Loaves and Fishes: A Financial Workshop for Catholic School Principals

Editor's Note: This is an outline of a financial workshop given to principals in the Archdiocese of Mobile on November 8, 2007.

Jesus, faced with the needs of many and very few resources, multiplied the loaves and the fishes to satisfy the hunger of the crowd. As Catholic school principals, we are often called to do more with less, and although we can't work miracles, with good financial processes and strategic planning, God will bless our ministry as financial stewards.

A. Good Financial Processes:

1. Two Important SACS requirements:

SACS, Standard 6.15 "Controls all funds raised in the name of the school" and 2.10 "(Leadership) controls all activities, including extra-curricular, that are sponsored by the school"

a) All monies raised in the school's name should run through school's books and require your signature for allocation. PTO, Booster, Band, etc. unless it's a stand alone 501(c)3 charity, recognized as such by the IRS. There should be no separate checking accounts with someone's signature other than your own.

Point of this is not to horde power for yourself. I tell the PTO and Boosters I will never spend their money unless I have a written purchase authorization to do so. But this protects them, first and foremost, because it adds a system of checks and balances that keeps them from being accused, for example, from pilfering funds. It provides them with a professional report each month, because as an account of the school, we can send them balance sheets each month. And, I tell them, we have no choice....its an accreditation requirement. No matter how much you trust the people in these groups now, it is also possible that in the future, a less reliable person will in charge, so the precedent you set now is important as well.

b) The other piece to that standard is that no monies may be spent internally without your prior consent. This may be tougher to get a handle on than convincing PTO's the money must run through school books! No commitment or promises of the school's money may be made, no charges applied, without prior consent of the principal. "Signing the checks" at the end of the process is not enough to meet the SACS standard, and it isn't very good financial management either. This is where the very simple idea of "purchase requisitions" come in to play. These need not be sophisticated instruments. So a teacher, staff, etc. requests purchases, you approve it, they may then purchase it. If they don't know the exact amount, we ask them to give us an educated guess before we approve.

2. So on what basis do we approve or not approve spending?

Three criteria:

a) Is it necessary, as opposed to nice? I will not approve those things I consider a luxury. Our parents work too hard to pay our tuitions and our faculty are under-paid--neither of those argues for free spending of school resources! Explanation of why on p.reqs is important!
b) If expensive ($100+), have they priced the item from 3 vendors?
c) Is there money available? Depends on the accounts.

3. Monthly management of school funds:

a) Administrator's report--note coding--every school fund in the operational budget. Each is a "category" in bold. I only fret about school budgets once/month. I recommend this to you! So when a science teacher hands me a purchase req and says he wants to spend X for new microscopes, I look and see how much $ is left in that account.

b) Board report--summary of categories. Board doesn't need every line item--it both overwhelms, and encourages micro-management. Boards are the big picture over-seer. They may ask questions about a category, and since I have the admin report, I can refer to the sub-category that may be driving a summary category over budget.....

4. "Designated Funds"--

Think of these as savings accounts that are "controlled" by other groups (SGA, PTO, Boosters', etc) or a gift that was given to the school not designed for the operational budget. Money is "designated". This money still resides in the school's savings accounts, but through your school's accounting program, is kept separated from the schools' income/expense of the operational budget.

Examples: Endowment fund, Annual fund drive, Overall SGA account, Senior class account, Athletic savings account, etc.

Restricted and non-restricted. Restricted funds--monies cannot be spent until a target or goal is reached (endowment fund) or unless the money is spent for a very specific purpose (scholarship fund). Non-restricted--more freedom to spend monies, but important that these are spent for things, if possible, for tangible things that are highly public and appreciated by the public.

It's very important that the money volunteers are raising is not going into the "black hole" of the operational budget, but will reside in a savings account as the money comes in until they decide.

5. Preparing Budgets, working with Boards

Several key principles:

1) Important to give Board 5 year histories. You keep these! Because you are intimately involved in the financial process, your understanding of where the school is financially is likely much more intimate than a Board's. Board members need a conext. Someone may say: "Teachers need a big raise, because the public schools just got an 8% raise". That may be true...but what if, over the last 4 years, the school has been increasing salaries by 3% each year?" I believe it's YOUR responsibility to keep these 5 year histories, and I believe as the budget process begins, it's important that you discuss these figures with the Board.

2) Important to know the competition's prices. Your tuition setting may make sense to your internal budget, but it ought to make sense relative to your competition.

--Interesting note: It's not necessarily a good thing to be lowest cost school in town! (Do we feel better or worse knowing our doctor is the cheapest in town?)

