While many Schools currently find themselves preparing for or enjoying their Spring or Easter Break. In this month's article Rhonda Norris stresses the importance at this time of year of optimizing your financial plans for next school year.
As Jim Pugh shared in his Business Office Basics: Preparing Next Year’s Operating Budget for the January Board Meeting, schools should have a preliminary budget for the upcoming school year in place by this time of year. This budget should have been proposed and recommended for initial review by the Finance Committee and the Board with a plan for further refinement before the end of the school year. This preliminary budget is typically a culmination of the previous months of research, analysis, and development into a leadership recommendation for next year’s tuition based on early projections for enrollment, projected staffing levels and compensation packages to support recruiting, as well as estimates for learning expenses, operating costs, and capital budget projections.
Starting in March, the preliminary budget should be reassessed and refined. This process includes a critical partnership between Admissions and the Finance office as shared in the Sage article last month, How the Business Manager Supports Admissions in the Re-enrollment Process. Enrollment as a significant driver of revenue provides the basis for what resources will be available for the upcoming school year. Students, families, and sponsoring companies are aware of more parts of the own puzzle, with regards to their plans for the next school year, so working collaboratively with these community members will provide important data for finalizing the budget.
The community information is key to the refinement of enrollment projections to include both the re-enrollment of existing students and the enrollment of applying new students. Proactive and continued collaboration between Finance and Admissions through a strategic approach that follows-up with parents and companies on which students are returning, preferably including a financial motivation to ensure a commitment of these students to attending next school year. If a re-enrolled student doesn’t “show” for the next school year, it is possible that a seat will be held and then become available and can no longer be filled with a potential new student.
The re-enrollment process should be concluded no later than the end of March so that new student applications can be reviewed and evaluated for admission as soon as possible, but preferably in early April 2024. This does not mean that new student applicants have to wait for enrollment decisions when space available is already known.
The March – May timeframe is a common timeline for international schools in re-enrollment and new student application reviews, so our schools want to ensure that they know the spaces available for new students and can enroll all students who can benefit from the learning experiences we offer.
An extension of refined enrollment projections, our schools can ensure more accurate projected staffing needs, usually the largest school expense, to support these expected students. In addition, this is the time of year when we begin to understand the related compensation cost of benefits, such as medical insurance renewals, housing costs, etc.
This collaboration should include the Leadership, the HR team and the Finance Office. This refinement is ongoing starting with the intentions process from the first semester, but as our schools get closer to the end of the school year, more clarity is available on these needs. The ideal would be that the original budget projected staffing expenses are accurate, appropriate, and efficient. If the budget is expected to have significant variances in staffing, then as soon as this information is known and decisions can be made, the increased likelihood of improved financial management for the benefit of the whole school.
Last, but definitely not least, is the review of original projections for resources to support the learning experiences as well as operations. This review is two-fold, one is to ensure that educational resources needed for the next school year are identified, planned for, and ordered timely to arrive before needed next school year. This coordination should be with the Finance Office for orders. Second, the final allocations in the budget should support strategic priorities, learning goals, and annual action steps. These areas should be reviewed keeping in mind the progress in the current school year and how this progress influences the areas of focus for the upcoming school year.
The refined budget should reflect resource allocations needed to support ongoing high-quality learning alongside the strategic priorities to ensure the school has aligned budget funding with the School’s Mission and Vision.
The goal of this Spring refinement process is to utilize current, available information in comparison to the preliminary budget to ensure resources are being allocated appropriately and to minimize financial surprises. The clarity that can be realized in March and April for next year should be an integral part of finalizing the budget.
Allowing our schools to reaffirm the expected financial resources available as well as how these resources can best be allocated to not only cover all costs, but to maximize the support for the mission, vision, strategy, and goals aligning financial management with the core of student learning. This process of refinement concludes with a leadership recommendation to the Finance Committee and the Board to adopt a final, enhanced budget by the end of the school year.
The budget process should be seen as evolving and ongoing to best manage and maximize our schools’ resources for student learning and strategic achievement.