It’s that time of year again, the time when administrators and trustees begin the process of determining tuition for the following academic year. The “doom and gloom” faction laments higher tuitions, and questions the viability of on-going increases. On the opposite side are those that champion bigger increases in order to pay faculty and staff, keep up with the competition, and fulfill the mission of the school. Then, of course, there are those who see alternative revenue as the way to reconcile these opposing views, the true silver bullet that allows schools to have their cake and eat it too.
Based on the NAIS Trendbook, it appears that many schools reconcile these opposing views with more modest tuition increases than the national average – a compromise of sorts. But the Trendbook statistics also indicate that moderating tuition increases has no impact on declining enrollment. In other words, this gesture, often emerging from the political exigencies within the Board, does not stop the decline in enrollment.
The discussion repeats itself and so do the compromises. It’s like a bad movie that you are forced to watch over and over.
Why? Several reasons.
1. Schools continue to do little demographic and income research for the areas they are serving.
2. Schools can be incredibly insular. The problem is often “out there”- the economy, being the best-kept secret in town, too expensive. Rarely are these assumptions tested.
3. Schools refuse to see tuition setting as a strategic issue that requires a choice and a plan. It’s true that the choice may be the result of the school’s best guess about the future, but absent a strategic choice, there is no long-term, coherent philosophy.
4. Too many schools refuse to abandon the implicit deal established years ago whereby faculty are paid little, but left alone unless there are parental complaints. Thus, B-/C+ teachers who are doing what they did twenty years ago can often be the norm.
5. Many schools are without a base knowledge of strategic marketing. Thus, setting tuition is serving no larger marketing strategy.
6. Many schools lack a five-year financial model that allows them to play with alternative scenarios involving salaries, tuition, non-salary costs, fund raising, and financial aid.
7. Many schools don’t examine their assumptions about the strategic value of major gift fund raising. If increasing enrollment of mission-appropriate students is the primary strategic goal, then fund raising should support that goal in a justifiable way that emerges from a strategic, cost-benefit analysis.
If independent schools are to successfully face the challenge of financial sustainability, they need to stop chasing rainbows (alternative revenue) or continuing the tired narrative of affordability v. fulfilling mission. Instead, they need to look both inward and outward and use their imaginations to integrate the two. There is no set formula here; each landscape of reality is different and requires a discrete analysis and the proper framing of the strategic challenge. The Head can play a significant role by insisting that trustees and administrators eschew the non-decisions that come in the guise of compromise and instead, choose a strategic path based on data, vision, and mission.