--We should also pay close attention to our second/third child discounts. Most of you are principals of K-8, or even K4-8 schools. That's a 9 or 10 year range, which means you likely have a LOT of discounting going on. (When Catholic High, a 9-12 school, became MCPS, a K-12 school, the first thing the Board and I had to do is reduce our discounts for 2nd/3rd children. We couldn't afford it, given the 13 year range. We used to give 1500 off for the 2nd child and 50% off for the third. Too generous. What we do now is simply give 1K off for each additional child. So if 2 children, twice tuition minus 1,000, if 3 children, 3 times tuition minus 2000, etc. We should support our large families as much as possible, but often we give too steep a discount.

--Pay close attention to fees: go light on application fees (you want them to apply, ours is $25), but require some sort of substantial reservation fee in early Spring (ours is due on February 15, $200/child). Fees are a way of raising revenue, without immediately "hurting you" in the public comparisons of tuitions, but we should not nickel and dime parents. We used to have separate capital assessment fee, endowment, activity, PTO, registration and it drove our parents crazy. We've folded all but our registration fee into our tuitions, and are parents are much happier. BTW, so is our finance office, because they don't have to track all those fees and chase parents who are delinquent with them.

6) How we estimate for tuition revenue for next year.

Cannot spend too much time on this
How we budget for other line items (use actual #'s from June 30 close-out, not budget #'s from this year. Work off actuals as much as possible)
The biggest variable in expense is how much of a raise we give faculty and staff. I run a couple of scenarios for Board to discuss. If a 3% raise, that will mean X% raise in tuition, if 4%, then Y, etc.
Important that we are VERY conservative. I tend to estimate conservatively when I am projecting numbers I cannot control. I cannot control enrollment, so I am not going to estimate huge growth in enrollment that makes the numbers work! It's better to under-promise and over-deliver! Everyone will be MUCH happier a year out if coming in the black relative to the budget than the red.

II.. Other financial ideas (random)

a. Collecting tuitions. Consider bank drafts. Used to hold report cards. There were 60-70 report cards held for delinquencies. Parents were angry, children embarrassed, etc. Now we have ZERO delinquencies. Office staff more efficient, not chasing down checks.

b. Families want to leave the school with outstanding balances. They can't pay balance now. Don't use promissory notes. People don't keep them, and unless you take families to court, which is a huge head-ache and the diocese will not likely support. Instead, make them write a post-dated check. If the check bounces when you try and cash it, you can report them to attorney general's "bad check division". I was 0 for everything with promissory notes, but batting 1000 with bad checks--we are 5/5. When the check bounces, I write them a certified letter saying they have one week to make good or else I report the bad check to attorney general's office. 4/5 times the money came in within that week. The other time, we did report, and the money came in thereafter.

c. Salary ideas: I am guessing we'd all like to pay faculty more than we can. Here are some ideas to consider, that don't cost us an arm and a leg:

--signing bonuses (to attract hard to find positions). It's only a one time fee and doesn't become a permanent part of salary structure. Also, young faculty in particular often need the money NOW, making your lower salary + signing bonus more attractive than someone else's yearly salary offer. The other advantage is you can have that person sign a memo of understanding when receiving the bonus that he/she must forfeit the entire amount if she breaks contract over course of year.
--pay additional supplements up front (cheer-leading sponsor, for example)--same idea--forfeit if break contract or if they quit their task
--cooperative relationships for housing with parishes--low cost housing for abandoned convent property. Ideal for young person.
--merit bonuses. Channels limited financial resources to the highest performing teachers/staff, even while rest of folks get cost of living increases.
--contact local vendors--like YMCA. Would they be willing to work out a deal where they allow your school to get an institutional membership at a lower than market cost, so our employees can use fitness center? Big benefit to them, relative low cost to school, healthier employees!

d. Cafeteria--consider catering. Hard these days to break even, not the mention the labor head-aches. Vending machines! Drink machines! Big money maker. You can equip machines with diocesan approved drinks--water, juice, diet drinks only! It's a huge loss of revenue not to have these machines. We made about 18K in PROFIT last year on drink machines alone.

e. Books---consider having parents purchase on line. Less manpower head-aches, no inventory losses. Renting books great deal for parents but the cost is absorbed by the school.

f. Financial aid--giving out MORE financial aid, if aid is partial and if there are empty seats, is revenue, not expense. This is why airlines discount tickets. Look to standardize the process to avoid giving out too much. (EXAMPLE)

g. Look at issues of scheduling--this affects bottom line, often in hidden ways. Two examples:

