1. The Debatable Propositions: Why whispered questions deserve constructive conversations Genevieve Madigan National Business Officers Association (NBOA)

2. How many of you are familiar with ‘The New Normal’ and ‘Full Steam Ahead’? We will be: – Updating Financial Sustainability – Defining Debatable Propositions – Working together to generate constructive conversations

3. Before 2008 2008-09 Now Future Financial Sustainability Update

4. Before 2008 Smooth sailing, or at least relatively so as compared to what was coming.

5. The Decade Before the Economic Climate Changed Tuitions up 30% (real dollars) over 10 years Overall staff up 32% over 10 years Student: teacher ratios getting smaller Financial aid grant dollars up 38% Enrollment up 20%

6. Historic Tuition Growth

7. 2008-09

8. Different Ideas Emerged “New Normal” National Association of Independent Schools (NAIS) “Full Steam Ahead” Independent School Management (ISM)

9. The New Normal (NAIS) Charge what people can pay Design your program to that revenue number Moderate tuition increases, cut expenses

10. The New Normal (NAIS) Increase enrollment without increasing staff “Sunset” an old program for every new one Right size: re-think class size, workload, # of teacher specialists, assistants, school size Devote 1/3 rd of each fundraising dollar raised to endowment

11. Full Steam Ahead (ISM) Identify Value Proposition Charge what it costs (CPI + 2% or more when needed)

12. Full Steam Ahead (ISM) Decide whether you are a price, product, or process school Acknowledge that the 20 th century “factory” model of education will not prepare students for the 21 st century Design school to individualize learning using technology Dedicate 2% of your budget to faculty professional development

13. Now

14. Tuition Continues to Rise Source: NAIS Facts at a Glance

15. Faster than CPI Source: US Bureau Labor Statistics, NAIS Stats Online

16. We’re Adding Employees Source: NBOA Business Office Surveys 2008-12

17. Perceived Financial Health

18. Strategic Reactions Increase Number of Students Per Classroom PlannedImplemented ’09 & ’10 Surveys26.4%11.7% ’10 &’11 Surveys19.9%10.7% ’11 &’12 Surveys16.2%11.6% ’12 Survey17.9%

19. Strategic Reactions Increase Teaching Load PlannedImplemented ’09 & ‘10 Surveys26.6%12.8% ’10 & ‘11 Surveys18.4%10.9% ‘11 & ‘12 Surveys14.2%8.1% ‘12 Survey 14.8%

20. Strategic Reactions Eliminate Student Programs PlannedImplemented ’09 & ‘10 Surveys6.7%2.7% ’10 & ‘11 Surveys5.0%1.4% ‘11 & ‘12 Surveys2.3%2.2% ‘12 Survey2.2%

21. Same goes for: Reduce Faculty FTE Reduce Staff / Admin FTE Decrease Planned Salary Increases Reduce Salaries Reduce Benefits Strategic Reactions Source: NBOA Business Office Survey 2009-12

22. Strategic Reactions Increase Employee Contribution for Benefits PlannedImplemented ’09 & ‘10 Surveys17.5%11.7% ’10 & ‘11 Surveys20.7%12.7% ‘11 & ‘12 Surveys13.5%13.2% ‘12 Survey18.1%

23. Future

24. Tuition Growth Trends

25. Affordability Source: NAIS 2012-13 Trendbook, as calculated by SSS NOT Adjusted for Cost of Living in NY/NJ/CT

26. Financial Aid Source: NAIS Facts at a Glance

27. Demographics Source: NAIS Demographic Center

28. Productivity Problem In classical economics, as workers’ productivity increases, they produce more, and can be paid more, without charging the consumer more. In many social services, no increase in productivity of labor means that prices must rise in order to give wage increases. E.g. string quartet.

29. “Real Life” Game Changers Fork Union Military Academy (VA) one Subject Plan The Online School for Girls, Global Online Academy virtual learning with multiple schools Buckingham Browne & Nichols tuition growth model tied to CPI Drew School YES: fixed tuition for each student Flipped classrooms Khan Academy Banded Faculty Compensation

30. DEBATE THE PROPOSITIONS

31. “Creative thinking comes from making connections across fields of thought.” Steven Johnson, author of “Where Good Ideas Come From, A Natural History of Innovation”

32. Debatable Propositions Purposely Controversial Can take a stand: for or against Spark new thinking around both long-held beliefs or revolutionary concepts Eradicate “cherished theories”: things you believe, but have no evidence to support

33. Critical Thinking Process Make Assumptions and Perspectives Explicit Understand Interests and Relationships Explore Alternatives Make Choices

34. For example… 1. The value of the smaller class experience is not as great as the cost.

35. or… 2. Financial aid should only be used in service of mission, not to increase enrollment.

36. and… 3. The cost of technology exceeds the value it provides.

37. how about… 4. Schools need to fully fund depreciation in order to ensure the long-term sustainability of their facilities instead of relying on philanthropic donations.

38. With that proposition, ask: a.What assumptions underlie the proposition? b.How can we test those assumptions? c.What data do we have that supports or refutes the proposition? d.What are the qualitative pros and cons? e.What other alternatives can we generate? Is there a “game-changer” in the proposition for OUR school? f.What are the next steps?

39. Example The cost of technology exceeds the value it provides.

40. The Challenge Put one proposition on the agenda of your next leadership team meeting or trustee retreat

41. Contact Information Genevieve Madigan Director, Research and Online Resources Genevieve.madigan@nboa.net 202-407-7144 www.nboa.net @NBOAnet