Tomorrow Is Today

There is summer and there is winter: what need for hurry? -- Turkish proverb

It is a misnomer in our wealth-obsessed society that "fiduciary" and "financial" are synonyms. The board of an independent school derives its authority from the former, meaning a position of trust both legal and ethical, and exercises that authority most often through the latter, the management of the school's fiscal well-being. Those long involved with independent schools know well that most boards dedicate their toil foremost to balancing budgets and creating or preserving mechanisms promising the school's ongoing economic health. Even if the board's central function is financial leadership, we argue that diversity and access should play an increasingly critical role in strategic planning for schools. Indeed, the two are inextricably intertwined.

The demographic, sociological, and economic trends predict serious consequences for the independent school market of the future -- even in the near-term. It is our claim that the schools which take assertive positive action to attract and retain a wider array of students and families will find the marketplace of the early 21st century more hospitable. It is important that schools take steps now -- during this fortuitous era -- to ensure ongoing viability and excellence. Waiting much longer may mean waiting too long.

THE TRENDS

Fortune and misfortune dwell in the same courtyard. -- Russian proverb

Independent schools are affected by society's trends as are any other institutions. Population growth rates rise and then fall; the economy surges and recedes; "private" schools gain and lose favor; and so forth, sic transit gloria mundi. Still, there is an element of unpredictability in each of these factors influencing the potential markets for schools. It is a truism that the marketplace of the future will be predicted largely by the intersection of demographic, sociological, and economic cycles. Each of these cycles in itself is formidable; their unpredictable interactions suggest a requisite readiness on the part of administrators and trustees in the near-term.

Demographic, sociological, and economic predictions are only as valid as the sets of assumptions on which they are based. Consider the so-called "baby boomlet," the offspring of the largest group of offspring yet weaned in this country, the Baby Boom. The "boomlet" was reasonably accurately predicted, and it is easy to see why: a large group of adults will likely conceive and deliver a large group of children. However, demographers seriously misjudged the timing of the "boomlet" -- by about 10 years -- an error derived by assuming that child-bearing years would remain more or less constant. Since Boomers delayed child-bearing compared to their parents, demographic predictions were belated by nearly a decade, explaining the proliferation of empty public schools throughout the country early in the 1990s.

Allowing a few fleeting seconds of glory, let's remind ourselves of our current moment: an all-time high number of school-age children in the United States; the longest sustained economic expansion in history (we brush off the tepid international economy, especially in Asia and Mexico, which has ramifications for boarding schools); a growing interest in educational choice and attendant enhancement of independent school profiles and reputations. Enough mirth: it is too tempting to drink ourselves silly on the nectar of today's market factors.

It was not long ago, the late 1980s for those in need of reminding, that market forces conspired against independent schools. The school age population was declining; that ugly figure of economic speech -- "recession" -- was near to everyone's lips; Americans in general saw reason for school improvement, led by a strong commitment to public school reform in Chicago and elsewhere. No surprise to most, the late 1980s witnessed declines in private school enrollment and (depending on the level of your milk glass) either coincident or concomitant drops in admission standards. Indeed, many less well-established schools went so far as to rewrite mission statements or even close their doors. These are bitter times to remember, and all but those inhaling the sand in which they bury their heads know innately that the next era of market volatility or even hostility is not really an "if" kind of question. It is a "when" kind of question.

POPULATION

Fortune is with you for an hour, and against you for ten. -- Arab proverb

Of the three factors under consideration here, perhaps the best news is population. There are over four million 10-year-olds in the U.S., compared with only about three million people age 25. The number of school-age children has been increasing since 1996, and will continue to do so until 2005. After that, the number of school-age children will increase very slightly or not at all each year until 2010, and will then decline until 2020, to about its 1996 level. The most significant portion of the growth that began in 1996 is nearly over. For example, in high school-age children, there will be a 9 percent increase in the population aged 14-17 from 1995 to 2000, then a 7 percent increase from 2000 to 2005, and a 3 percent increase from 2005 to 2010.¹ And then the decline begins.

