Wednesday, June 15, 2005

Practical Ideas to Help Catholic School Principals as Financial Stewards

We Catholic school principals are often torn: On the one hand, we know that some of our families really struggle to pay tuitions and fees; on the other hand, our faculty are underpaid and we need more money to offer the kind of programs that keep our schools competitive. In my mind, this dilemma requires us to be careful and frugal, but also creative in how we handle money for our school. It does us well to remember that we are not a “for profit” institution, so when we raise prices, add fees, or require certain processes be followed, we are not doing it to make money for ourselves! Rather, we are acting as responsible stewards of the limited resources God has given us for the benefit of all.

What follows, then, are some practical suggestions on handling money, and how many schools can both save money and increase revenue.

I. Suggestions for Principals , “Do’s and Don’ts”:

1) DON’T take the chintzy route with financial software for your school. The difference in quality, training offered and technical support is striking, and will either make your life much easier or harder. Your time is important, and accuracy even more so. There’s too much good stuff out there.
2) DO set up a monthly reporting mechanism to the Board and report this religiously to them. It is good protection for you as principal, but it’s also a practical way for YOU to monitor expenses given the daily demands on your time.
3) DO make use of “designated funds” that are not part of the operating budget. Someone gives you $5,000—what do you do with it? Is it within the Council/Board’s purview? Designated funds don’t affect operating budgets.
4) DO insist—INSIST! --that you as principal are the only person in the school that can legally obligate the school for any monies (generally through purchase requisitions which you approve—signing checks is too late, since checks are for bills we now owe). Also insist that ALL monies raised in the school’s name must run through school’s books (no independent Booster Club, Band, PTO accounts, etc. These can all be placed in designated funds, which you can assure these groups you will not spend). This is a Southern Association rule (4.9 under the “accreditation standards for non-public schools” which says “Any funds generated by school or student activities are under the control of head of school”.)
5) DON’T allow extra-ordinary fundraising to pay for ordinary expenses. Target a specific “non-operational” item for each fund-raiser. Even if you can’t afford to do this, target something your operational budget must pay for anyway and remove it from operational budget (like new technology), so that there is a tangible “product” that your volunteers can feel proud of helping you get. Use designated funds for gifts.
6) DO learn to use excel spreadsheet if you don’t know already—it will save you an extraordinary amount of time creating budgets, keeping track of salaries, etc. It’s not hard to learn, either. Each year after the first, you simply have to update things.
7) DO develop a financial aid assessment process so that you can measure financial need objectively for tuition assistance, using some third party source. But also include a question that asks THEM to tell you how much money they think they need.
8) DO keep a running 5 year history of tuition rates, % increases, salary rates, % increases, enrollments, % increase or decrease, inflation rates, % increase as a reference before beginning budget processes. It helps to have a history in front of you in making decisions about how much salaries, etc. should increase.
9) DO hold report cards for delinquent accounts. It works, most of the time, and I’ve found it to be a “necessary evil” to help families stay up to date. For the hard cases, if delinquency notices are ignored, call parents and give a dead-line. If they skip the deadline, tell them they must meet with you before their child can return to school. We don't do parents a favor (nor their kids!) by allowing them to live irresponsibly.
10) DO think creatively with clubs for raising money. Aim them for fund-raisers that provide services parents would spend money for anyway, and vigorously support fund-raisers that draw in money from folks other than parents!

