1. Financial and Operational Trends in Catholic Schools July 8, 2014

2. Financial & Operational Trends Operational 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

3. Data and analysis is organized in 8 key areas EnrollmentTuition RevenueInstructional Costs Admin CostsPlant Costs AffordabilityLiquidity Areas Covered in the Report

4. Financial & Operational Trends 201220132014 Min.Avg.Max.Min.Avg.Max.Min.Avg.Max. Capacity 75 439 1,05675 424 105675 407 1080 Enrollment 22 330 1,00919 324 101426 317 1023 Total AoC Elementary Enrollment 29,992 29,466 29,182 % School Capacity 29.3 %75.2% 95.5%20.0% 76.4% 103.3%34.7% 77.9% 100.0%

5. Financial & Operational Trends 201220132014 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%

6. Financial & Operational Trends 201220132014 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 0.040.90 2.060.05 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 9,400 284,171 1,654,950 18,000 312,196 1,141,920 2,997 312,680 1,167,540

7. Financial & Operational Trends 201220132014 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 2,435 6,843 Admin Cost per Student 184 477 1,301173 484 2073190 530 2341 Employee Benefits cost per student 916948970 Plant Operations per Student - 495 1,1970 479 12590 505 1085

8. Financial & Operational Trends 201220132014 Min. Avg. Max. Min. Avg. Max. Min. Avg. Max. Net School Operating Shortfall $$ - (242,732) (828,928) - (203,363) (731,393) - (212,074) (781,509) $$ 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 - 541,675 4,395,000 - 386,464 5,504,055 - 413,871 5,235,500

10. 10 That’s impressive Wayne. But how did you do it?

11. 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. 12 How have we adapted to the environmental changes of the last 50 years?

13. 13 Name this Chart Line?

14. 14 Name this other Chart Line Catholic School Enrollment? ? ?

15. 15 Adapt or Die OR Die and Rise Apple Computers – Net Revenue

16. 16 Active Inertia Management’s tendency to respond to changes by accelerating activities that succeeded in the past.

17. 17 Managing by Commitments Despite 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. 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. 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. 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. 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. 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. 23 Active Inertia Trap* ValuesFrames Relationships Resources Processes DogmasBlindersShackles 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. 24 Three Areas We Are Stuck Improving School Leadership Governance Models Accepting our role in the New Evangelization

25. 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 FormulaModified Success Formula

26. 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. 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.

28. 3 Areas where we’re stuck: Improving School Leadership Governance Models Accepting our role in the New Evangelization