Blog Viewer

Navigating the Semi-Normal

By Net Assets posted 06-08-2020 05:11 PM

  
new_normal

Risk Management |

While independent schools may be facing financial difficulties this coming school year, they can use their independence to meet the market’s quickly shifting needs.

By Eric Wearne and Benjamin Scafidi, Kennesaw State University

As of late spring 2020, millions of American students are in public school systems that still have no clear plan of action for continuing operations or academics in “the COVID-19 era” — as this highly transmissible and sometimes lethal disease continues to spread without a vaccine or widely available treatment. While unfortunate, this situation provides an opportunity for thoughtful independent schools, albeit an uncertain one.

All This Uncertainty

To be fair to both public and independent schools, simply coping through the end of the last school year was an accomplishment, given the unexpected and very sudden onset of the virus. Even public health experts had trouble advising the country. On April 7, for example, Dr. Anthony Fauci’s view was that schools would likely be in “good shape” to open on time for 2020-21 school year. By mid-May, however, he was much more circumspect, and said re-opening would be based on how safe students, parents and teachers feel returning to school without vaccines or widely available treatments. Former Food and Drug Administration Commissioner Scott Gottlieb suggested recently that America’s schools should open on time this fall if the virus is relatively under control — if.

While at least one policymaker appears to believe that K-12 schools will open this fall in a routine manner, seemingly all education leaders and public health experts agree that schooling this coming fall will be anything but routine. The spokeswoman for U.S. Secretary of Education Betsy DeVos recently articulated what many school leaders are currently anticipating: “Students may very well be returning to a learning environment that’s a mix of in-person, online and experiential.” 

All of this uncertainty is occurring in the context of an already difficult environment for many independent schools. In our April 9 "Open Letter to Independent School Leaders," published on our blog, Choice Remarks, we documented an enrollment decline in independent schools of almost 200,000 students since 2007, stemming from the Great Recession. And we noted that this decline occurred as the number of school-aged children had been increasing. We also documented that the number of U.S. births fell by 12% from 2007 to 2018 — from 4.32 million in 2007 to 3.79 million in 2018. So now the increase in the number of school-aged children is ending.

At that time, six questions related to school health, finances and academics stood out — and those remain important. But as we enter a new phase of the COVID-19 era, there is one over-arching question that independent schools must ask themselves:

“What are we doing to best serve the educational and other needs of our students, families, teachers, and staff during this era of COVID-19?”

We realize each independent school is in a different situation with respect to the prevalence of the virus, local demographic and economic conditions. Thus, all recommendations below certainly do not apply to every school, but prudent risk management indicates that all independent schools need to prepare now for the new era ahead.

In dealing with enrollment drops, the first and most important step is for schools to convince their communities that they are safe by improving and communicating health and safety.

Making Ends Meet

COVID-19 presents an existential crisis for many in terms of economic impact, which may in turn cause a severe enrollment drop for some independent schools. As with other points raised here, it is too early to see clearly what will happen this fall — because (a) not everyone who is going to lose their job during this era has lost it yet, and (b) it is one thing for families to pay a small deposit now, but quite another to write tuition checks throughout the year. 

Safety and Communication

In dealing with enrollment drops, the first and most important step is for schools to convince their communities that they are safe by improving and communicating health and safety. This may include masks, daily temperature checks, nightly or even intra-day disinfecting, three-day and two-day schedules to permit social distancing at school or other measures. Schools also need to plan how they will respond the first time a member of the school community tests positive for the virus — and communicate those plans clearly before the schoolyear begins. 

Tuition Payments

Given that many jobs have been temporarily furloughed, and not ended permanently, some families are presumably facing one-time liquidity problems. Many of these families have options including tapping into home equity and/or taking money out of retirement accounts (the latter can be done penalty-free in some cases under the recently passed CARES Act). Also, schools may be able to provide some scholarship aid or targeted tuition reductions. 