Part-time teachers are cheaper than full-time because they're not eligible for benefits. Also, may be able to attract high quality faculty in a part-time capacity. But sometimes, our schedule makes part-time work unlikely. Take my alma mater, McGill. Ever since the days I attended there in the 1970's, they had a rotating schedule, whereby students went to 6 classes/day, but had 7 classes each semester, such that every day students didn't take one of their classes. SO on Monday, they may take classes 1-6, but not 7, on Tuesday 2-7, but not 1, on Wednesday 3 through 1, but not 2. Full time teachers loved this, because they never had the same class at the same time slot, but it was impossible for Bill Lee, the principal at that time, to hire someone like my father, a retired PhD in Physics who was willing to teach the AP Physics course if he could do so at a fixed time each day. Bill locked in first period and rotated the rest of the classes, which then allowed him to hire my dad, pay him no benefits (he didn't need benefits since he was drawing retirement).

At MCPS, we had a semester schedule with 6 periods/day. Teachers were teaching 5 periods, with one free period, for a total of 10 half credits/year. in 1998, we moved to a trimester schedule, where students take 5 periods/day, year is divided into 3 equal parts, first trimester ends around Veteran's Day, second ends around Feb 20, and third at usual time. Teacher teach 4 of those 5 periods, with the standard free period. Multiplied times 3 trimesters, that means our teachers now teach a total of 12 half-credits. We got 2 free half-credits per full time teacher at no extra cost to the school. It really helped us ramp up our elective offerings.

h. Raise prices, everywhere. We beat ourselves up for fund-raisers that raise a couple of $100 here and there, even while we have prices in things like concession stands that are far below market value....our parents, once leaving our campus, will pull into McDonald's or Burger King, and will gladly, willingly pay.

Teen Drinking and Parenting: A Crisis in our Confidence

I think we parents are having a national crisis of confidence.

According to the Center for Disease Control, over 75% of our nation's adolescents have consumed alcohol by the time they graduate from high school. 36% of all teenagers have had 5 or more drinks on one occasion within the last month. Prior to high school, 40% have had alcohol by the time they finish 8th grade, and 20% of 8th graders have been drunk at least once.

Overwhelmed by these statistics and by the prevalence of alcohol in our society, we are losing confidence in our ability as parents to stem the tide. This becomes evident :

1) When parents host so called "safe-drinking" parties, in which they allow teens to drink in their homes or on their property, but take up car keys, insisting there is no driving afterwards.

2) When parents look the other way.

In both cases, parents are giving in and giving up. We can do better!

I parallel the "safe-drinking" argument to the "safe sex" argument. When I talk about this with seniors in my class, I ask them for their reaction to the following true stories:

In New York City, government officials have been supplying heroin users with clean needles in order to curtail the spread of A.I.D.S.

The A.P. reported a few years ago that in small city in Wisconsin, students from a local high school were shot outside a seedy hotel after Prom--a hotel popular among students of that school. The following year, a mother of an 18 year old girl, so worried that her daughter would go to this unsafe hotel with her boyfriend, told her that she and her husband would vacate their home for the evening.

A Los Angeles city Councilman, perhaps tongue in cheek (but perhaps not), suggested in the wake of yet another occasion of an innocent by-stander being shot by accident in a gang battle, that it would be prudent for the city to offer gun-handling lessons to gang members. His reasoning? Gang members are going to use guns anyway. Let's teach them to use them more safely, he said, to protect innocent lives.

Seniors are appalled by all three examples. Yet the logic behind each is exactly the same as it is for "safe-sex" and for "safe-drinking": "Yes, we think heroin use, pre-marital sex and gang activity are wrong, but since in the 'real world' people are going to do these things anyway, we need to help them do it without risking more serious harm." "Yes, we think teenage drinking is wrong, but they're going to do it regardless, so we need to keep them from drinking and driving".

When we allow teenagers to drink in our homes and on our property, we give our blessing to their drinking, and thus encourage it, irregardless of our intentions. In so doing, we both break the law and violate a common trust among us in our joint task of raising children.

Alabama law is very clear: An adult having control of any residence commits a Class B misdemeanor by allowing an “open house party” to continue; knowing that persons under 21 illegally possess or consume alcoholic beverages at it; and not taking reasonable action to prevent the consumption or possession. If you find out families are hosting a party at their home where alcohol is present, my suggestion is to call the police.

