financial and operational trends in catholic schools july 8, 2014

Financial and Operational Trends in Catholic Schools

July 8, 2014

Financial & Operational TrendsOperational Vitality Measures :

• Compares school performance to national benchmarks and school results vs. other Archdiocesan schools

• Combination of school financial, demographic, enrollment, and parish data

• Collectively helps to identify key issues (triage)• Based on objective measures, but presented in ways that are simple

to understand• Schools & Parishes (Finance councils) are learning to utilize the

information to guide planning

Data and analysis is organized in 8 key areasEnrollment TuitionRevenue Instructional CostsAdmin Costs Plant CostsAffordability Liquidity

Areas Covered in the Report

Financial & Operational Trends2012 2013 2014

Min. Avg. Max. Min. Avg. Max. Min. Avg. Max.

Capacity

75 439

1,056 75 424 1056 75 407 1080

Enrollment

22 330

1,009 19 324 1014 26 317 1023

Total AoC Elementary Enrollment

29,99

2

29,46

6

29,18

2

% School Capacity 29.3%

75.2% 95.5% 20.0%

76.4%

103.3% 34.7%

77.9%

100.0%

Financial & Operational Trends2012 2013 2014

Min. Avg. Max. Min. Avg. Max. Min. Avg. Max.Students - % Catholics 0.6%

83.1%100.0% 0.0%

82.5%100.0% 0.0%

80.8%100.0%

Students - % State Vouchers 0.0%

14.5% 76.7% 0.0%

15.5% 81.4% 0.0%

16.6% 91.6%

Mkt. Share within a 3 Mile Radius of the school 0.83%

5.22%22.42% 0.99%

5.08%22.35% 1.40%

5.14%22.31%

Enrollment Retention 64.2%

100.1%116.4% 52.6%

100.1%113.9% 65.9%

97.8%112.9%

Financial & Operational Trends2012 2013 2014

Min. Avg. Max. Min. Avg. Max. Min. Avg. Max.

Tuition

1,450

3,171

5,540

1,600

3,250

6,025

1,600

3,283

5,350

Tuition % of Median Income 3.28%

6.41%24.15% 3.55%

6.57% 22.2% 3.73%

6.71%24.39%

Tuition Collected vs Calculated 0.06 1.06 2.29 0.04 0.90 2.06 0.05 0.94 2.20

Tuition % of Revenue 3.9%

68.0% 93.5% 2.8%

68.2% 91.8% 4.1%

71.8% 90.8%

Opportunity loss

9,400

284,1

71 1,654,9

50

18,00

0

312,1

96 1,141,9

20

2,997

312,6

80 1,167,5

40

Financial & Operational Trends2012 2013 2014

Min. Avg. Max. Min. Avg. Max. Min. Avg. Max.

Instructional Cost per Student

1,612

2,288

4,482

1,639

2,320

5,815

1,744

2,43

5 6,843

Admin Cost per Student

184

477

1,301 173 484 2073 190 530 2341

Employee Benefits cost per student

916 948 970

Plant Operations per Student

-

495

1,197 0 479 1259 0 505 1085

Financial & Operational Trends2012 2013 2014

Min. Avg. Max.Min

. Avg. Max. Min. Avg. Max.

Net School Operating Shortfall $$

-

(242,73

2)

(828,928

) -

(203,36

3)

(731,393

)

-

(212,07

4)

(781,50

9)

$$ Per Student

-

(728)

(3,985)

-

(616)

(3,410)

-

(655)

(5,109)

@ % of Parish Revenue 0% 20% 54% 0% 17.2% 58% 0% 18.5% 66%

No. Months Cash on Hand

-

4.0

22.7

4.26

24.3

4.30

26.1

Parish Investments/Annual Support

-

4.5

126.8

5.8

1,914.8

5.5

228.2

Parish Indebtedness

-

541,67

5

4,395,00

0 -

386,46

4

5,504,05

5 -

413,87

1

5,235,5

00

10

That’s impressive Wayne.

But how did you do it?

11

How has the educational environment of Catholic education changed over the

last 50 years?

• Competition?• Relationships with internal and external

stakeholders? • Resources? • Values that inspire, unify and identify? • Processes?

