Rethinking Sustainability
Building a Better Budget
Dr. Alan Pue, President
The Barnabas Group
www.thebarnabasgroup.com/[email protected]
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Cost First
Remember, the role of the chief school officer is to
define excellence and give it a price tag. The role
of the board is to decide how much excellence it
wants to buy.
Begin With Cost Centers
“A cost center is a distinctly identifiable
department, division, or unit of a firm whose
managers are responsible for all associated costs
and for ensuring adherence to its cost budgets.”
businessdictionary.com
Suggested Cost Centers
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Instructional costs
Administrative/support costs
Co-curricular costs
Advancement costs
Plant operation costs
Institutionally funded financial aid costs
Auxiliary-service costs
Categories/Sub-categories
See handouts
Financial Reports
Three levels of detail
▫ The micro level – greatest level of detail including all the
financial data for each sub-category
▫ Mid level – will show all cost of each sub-category within
each cost center
▫ Broad level – a single sheet showing the complied costs for
each cost center
These three levels will allow you to determine true costs
while providing a usable summary budget for public
discussion. You can explode or collapse your budget to
expose as much or as little detail as you desire for a
particular conversation or discussion.
Your Biggest Investment: People
• 70-80% of the typical budget
• It is crucial to appropriately determine staffing needs
▫ based upon your identified purpose and desired
outcomes
▫ appropriately defining roles and connecting “talent to
task”
▫ while understanding the concept of ROI
• Determine appropriate compensation
▫ Develop a salary schedule (see chart)
▫ Determine appropriate fringe benefits
▫ Professional development
A Second Significant Issue
• The Cost of Place
▫ Fixed expenses – rent, lease, mortgage, insurance
▫ Fluctuating expenses – utility costs, cleaning,
repairs/maintenance, landscaping
▫ Re-model
▫ Depreciation
▫ Reserve funds
• Key Question
▫ Do we rent, seek a long-term lease, purchase and
re-configure, or build?
Now Set Your Price
• On the Horns of a Dilemma
▫ The price for providing a quality education is
increasing.
▫ In the real world it is putting Christian schooling
beyond the reach of many people.
• Somebody’s Got to Pay
▫ The solution is not to discount the cost of
education
▫ It is to create additional revenue streams
▫ How?
First, Identify Revenue Streams
Income Categories
▫ Net Tuition
▫ Fees (as minimal as possible)
▫ Net Auxiliary Revenue
 Food service
 Summer programs
 Before/After school care
▫ Resource Development Revenue
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Fund raising activities
Annual fund
Capital campaign
Planned giving
Now, Connect Those Streams
Hard
Revenue
Annual
Fund
Capital
Funds
Planned
Giving
• Operational Costs
• Program Development/Enhancement
• Financial Aid
• Capital Projects
• Financial Aid
• Endowment
• Capital Projects/Targeted Operations/New Programs
Then, Develop Income Assumptions
• Most important – Enrollment assumptions
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The enrollment funnel
Tracking the data
Early re-enrollment
A retention strategy
• Realistic resource development assumptions
• Realistic auxiliary program income
▫ Your business plan
▫ Net revenue
Now Set the Price
A Simple Strategy
(you won’t like)
A Necessary Reminder and Painful Reality
Education is not affordable
▫ People
▫ Place
▫ Programs
▫ Perception
But it must be accessible – so what can
we do?
Key Strategies
• Practice wise stewardship
• Learn to think and act like an entrepreneur
• Build transformative partnerships
• Tap the underground stream
Think and Act Like an Entrepreneur
Keys
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Identify a need and meet it with excellence
Stay focused on the main thing
Staff wisely
Build a sound business model
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Target audience
Pricing model
Marketing/Implementation strategy
Measures of success
Appropriate accountability
Think and Act Like an Entrepreneur
Some Ideas
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Full time day care
Extended care
Hot lunch program
Summer camps: music, fine arts, technology, sports,
academic coaching
Music conservatory
Tutoring
English as a second language
International student program
Rental of facilities
Retail operations (unusual but possible)
Building Transformative Partnerships
A Theological Foundations
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A heart of gratitude (2 Corinthians 8:9)
Meeting genuine needs (2 Cor 8:13-14, 1 Jn 3:16-18)
Generous giving honors God (2 Cor 9:12-14)
Practice biblical stewardship (1 Timothy 6:17-19)
Begin by examining yourself
Practice organizational generosity
Pursue biblical partnerships (Phl 1:3)
Common
Purpose
Trust
Genuine,
deepening
relationships
Partnership
Planned Giving – the underground stream
A troubling reality
▫50% of Christians . . .
▫Only 8% . . .
Planned Giving – What Next?
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Broaden and deepen your understanding
Identify a well qualified, respected coach
With their help create clear guidelines
Pursue partnerships with other schools/churches
Develop a strategy for identifying and connecting