Similarly, in our MCPS policy handbook, we say the following:

"As an adult community we share responsibility for each other's children and so should communicate issues of concern about other's children with their parents. We should be receptive and appreciative if we receive such calls! However, we are sovereign over our own children alone and therefore cannot substitute our judgment for other parents (as would be the case, for example, if a parent decided to host a party which involved drinking, even if that parent went through the precaution of "taking away the keys"). Parents who knowingly allow another family's child to participate in illegal or immoral activities while under their jurisdiction violate a trust among our families and may be asked to withdraw their children from our school (page 24, MCPS Family Directory and Policy Handbook, 2007-08)."

We must stand firm! Are our kids perfect? No. Will they defy us? Occasionally. But when they don't do as we've told them, they sin against us and violate the 4th commandment. In a Catholic and Christian community, we should use this language! When our children sin, our tradition speaks of doing penance as atonement for sin, and yes, it also speaks of forgiveness. But we do our kids harm by telling them it's NOT a sin, or by telling them it's OK to sin as long as they do it safely! We need to speak clearly and consistently to our children about right and wrong.

Nor can we look the other way. I think we often do this because we get worn down. We don't ask our kids to give a full accounting of where they're going as they leave the house on Friday nights because it will irritate our children and disturb the "domestic tranquility". We don't enforce our own curfews. We don't ask for a full accounting of where they've been when they return home. We don't make them speak to us when they return home because it's god-awful late. We don't do the "kiss and smell test" when our kids come home, robbing our kids an excuse to save face with peers by saying "I can't drink; my mom is crazy, she will demand to smell my breath when I get home". We parents don't check with each other about events being hosted in our homes because we're worried that the other parent will be offended. Instead we allow teens to play the shell game: child A tells his parents he's going to child B's house, child B tells his parents he is going to child A's house, and both child A and B, unbeknownst to parents A or B, go to child C's house, where there is an unchaperoned drinking party. We don't want our kids to be unpopular or lonely, so we too often allow them to do things when our parental radar is beeping at us, telling us it's not a good idea, even if it means our child has to spend Friday night at home with us, miserably unhappy to have such horrible, uncool parents, "unlike everybody else's parents".

We can make a difference if we decide to do so, together, in two very practical ways.

First, our kids need alternatives. Soon MCPS will host our homecoming dance, from 8 until midnight. In the absence of any alternatives, kids will go out drinking afterwards. But if we have parents from each class willing to host alcohol free parties, many of our kids (though not all) will happily choose these activities. I encourage you to plan with each other. Perhaps families can join together to host a breakfast. Perhaps a family or two can rent 3 or 4 lanes at the bowling alley for the evening, and invite students after the dance to hang out there. Maybe there are families who have basements in their homes with billiards and ping-pong tables and they could invite their child's friends over, making it clear there will be no tolerance for alcohol. If we join together and give our kids alternatives, we can make a HUGE dent in the drinking.

Second, about 7 years ago, we started an idea at Montgomery Catholic which met with enthusiasm at first but then fizzled out, I think partly because we changed principals (2 principals ago) and children of the women behind it graduated. However, our PTO would like to re-institute this idea and carry it forward. It's a simple idea, really.

One of our biggest problems as parents in standing together against teenage drinking is our reluctance to communicate with each other. We feel hand-cuffed to call other parents, because we're worried about appearing to be busy bodies or worried that they will think we're trying to tell them how to be good parents.

We're inviting parents to sign a pledge card to each other. It says, very simply, three things:

1) I will not allow teen drinking to take place on my home or property, and will do my best to monitor things carefully whenever other teens are in my home;

2) I commit to calling other parents who have taken this pledge about information I have received concerning the health and safety of their child.

3) I welcome phone calls from other parents about the health and safety of my children or about events I am hosting.

Three simple statements. The PTO will publish a running list of families who have taken this pledge, invite those who were not here tonight to also take this pledge, and then post this list in the Knight-line and on the Web site. If your kid is going to a certain family's home, you as a parent can check to make sure that parent has pledged to keep his or her home alcohol free, and you can feel comfortable in calling for the details, because this parent has invited you to do so. In other words, the pledge gives us permission to talk with each other. Standing together, we can make a difference.

Of course, there are things we can do with our own children as their parents, beyond this community effort. I will share with you a personal example.

We learned that one of our older children was drinking while spending the night at a friend's house. Exasperated, I talked to a mother who had raised five older children well, someone I really respected, and asked how her how she and her husband dealt with this problem. Her answer was surprisingly blunt: They didn't allow their teens to spend the night out. "Not even with parents you trusted?" I asked. "No", she said, "because we didn't want to get into the position of publicly rating one parent as better than the other. So we told our kids don't bother asking." She also said that years later, for a birthday present, her 5 children gave her a plaque, pronouncing her as "the world's meanest mother". The bottom of the plaque said "Thank you, Mom". She says it's the best birthday present she's ever received and that plaque still hangs prominently in her home.

