Over the last decade the traditional business model for independent schools has faced unprecedented pressures. In fact, it has put some schools at risk of closure, which may have been unthinkable several years ago. As independent school leaders know, the model consists of several primary components: heavy dependence on tuition as the key source of revenue, tuition price that does not cover the actual cost of the education and services provided, affordability for “full pay” families arguably limited to the top 1 percent within most markets, and an ever-growing lead expense category, namely, salary and benefits. Costs of the latter, such as health insurance, are challenging to manage and still may not be competitive with other education employment options in the community.
We in the U.S. are not alone. Brexit’s approaching deadline is forcing U.K. independent schools to re-think their business models. Administrators there expect the number of E.U. students enrolling this fall to drop significantly in anticipation of the U.K.’s departure from the E.U. The political landscape here in the U.S. has also had a chilling effect on international students, particularly from Asia. In both cases, international student enrollments and the full tuition that accompanied them were a breath of hope for a challenged business model. That’s the bad news.
The good news is that to address these forces, independent schools have been forging new paths, reinventing their approach to tuition revenue and creatively re-thinking financial aid and other levers that widen the enrollment funnel. Many have doubled down on their schools’ distinct value proposition. What could potentially be a time for handwringing has become a period of reimagining the present in order to secure the future.
Q: You traveled across the country this past school year speaking about independent schools’ changing business models. What has been the response from business officers and other school leaders?
A: The topic is clearly on the minds of many independent school leaders. Most commonly schools will explore indexed tuition, but not necessarily other options. NBOA aims to share the full breadth of schools’ impressive work to re-engineer tuition models, financial aid and discounting; we are limited only by our own creativity and willingness to innovate.
Q: How might leaders find the time and energy to tackle such large-scale changes?
A: In every case mentioned here, the solution was developed by senior leaders working in tandem with the board of trustees. Doing creative work such as this, with the potential for such a profound impact on the school, should inspire everyone to make it a high priority.
Q: It’s often said that the business office doesn’t take a break over the summer. Will you?
A: Summer plans include kicking off our Summer Webinar Series, attending the 2019 Business Officer Institute in Cleveland, and participating in the NBOA staff summer off-site in Annapolis, Maryland, and the NBOA summer Executive Committee meeting. In between, I will be taking some time off with my family in Rehoboth Beach, Delaware, and participating in professional development of my own, including being installed as a member of the American Society of Association Executives Board of Directors at its Annual Meeting in Columbus, Ohio. I’ll be ready to hit the ground running at the start of the 2019–20 school year!
The proud, long-held tradition of our schools is to chart their own course in and outside the classroom, and these innovative leaders are not looking for a one-size-fits-all approach. Some examples include the “Family Individualized Tuition” program at The Gordon School, restrained tuition increases at The Gunston School, and a top-to-bottom review of revenue and expense levers at Saint John’s Preparatory School in Minnesota. I’m proud to say these schools are featured in NBOA’s Summer Webinar Series, available live on selected Thursdays and afterward in the webinar archive. You may also be inspired by Montgomery School’s bold strategic plan that includes a tuition reset to better align with its competition. And by Indian Creek School’s development of a successful indexed tuition program it calls “flexible tuition,” spearheaded by former Head of School Rick Branson and former business officer Linda Dennison (both new members of the NBOA Board of Directors).
The pressure is real, but so is the response led by independent school leaders providing numerous examples of challenging the status quo. They are rejecting the risk of our traditional business model and creatively looking at their schools enterprise-wide to better secure the financial resources they need in order to educate students and deliver their mission in perpetuity. The question is, is it time for your school to chart a similar course?
Modeling Sustainability: Four Tuition Models and Case Studies in Context (July/August 2019)
2019 NBOA Summer Webinar Series
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