II. Ways for Schools to Save Money (without cutting programs!)

1) Consider alternate scheduling, depending on your type school. Catholic High runs a trimester schedule, in which students take 5 periods/day. Full time teachers teach 4 of these periods. That means a full time teacher teaches 12 trimesters of classes/year. In a 6 period/day semester schedule, teachers teach 5 periods a day, or 10 semesters of classes/year. (If teachers teach 6 periods in a 7 period day, they equal a trimester system, but consider the effect on teachers and students!) Moving to a trimester schedule not only relieved the daily load on the teachers and students, but helped our budget!
2) Two part time teachers are cheaper than one full time because of benefits. I also believe part time teachers often have more time to prepare classes than some full time teachers….look at scheduling issues that may discourage interest in part time teaching in your school.
3) Consider catering lunches with local fast food/delicatessens instead of cooking it yourself. It’s cheaper on the school and doesn’t require headaches usually associated with running a full service cafeteria.
4) Consider selling books to families rather than renting. They recover some costs by re-selling books at the end of the year.. If selling, consider on line vendors in which parents can purchase books similar to if they were purchasing at (in addition to this being less burdensome on staff, it saves the school money because the school does not eat unused inventory costs)
5) Always receive 2-3 bids for a job, and make sure the companies know they’re bidding against each other. It’s common sense, but competition is good for us!
6) Set up maintenance schedules for A/C and heating systems (for replacing filters and unplugging condensation valves…) for mowers, etc. to avoid unnecessary service call expenses.
7) Publish a running “wish list” in every monthly newsletter to parents and alumni—things someone may be willing to donate to the school or to a classroom.
8) Consider a quid pro quo arrangement for families needing financial aid. Most would prefer this anyway. For example, a single mother who is a LPN administers our drug testing program. We pay her a set amount by check, she signs that check back over to us and we count it as a tuition payment. We have done similar things with an A/C repairman and an electrician. Everyone wins.
9) Re-think current hours for staff members of school. I know a school that lost 40 students but still wanted to retain its “specialty teachers” (art, music, etc.), yet there wasn’t enough money. At the same time, the school had a poorly run after school care program. They decided to make the specialty teachers part of the after-school program and offered them a contract from 9:30—4:30. Everyone wins.
10) Look at how you communicate with families. Postage costs eat schools alive! Get all families on an email list serve for communication to families with a single “send” button at almost no cost (20/month or so). Consolidate all mailings into a once/month comprehensive newsletter to avoid multiple mailings. Look also at using T-1 lines for (computers) to serve doubly as phone lines. Bundling into one service saves the school significant monies.

III. Ways for Schools to Make Extra Money (without doing more candy sales!)

1) Examine such routine things as vending machine prices, lunch prices, concessions for games, ticket prices, etc. Most of us in Catholic schools charge too little compared to the market rates our families willingly pay once leaving our campus.
2) Give out financial aid liberally if you have empty seats. Filling the last five seats with families paying ½ tuition generates more income than insisting on full tuition with 5 seats empty. Also, giving out financial aid allows the school to raise tuitions more aggressively without worrying as much about the impact on less wealthy families.
3) Look at fee structures. Registration fees are routine in non-public schools, due typically in the spring. These are simply tuition add-ons. Also consider 11 month tuition payment schedule or having fees due in July during non-tuition months.
4) Re-consider the amount multi-child discount rates. Catholic schools are exceedingly generous! We give $1,000 off for each additional child. Thus a family with 3 children would pay 2,000 less than if each child was charged full tuition. Some schools give 50% and 75% off for multiple children, which is wonderful except that our faculties are often underpaid, which is always the rub. Especially if the school has a liberal financial aid program (see #2), cuts that deep may not be necessary.
5) If you are a school that sponsors many athletic events, consider a year round home pass for families to attend sporting events. If you set the prices correctly, you can both give a benefit to your most loyal fans while creating more net income for the school. Why? Because general public interest is higher in the Fall than in the Spring…families generally don’t go to as many sporting events in the Spring as they estimate in the Fall. Similarly, consider adding a “student activity fee” for all students which gets them into home games free
6) Start an annual fund for the school, however small, perhaps at first through a simple letter asking for donations. Consider doing this just after Thanksgiving, just before year end for tax purposes.
7) Ask an accountant or another financial planner who is a parent in you school if he or she would be willing to be a free “consultant” to anyone who may wish to make a planned gift to the school. Then advertise the school has someone available to discuss making a planned gift (through insurance, stock transfers, wills, etc.)
8) Consider running a summer school program open to the broader public. Tie it to a local day car center, in which kids can be transported from the summer school program to day care without need for parents. Day care issues are huge for working families over the summer.
9) Never cancel debt for families who cannot pay it to you at a certain time; instead, lengthen the payment schedule, or as a last resort, leave it as “when circumstances change, please begin to pay down on what you owe.” Even if they are no longer with you, write these families once/year and ask them to make some contribution toward their debt as a matter of good faith.
10) Consider what amounts to an “introductory rate” of tuition for kindergarten that is significantly less than regular tuition from first grade forward. Once a family commits to kindergarten, they are likely with you to the end. Consider this for all “entry points” into your school system—in the long run, the school will generate significantly more tuition revenue. Similarly, unless your school has long waiting lists, avoid any “new family fees” or heavy application fees that create a financial disincentive to come there. Registration fees, due for all families in the Spring, help you distinguish those truly interested and those spamming applications to multiple schools.

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