Will These 250 Schools Go Out of Business?

I have obtained some data on about 250 schools whose net tuition revenues (NTR) have fallen considerably over the last 8 years.  I am going to share some of the aggregate information and show you how to evaluate your own school’s net tuition revenue growth over the last 8 years.   Maybe this can garner you more support for additional resources with the board or head of school.  First let me explain the methodology. I only included schools that had net tuition revenues of over $1,000,000.

Here is an example to help me explain the calculation.

I looked at 8 years of the school’s’ net tuition revenue data from 08/09 to 15/16 as seen in the example in Table A.

Table A

Then, I calculated where a school should be, if it increased its net tuition revenue by 5% a year starting in 09/10.  As seen in Table B

Table B

Then I identified the delta between the two.  In this example, the actual net tuition being generated is $2,505,086 in 15/16 Table A.  However, after 7 years, the school should be generating $5,155,974 in net tuition revenues, a difference of 2,650,888 as seen in Table C. In this case, there was a big jump from 09/10 and 10/11; it never stopped.

Table C

(There are reasons why net tuition revenue could be lower, for example, a larger endowment draw, because the school has increased its endowment.)

Next I calculated what percentage of income loss the school incurred when they don’t achieve the normal growth.  You do this calculation by taking the NTR Loss amount (Table C) and divide it by the NTR actual amount (Table A) for that given year and change to a percentage.  In this example, the school should be generating 94% more income in 15/16.  You can calculate the total amount of income loss over the 7 years too, but it is a sad figure in this case – $11,513,445.

At this point in the school’s history, it is probably being affected by the following

• Larger than average deferred maintenance issues
• Lower teacher salaries, yielding less quality teacher
• Weaker student composition
• Poor leadership, unless there has been a good replacement
• Pushing the tuition increases to 5-6%

If the school would have given the right person 10% of the 11 million over time to do great marketing and use the balance to boost the quality of the educational experience, how better off would it be now?  How would the school look different with $10 million dollars additional income (1 million was spent on marketing) over those years?  Is this 10 cents on the dollar spent for marketing better than what the development office makes on each dollar in its fundraising effort?

Information on the worse 250

Shortfall

1. Percentage off of projected amount with a 4% tuition increase from 2008
   • 19 schools’ NTR should be 100% higher (This means they should have had twice as much income this year than in 2008.)
   • 50 schools’ NTR should be from 70 – 99% higher
   • 77 schools’ NTR should be from 50 –  69% higher
   • 104 schools’ NTR should be 36 – 49% higher
2.  Net tuition income loss during the 15/16 only from anticipated net tuition revenue with a 4% tuition increase from 2008
   • 4schools loss over $10,000,000 each (This means they should have $10,000,000 more this year in net tuition income.)
   • 20 schools loss over $6,000,000 each
   • 59 schools loss over $4,000,000 each
   • 78 schools loss over $2,000,000 each
   • 89 Schools loss $600,000 – $1,999,999 each

Click here to download your copy of the spreadsheet to review your net tuition revenues.  All you need to do is to input your data (area in blue) for the net tuition revenue generated over the last 8 years and all the other fields will calculate for you.