So we've taken her advice with my younger children: we don't allow our kids to spend the night. Yes, we are now contenders as the world's meanest, most unreasonable parents. But that's OK. Our job, as parents, is to take the long view. Maybe one day--no time soon--our kids will thank us, too.

Running a High School

“Why can’t the high school be more like the middle school”?

This question, often wistfully posed by parents whose children are now in the high school, implies two things: First, it speaks of the high esteem with which our middle school principals, teachers and program are held. Second, it suggests the high school just isn’t measuring up.

The problem, however, is that it would be a dreadful mistake for the high school to emulate the middle school! In best describing why, I believe it's helpful to consider how our parenting changes as our kids move from the pre-teen years to the older teen years. Consider:

When our children are young, we:

--Insist on particular study times, how much study is done and where it’s done
--Keep in frequent communication with teachers, reacting swiftly to poor performance, intervening before there is failure.
--Impose bed times on them to insist they receive the proper amount of sleep
--Structure our children’s activities and tightly monitor all “away from home” events

In contrast, as our children become older teenagers, we:

--Give them say over their homework, until evidence suggests they aren't handling it well.
--Allow them to taste the consequences of poor academic performance so as to learn from it, rather than immediately intervene
--Give them some flexibility in bed times, within reason.
--Set parameters and curfews even while allowing some flexibility in choosing activities.
--Increase our role and impose consequences after the mistake(s) rather than before.

Of course, some of these differences are more matters of degree than substance. Parents of 12 year olds don’t rescue their kids before every mistake any more than parents of older teens allow their kids to totally self-destruct before intervening; indeed, the great challenge of parenting is knowing precisely when to do which! Still, all of us want our children to stand on their own feet upon graduation from high school, and we understand we cannot be there like we once were when our children learned to walk, hands outstretched to catch them from falling each time they wobbled.

Put another way, as our children grow older, our aim is wean them from us. Our modus operandi is to give them increasing amounts of freedom, a snippet at a time, observing them carefully to see how they handle each step, curtailing the freedom for a time when they misuse it, insisting they pay the piper, even while giving them the chance to start over after each mistake. We expect that our children will take missteps, but know that by experiencing the consequences of these missteps our children will mature and move closer to the day they can lead independent lives. We must give them "space."

Good high schools run this way, too. Despite the strong temptation to control daily activities so tightly that students are not allowed to make mistakes without being intercepted by teachers before-hand (because the school would be perceived as more “orderly” and the principal seen as a better “disciplinarian”), doing so would be bad principaling as much as it would be bad parenting. Rather, good high schools give their students room to fail and insist they experience the consequences of their failure, even as they are ready, like parents, to help lift them from their stumbles and get them back on track. Good high school teachers, like good parents, sometimes have to insist on “tough love” by holding students accountable for poor effort or performance, even at the risk of being labeled as “uncaring”-- though like good parents, too, they allow their students to start over and are eager to assist them when approached.

This means, to be frank, that running a high school is often "messier" to the untrained eye. If there is greater freedom, there are also more disciplinary incidents. The obligation of the high school is to insist on proportionate consequences, each and every time, so that the offending student gradually shuns the behavior on his own. Schools can expect that freshmen in particular will struggle with their new found freedom and are thus prudent to allow them more missteps than they would upperclassmen, even while "stinging" them with punishments each time. Similarly, if parents and teachers allow their children greater freedom in making academic decisions about their homework and grades, there are also more "failures", though wise schools, like wise parents, structure these potential failures to be more short term ( a 4 week marking period grade) than final outcomes (a trimester average), thus giving their children a "taste" of the failure while also allowing ample time to recover.

When our children were younger, my wife and I would often lament how parents of older teens raised their children. With our two older children (see pic above) we began to understand! As parents of younger children, we are tempted to believe in our own omnipotence and omniscience, since we have control and responsibility over so many facets of our their lives. But if we want our children to grow to be men and women, we must give up some of this "power" and allow our children more freedom, even while insisting on parameters. One particularly astute parent called it the difference between riding a horse and creating fences within which the horse can roam. When our children are younger, we can ride that horse, directing the horse when to turn, trot or run. If we try and ride teenagers, their natural instinct is to buck us off! Good high schools, like good parents, build fences instead, all the while shaping a landscape that leads the horse to a final destination, with the horse believing it's getting there on its own.