This rosy outlook looks still more sanguine when one considers that independent schools have seen even greater enrollment growth than general demographic trends suggest. Between 1987 and 1997, NAIS school enrollments grew by 25 percent, compared to 16 percent in public school and 7 percent in other private (mostly parochial) schools.²

However, good fortune seldom blesses everyone equally, and schools in the South and West, day schools, and schools with enrollments greater than 700 comprise the bulk of the expansion in enrollment. Schools in other areas, boarding schools, and schools with enrollments of 300 students or fewer actually saw enrollments shrink relative to public schools in the same years.³ Take note: given the current demographic and economic prosperity, this divergent reaping could augur difficulties for schools when market trends no longer make rose-colored glasses so inexpensive or plentiful.

If all politics is local, surely most demography is too, at least for schools. Even boarding schools rarely draw significantly from outside their regions. And in this consideration, we are reminded that local economic and demographic trends can vary widely from national aggregates. A school's location can insulate it from various factors; location can also amplify wider societal concerns. And even when certain locales seem to weather national storms (an acerbating economy or a declivity among parents to go forth and multiply), schools can see well-meaning state and local governments paving their driveways with good intentions like changes in tax laws or zoning codes intended to compensate for inimical national trends.

RACE AND ETHNICITY

The politics of today's lexicon aside, we have tended to think like Webster, which defines "minority" as a "population which is less in number than 50 percent." Taking this rather rigid definition, by 2030 the term "minority" will apply to everyone: fewer than half the babies born in America will be white. Twenty years later, white and Hispanic babies will debut in American delivery rooms at roughly the same number.⁴ Not only will the marketplace of the future be significantly more racially diverse, the change will be, and in some cases already is, dramatic.

Further increases in black, Hispanic, and Asian populations will be distributed unevenly across the country. Those places which claim a high Hispanic population will become even more Hispanic; African-American concentrations will become more African-American; Asian centers will continue to expand from their nuclei. This is already the case: during the 1990s the 10 metropolitan areas with the largest Hispanic populations saw the 10 largest increases in Hispanic population. 43 percent of Asian and Asian-American families live in New York, Los Angeles, or San Francisco; these three areas alone accounted for 39 percent of the increase in Asians and Asian-Americans in the United States.⁵ The country's African-American population is more dispersed, but still concentrated in the South and in northern industrial cities. In most areas of the country, "melting pot" is a dubious metaphor. Population shifts of the 1990s show continued concentrations of ethnic groups in specific regions, largely in metropolitan areas that are already home to strong representations. In spite of significant growth of "minority" populations, precincts of racial and ethnic diversity will dot the U.S. map, rather than spreading over it.

Immigration will also account for much of the changing school markets of the future. Between 1961 and 1970, 62 percent of American immigrants claimed European motherlands; 13 percent were Asians. By 1994 the trend was nearly reversed, with 49 percent from Asia and 12 percent from Europe.⁶

It seems inevitable that the marketplace of the future will be populated by significantly more Hispanics and Asians; the African-American population will grow a bit; and while the white population will continue to increase in number, it will decline significantly as a portion of the total.

AFFORDABILITY AND ACCESS

He who would be rich has not to pick up money, but to diminish his wants. -- Spanish proverb

The average NAIS school awards financial and scholarship aid to 16 percent of its students.⁷ Save those schools with handsome endowments (who generally award aid to a larger portion of matriculants), the economic survival of most schools depends on a strong pool of interested families able to afford tuition outright. News both good and bad looms in this context. To the latter first: independent school tuitions continue to rise on trajectories far steeper than the national inflation rate. Historically, this has not been the case. Between 1955 and 1980, tuition increased at rates nearly identical to inflation's climb; in 1980, the relative cost of a private education was more or less the same as it had been 25 years earlier.⁸ But the go-go 1980s kept on going and going: private school tuitions have grown with near-total disregard for the rate of inflation. In independent school markets, the national recession and demographic dip of the late 1980s merged banefully with the rapid upsurge in tuitions. The lesson is that a confluence among factors -- only some of which are within the schools' auspices -- can carry profound implications for independent schools.

