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COVID-19: Bracing for Impact

By Net Assets posted 03-23-2020 08:36 PM

ripple effect

Financial Management |

Business officers discuss priorities, decision-making processes, possible financial impacts for the current and future fiscal years, and more.

The past few weeks have seen incredible upheaval to all aspects of daily life, including our work at independent schools. Net Assets asked business officers around the country how they have handled the situation so far and what they think the future may hold. This selection of responses is meant to show the range different approaches.

Many states have closed schools for the time being and possibly through the end of year. How long are you planning to keep campus closed? Will adults work from home if possible or remain on campus?

  • We will offer staff the option to work from home or school as long as we can. Many in our community are struggling with their own children being home and handling homeschooling needs.
  • Originally staff was able to come to the office. However, once the situation worsened, we closed the entire campus and are now working remotely.
  • We return from spring break on March 30, and distance learning will begin then. Adults have been given the chance to work from home or campus but that may change.

What role does your board have in making these decisions?

  • Our board has been updated, but they currently are not part of the decision-making process. If we decide we need to close, the board will be the one to make that decision.
  • Our head of school consulted with the board chair and the executive committee daily in making these decisions.
  • All decisions were made by the head of school and administrative team. The board chair was involved from the beginning and very supportive of our head of school.

How have you communicated this plan to the community? How have students and families reacted to your plan?

  • Our parents are very grateful for the decisions and communication process. Their responses to our head are very positive. We have also had our communications translated into different languages to meet the needs of our diverse community.
  • Our head of school was in frequent communication with the entire community as the situation evolved. Her transparency about decision-making and updates about the virus built a lot of good will. Once it was determined that we needed to close the school, our head of school continued to send out emails at least once per week, and the division heads began sending emails/newsletters that were more geared towards each division and the specifics of our remote learning plans. We’ve received a lot of praise from families for our ability to quickly move to remote learning. And we continuously incorporate their feedback to refine and improve the learning experience for students.

Is your school furloughing any employees and, if so, will you be paying them?  How did you come to that conclusion?

  • We have not furloughed any employees yet. We hope to make sure all of our employees stay paid and employed.
  • We are paying all our employees, salaried or hourly, their normal paychecks regardless of if they are able to work from home or not. Salaried — easy. Hourly — we are paying based on their schedules. While some of the hourly people are able to help out and do work from home, for others, such as our after school child care providers, it is impossible. However, we felt as a community it was important to support our employees who through no fault of their own are unable to come to work. They still have bills, still have to eat and are counting on this income to allow this.
  • At this point, we are trying to keep everyone paid. That could change if the school closure in our state is extended. I worry about our after-hours workers. We committed to paying through April 3 but are not sure if we can extend that date. I am also concerned about the cafeteria staff (we outsource), and I don't see how we could continue paying the contract if there is no service.

What steps are you taking to protect employees who are working or residing on campus?

  • We are closing some buildings down so our housekeeping team can sanitize to the fullest, and we have encouraged employees to work remotely if they can. For those who cannot work remotely, we have asked that they be mindful of their physical interactions with others and how it could impact our campus.
  • Currently, maintenance team members are the only members of our staff on campus regularly. We did a second deep cleaning once we closed campus. Besides maintenance, the only people who have keys to get on campus right now are administrators. If an administrator must be on campus, they are to follow protocols from the CDC and our local health departments: social distancing, washing of hands, etc.
  • The only employees on campus consistently are the custodial staff, who are outsourced. The governor has asked all businesses to take employees’ temperatures when they come to work. There is a shortage of thermometers, so they have been asked to take their temperatures before they leave home. If it is 100.4 or higher, they are not to report.

What impact does your school anticipate on enrollment and tuition for the remainder of FY20, and do you have any plans to mitigate anticipated impacts?

  • We are not currently seeing any changes in our enrollment and tuition. Thankfully, we have already received almost all of the outstanding tuition, and students want to complete their school year.
  • We have had no impact on enrollment for this year. I think it is because our faculty snapped to the change so quickly, and our students are still engaged and learning. The bigger impact I foresee for this year is families losing their source of income as the service industries and travel industries are getting hit hard. Luckily, we only have one more month of tuition due. We do have emergency financial aid available for those who may need it.
  • I don't believe that we will have any impact on enrollment for FY20, but I believe we will take a hit on our tuition receivables. Next week is the last billing installment for this year. I may plan to anticipate a 20% non-collectible, but it’s very hard to tell. I believe that our board will allow us to work with each family, provide emergency aid — which will be funded out of our budget — in order to keep them for next year. This is a scary scenario.

What impact does your school anticipate on enrollment and tuition for FY21, and do you have any plans to mitigate anticipated impacts?

  • Right now, we are not seeing a negative impact on re-enrollment or new enrollment. However, we are already working on enrollment scenarios and the financial impact of these.
  • We have been fortunate and have not seen an impact on next year’s enrollment. However, offers of admission will be released on Friday, so those results are still unknown. As the situation unfolds, our administrative team will work together on a plan to mitigate any possible impacts.
  • For FY21, there will be a huge impact. This is our enrollment period, and if we can't be on campus, we can't enroll kids. Plus, with the uncertainty of the economy and families losing jobs, it could be horrific, but I need to meet with my admissions director to dig into the numbers.

What has the financial impact of COVID-19 been on the school both in the short-term and long-term, such as additional expenses incurred or lost revenue?

  • In the short term, the financial impact is minimal. We will not receive revenues from auxiliary programs; it can add up but will not make or break the school. We had to cancel our spring benefit, but we are doing an online version, so we are hoping that will bring in the anticipated revenue. Our global studies trip had to be cancelled, and while that has had a negative impact on the students no longer able to go, the trip was budgeted and therefore financially accounted for. Weirdly enough, cancellations of programs and supplies — professional development, overnight camps, etc. — will have a positive impact on the budget, as we won't be spending the money to attend.
  • At this point, the long-term impact is unknown. I think it depends on how long the country will be in virtual lock down. If we go back to a "normal" way of educating and the economy is running by April 27 or even September, then I don't anticipate a huge impact. The exception is the stock market. We all have lost quite a bit of value in our endowments, and how long will it take to get back to pre COVID-19 values will have affect how much we are able to contribute to our operating budgets based on policy.
  • I am concerned about tuition receivable and fundraising. Development has raised about 70% of their goal, and it’s uncertain how much more they will be able to raise.

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