12

How have we adapted to the environmental changes of the last

50 years?

13

Name this Chart Line?

1880 1890 1900 1910 1920 1930 1940 1950 1960 1965 1970 1980 1990 2000 20100

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

14

Name this other Chart Line

19771979

19811983

19851987

19891991

19931995

19971999

20010

2000

4000

6000

8000

10000

12000

18801890

19001910

19201930

19401950

19601965

19701980

19902000

20100

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Catholic School Enrollment ? ? ?

15

Adapt or Die OR Die and Rise

19771979

19811983

19851987

19891991

19931995

19971999

20010

2,000

4,000

6,000

8,000

10,000

12,000

19771979

19811983

19851987

19891991

19931995

19971999

20012003

20052007

20092011

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Apple Computers – Net Revenue

16

Active Inertia

Management’s tendency to respond to changes by accelerating activities that succeeded in the past.

17

Managing by CommitmentsDespite differences in their personal attributes, successful managers all excel in the making, honoring and remaking of commitments.

- Donald M. Sull, Managing by Commitments, Harvard Business Review

Five Categories of Organizational Defining Commitments

• Strategic Frames – How you see the world• Resources – Hard and soft assets at your disposal• Values – Shared norms that unite and inspire• Processes – How things get accomplished• Relationships-Customers, regulators, suppliers, partners

18

Symptoms of Active Inertia

Strategic Frames - How you see the world– People are fighting the last war– The “blame game” over multiple years (or

decades)– Unimplemented strategies in binders provided by

expensive consultants – Intolerance for diversity of thought

19

Symptoms of Active Inertia

Resources - Hard and soft assets at your disposal– Leaders hesitate to reconfigure resources for fear

of jeopardizing their “profits” – Resources considered for annual value rather than

lifetime value. – Reactive “repairs” rather than fixes– Lack of succession planning and cultivating the

next generation of leaders and mangers.

20

Symptoms of Active Inertia

Processes - How things get accomplished– People stop thinking of processes as a means to an

end and stop thinking of alternatives to their comfortable and reassuring routines.

– “Best Practices” are known but not implemented– One person in the organization is “the process”– Don’t know (or don’t pay attention to) key data and

core metrics

21

Symptoms of Active Inertia

Relationships-Customers, regulators, suppliers, partners – Gradual loss of key partners– Ossification of relationships with internal partners.– Established relationships with external partners

prevent responding to changes in technology, regulation or customer preferences.

– Antipathy toward or blaming the customers.– Your “stars” have found other partners.

22

Symptoms of Active Inertia

Values - Shared norms that unite and inspire– Unifying power of core values degenerates into

mindless conformity. – Unifying values are supplanted by rigid rules and

regulations codified in thick employee handbooks.– Confusion between “sacred cows” and “false

idols”

23

Active Inertia Trap*

Values

Frames

Relationships

Resources

Processes Dogmas

Blinders

Shackles

Millstones

Routines

Environment

* Source: Donald M. Sull. Revival of the Fittest: Why Good Companies Go Bad and How Great Managers Remake Them

Success Formula Active Inertia

24

Three Areas We Are Stuck

• Improving School Leadership• Governance Models• Accepting our role in the New Evangelization

25

Test Case: Improving School Leadership

• Strategic Frames• What is long term cost of not

developing leaders? • Is this really a priority?

• Resources• How do we identify future leaders?• What resources can be made to

develop them?

• Values• How do we demonstrate that we value

our people?

• Processes• How can we “mint” the best leaders in

our industry?

• Relationships• Do we in-source or out-source

leadership development?

• Strategic Frames

• Resources

• Values

• Processes

• Relationships

Traditional Success Formula Modified Success Formula

26

Managing Commitments

The actions that you take today can pave the way to success tomorrow. Or they an lock you into a doomed business model. The best leaders and managers now when to make commitments – and when to break them.

27

Seven Deadly Sins of Transforming Commitments

1. Repeat what worked last time.

2. Fail to run the numbers.

3. Don’t sweat the details.

4. Delegate the hard work.

5. Half-tackles.

6. Ignore core values.

7. Keep past sell-by date.

3 Areas where we’re stuck:

• Improving School Leadership• Governance Models• Accepting our role in the New

Evangelization