This is no less true today than it was 10 years ago, in spite of the temptation to grow smug in our currently propitious position. To wit: waiting lists at many schools expand annually, the economy surges ahead, the upper middle and upper economic classes swell on the strength of their copious investments. We know this: in the 1990s, the rich have grown vastly richer, the poor somewhat poorer, and the segment of the economy politely termed "middle class" has contracted.

This is not merely a factor of a buoyant economy. In addition to riding the crest of the economic cycle, Baby Boomers are achieving their peak income-generating years -- age 40 to 55 -- in this decade, and a record number of Americans now earn over $75,000 per year.⁹ (Recall that as Americans begin families later in life, more and more families in peak income years are also those with children -- a relatively new phenomenon.) Only folly would be well-served by our belief that this can continue ad infinitum. Once the Baby Boomers begin to retire, the large portion of Americans earning at this level will decline precipitously, and the birth rate will decline at a similarly notable rate. Add to that a simultaneous slowing of the U.S. economy and the climate for schools could become downright hostile.

Italian demographer Corrodo Gini devised a formula to demonstrate the overall distribution of income within a society. A Gini coefficient of 0 indicates equality in income distribution: every family has exactly the same income. A coefficient of 1 represents the opposite extreme: a single family owns everything, while others have nothing. As the Gini coefficient approaches 1, income distribution becomes less and less equitable. In the United States, the Gini coefficient rose from 0.394 in 1970 to 0.456 in 1994,¹⁰ statistically a notable change.

A tendency for income polarization is not novel. As early as 1887, William Graham Sumner wrote, "It is the tendency of all social burdens to crush out the middle class, and to force society into an organization of only two classes, one at each social extreme." Notable, however, is the dramatic pace of polarization in the last quarter-century.

THE NEW HAVES AND HAVE-NOTS

The man who has does not understand the man who has not. -- Chinese proverb

It is tempting to believe that demographic and economic trends portend an auspicious future for schools. But these are only two elements. In addition, American sociological trends could play havoc with the current benefits of demography and economy. In fact, a pernicious confluence of sociological trends and increasing economic polarization is likely to induce ever-larger gaps between haves and have-nots, economically and otherwise. The beginning of the millennium will see a manifestation not only of economic haves and have nots, but a polarization of the institutions of marriage, parenthood, and education -- again along socioeconomic lines.

A 1995 NAIS study indicates that the highest correlative factor influencing enrollment in private school is the mother's educational attainment. This is not encouraging. American mothers who have achieved a bachelor's degree (or better) average 1.6 children, while those who did not complete high school average 2.6.¹¹ Given this discouraging trend, what does the market of the future look like? We have already noted a more widely divergent American society between those who have and those who have not. In addition, as our tuition rates continue aggressively to outstrip inflation, our schools will contribute even more copiously to placing even many "haves" among the "have nots" as far as affording private education. We have already begun to do so. In 1993, only 27 percent of families who filed for private school financial aid (using the SSS application) earned household incomes over $60,000. By 1998, only five years later, over 40 percent of all SSS filers earned over $60,000 (with 12 percent earning more than $100,000 -- up from only 5.3 percent in 1993).¹² Even accounting for the modest inflation of the past decade, this is a significant change in only five years, with implications that are not necessarily obvious, but are clear: increasingly those families who really can afford private school have come to believe they cannot. The "haves" increasingly believe they are "have nots."

