broken: Here’s How We Fix It” (NAIS, Fall 2012). Farber recently led two discussions for ESHA members on this topic.

As antidote to the current state of affairs, Farber encourages us to reduce operating costs while increasing non-tuition revenue. Cost-cutting measures suggested include economy-of-scale collaborative purchasing, such as the Independent Schools Benefits Consortium; implementing recommendations from an energy audit; and reducing non-academic staffing.  On the alternative-sources-of-revenue side, Farber sends us to the work of Allen Proctor. Proctor proposes that we think of nonprofit financial management in a new way, funding high-mission/low revenue activities with high-revenue activities that may be less mission-central, “linking mission to money.” Examples include the Columbus Zoo’s entertainment and hospitality complex and Habitat for Humanity’s ReStores. Proctor’s TEDx Talk on the topic gives a good overview of his model.

Emerging “linking mission to money” initiatives in independent elementary/middle schools are entrepreneurial and diverse. Examples include: beyond-the-school-week programs such as Saturday enrichment classes, vacation camps, and more expansive summer programs; learning centers intended to serve faculty, students, and/or parents beyond one’s immediate school community; consulting service to that broader community, such as college placement; partnering with a nearby secondary school in welcoming foreign students with a home-stay arrangement; and using school property for non-school functions such as hosting a regular farmers’ market or raising crops for commercial harvest.

The 2013 ESHA Annual Conference in Houston will delve into this topic in its Saturday, October 19 pre-conference workshop, “Identifying the Missing Variable: Leading Financially Sustainable Independent Elementary Schools” featuring John Farber along with Chuck Baldecchi of The Lexington School in Kentucky. It could be an important meeting of the minds.

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