Government Funding

Additionally, the federal government has devoted emergency funding for schools, and states must share that not only among public schools but also with independent schools. According to the Atlanta Journal-Constitution, for example, Georgia schools will receive over $400 million from the CARES Act, some of which must be shared with independent schools in their districts. One Atlanta school, Cristo Rey Jesuit High School, is among the private schools that will likely seek the aid. It has 525 students, all from low-income households. Cristo Rey doesn’t normally accept federal funding, but with this pandemic, school President Bill Garrett said, “There is clearly enough need.” If the school returns to in-person service, bathrooms will have to be disinfected four times a day, which will raise janitorial costs. If students and teachers must continue schooling from home, the school will need a more robust online platform.

The case could be made for public policy to support independent schools even further: if significant numbers of students move from private to public education, it will exacerbate the looming crisis for state and local government budgets. According to EdChoice’s Robert Enlow, “If only 10% of private school students return to the public system, the combined state and local cost would be $6.7 billion, with $3.3 billion falling to the states.”

DeVos has posted guidance for states that also allows some federal emergency funding to be set aside as “microgrants” for parents to use for different purposes, including to offset tuition payments at independent schools. In the interest of saving state and local governments money, national and state associations should petition state governments to allow emergency federal funding to be used for these microgrants to parents.

Expense Management

For schools that do experience enrollment drops and significant reductions in athletic and other auxiliary revenues, cuts in compensation including a suspension of any employer match on retirement accounts or temporary pay reductions may be necessary. To enhance revenues, families that have maintained or even increased their income should be asked to increase their giving.

What the Future Holds

In health terms, experts are still learning so much about the virus that even they cannot say definitively when the pandemic will be under control. A vaccine may come in six months at the very earliest, in 15-18 months as projected, or — sadly — never

Opening, Closing and Modifying Campus Operations

In practical terms, state governments are reacting in very different ways. California has been slow to implement a statewide reopening, while Arizona announced that professional sports could resume in the state on May 16. It is worth remembering that the 1918 Spanish Flu came in multiple waves over a year-long period. However, it is still too early to tell whether the novel coronavirus will be recurring or seasonal. Even if your state sees a decrease in the virus and opens all or most businesses, your school could experience a localized outbreak and be forced to close for some amount of time. Therefore, even if your state appears to be on a good trajectory now, it is vital for all schools to plan and prepare for a potential outbreak in 2020-21. 

Medical Developments

In our Open Letter, we referenced an “interim period of semi-normalcy” that could last well into 2021. We are in that period now: no longer in a state of emergency, and instead dealing with the situation as best we can until we can truly return to normal. Dr. Tom Inglesby, the director of the Center for Health Security at Johns Hopkins University, recently said that if every aspect of vaccine development fell perfectly into place, we could see a vaccine by the end of this year – but that outcome was unlikely. Realistically, it is unlikely there will be a vaccine in large enough quantities to help during the next school year. 

We do have reason for hope, however: antigen tests are being developed which could be done at home, yield results in minutes, and cost around $10 per test. Harvard Medical School’s Dr. David Walt said in early May that, “Four or six months down the road, I suspect we’ll have pretty good test strips that people will be able to buy in a pack and test themselves every few days, if they’re considering going back to school or work.” 

Having antigen tests would truly be game-changing for schools’ ability to operate safely and to definitively provide safety to their communities. 

Having antigen tests would truly be game-changing for schools’ ability to operate safely and to definitively provide safety to their communities. Independent schools should monitor the development of these various test possibilities very closely over the summer and ask advocates to work with pharmaceutical companies to ensure their schools can acquire test kits when they become available. Imagine that beginning in January 2021, each of your students and staff are tested every morning for the virus. Positive test results would lead to quarantine, while healthy students and staff could remain on campus. This development may fail, but if it succeeds could allow schools to run fairly normally starting in January.

Uncertainly about health conditions will continue into the upcoming academic year. To not prepare and then be hit with an outbreak would be irresponsible and damaging to a school’s reputation, possibly irreparably. The COVID-19 era demands independent schools become beacons of protecting student health — and of creative and excellent learning activities if and when students will be learning from home.

Eric Wearne is a visiting associate professor and senior fellow with the Education Economics Center in the Coles College of Business at Kennesaw State University, where Ben Scafidi is a professor of economics and director of the Center.
#RiskManagement
#Pandemic
#Enrollment
​​​​​​

Sign in to leave a comment