Keep Your School’s Focus on Costs and Tradeoffs

This blog series has urged independent school leaders to think more strategically about costs — and enhance financial sustainability in the long run. Some of you commented that staff would be resistant to making changes driven by cost considerations. In my experience, those in independent schools spend much more time thinking about student learning than about money. That’s how it should be. But that doesn’t mean that school leaders can ignore the issue.

So let’s step back again. Why worry about financial sustainability? The following graph says it all.

 

With tuition growing faster than average family income, fewer and fewer families will be able to foot the bill for private school tuition. Part of the cause is stagnant household income, and the other part is tuition growth to cover cost escalators inherent in the business of schooling.

 

So, while some might find it objectionable to bring money into the discussion, without a relentless focus on maximizing value for the dollar, many schools may eventually find themselves falling victim to their budgets.

As you propose some uncomfortable changes to the salary schedule, or course assignments, or other value-maximizing ideas presented in this series, and your staff members resist (as they will), you might remind them what’s at stake for parents. For example, when families pay $15,000 per year at a K–8 school, tuition totals more than $135,000 in after-tax dollars to send one child through the school. If, like me, you have four children, the tuition adds up to more than $500,000. 

 

When families make that kind of financial sacrifice, they entrust their schools to do the most with those dollars. And when their independent school doesn’t maximize the value for those dollars, it is likely that families on the financial margin will choose differently. Doing the math for your staff can help create a sense of urgency.

As we’ve pointed out in this series, independent schools aren’t bound by the same constraints as public schools, and yet many of them act as if they are. Traditional salary schedules that pay primarily based on longevity (not value or workload) are a prime exemplar. Outdated staffing structures that don’t match changing curricular needs are another example.

That certainly doesn’t mean it is easy to revise long-standing practices that run counter to staff expectations. Unveiling a brand-new compensation scheme would send some school staff looking for a new job. But there are some schools that have made changes, often by starting incrementally. One principal left the salary schedule intact but swapped the term “years” for discretionary “levels” to give the school leader more say on promotions and corresponding raises. Some have used staff transitions as an opportunity for staffing redesigns. Having a librarian retire, for instance, is a great opportunity to hit pause and rethink staffing options.