Absent significant realignment of current population trends, American society will polarize into two groups, and it is here that we note what will these groups look like. Increasingly, the children of "haves" will

• come to depend on income from two working parents
• see growth in their family income, both in absolute terms and in real dollars
• have greater family net worth
• live with parents who have advanced degrees
• have fewer children in the family than the replacement rate (2.1 births per couple)
• be highly computer-literate, and own several computers -- among these families, computer time will significantly replace time spent watching television
• demand, and likely receive, greater educational choices and better performance from their public schools
• live with adopted children or step-children as part of their family configuration¹³
• live in the southern or western U.S.
• have parents who hire caregivers to manage many of their parenting tasks
• have parents more likely to stay married¹⁴
• be non-white
• have parents who think they cannot afford private school

• be born out of wedlock
• live with mothers who did not complete high school
• see little or negative growth in their family incomes and net worth (in real dollars, if not in absolute terms)
• have little contact with or support from their fathers¹⁵
• have more children in their family than the replacement rate
• have little educational choice or access
• have parents with little voice for improving their public systems
• live in the southern or western U.S.
• spend more time watching television than attending school¹⁶
• be non-white
• have a parent who cannot afford private school

STRATEGIES FOR THE COMING DECADE

What you are planning to do tomorrow, do today. What you are going to do today, do right now. -- Indian proverb

Never put your hand out farther than you can draw it back again. -- Irish proverb

Investigating strategies presumes agreement on assumptions, which merits review of the ground covered so far. We know that school-age population will begin to decline in about 2007 (for elementary schools) and 2012 (for middle and upper schools).¹⁷ It is likely that the economic munificence of our time will fade as Baby Boomers withdraw from their peak income-earning years. The U.S. population will comprise many more families not traditionally represented in private schools (those from single-parent homes, racial minorities, educationally disadvantaged parents, etc.).

What can schools do to confront this future? In short, we recommend that schools:

• develop more collaborative marketing with other independent schools to sell the advantages of private school and increase overall interest and awareness of our product;
• take steps to make our schools more appealing to families of diverse backgrounds;
• investigate strategies to increase affordability and accessibility among wider populations, including subjects long considered taboo, such as increased class size, distance learning, etc.;
• keep operating overhead low, even if increased enrollment possibilities offer the chance to cover the costs -- downsizing will be painful when the drought comes;
• keep tuitions as low as possible to avoid losing families from "sticker shock" mentality -- those who believe they cannot pay but probably can;
• work to define understanding of their missions in the community, and to differentiate their missions from those of other schools;
• accommodate the wider needs of families, especially those with two working parents, by offering more after-school care programs, developing parenting classes and other adult education options, etc., and even developing innovative responsive programs, such as meals-to-go for parents or pooled laundry service¹⁸;
• offer advanced technology in the curriculum and use technology as a marketing tool; and
• remain vigilant regarding local demographic, economic, and sociological trends, using the Internet as a valuable source of reliable and free demographic information.

Our assumption is that the good will of today's economy allows time to accomplish these strategies, but the size of the window of opportunity is uncertain. In the next five to 10 years, boards and school administrations should take advantage of economic and demographic prosperity to develop new markets, especially those divergent from traditional independent school families; strengthen student bodies, wait lists, selectivity, and reputation, the better to weather inevitable storms ahead; develop services to appeal to families who work hard to cope with an increasingly demanding world; maximize efficiency to keep the rate of operating cost increases (and corresponding tuition hikes) as low as possible.

THE FUTURE

There is no need to fear the wind if your haystacks are tied down. -- Irish proverb

It is tempting to overestimate a time of plenty, to become greedy, or to play Pollyanna. This is true of both well-endowed schools and those with budgets balanced precariously on the revenues of the current year's tuition. Instead of taking prosperity for granted, though, schools should work to strengthen themselves during this period, rather than acting on every appealing initiative. By doing so, we should be able to endure the inevitable future downturns without compromising our programs, enrollments, or financial health any more than necessary. Bracing for harder times is good sense; for many schools, it may be a necessity.

Notes