A school board member who acquires failing businesses and makes them profitable said in a budget meeting:  “Just like the businesses I buy, we don’t have an expense problem. We have a revenue problem.”

But this is not how most private schools consider their finances. They typically look first at the cost side of the ledger and instinctively ask, “How can we do this less expensively?” This leads to fanciful thinking about things like how teachers and staff are compensated (“they’re really here for the ministry”), how programs are funded (“athletics should be self-supporting”), and how financial aid is managed (“a discounted seat with some revenue is better than an empty seat with no revenue, right?”).

Then, when all the cost-reducing ideas are baked into the expense side of the budget, the question of what to charge comes up.  

And we go low.

Never mind that we know we should pay teachers more or that athletics will never be self-funding or that we’re overlooking the real accounting cost of every discount. Never mind that the annual fund goal that pads the budget projection hasn’t been met in five years. We approve a new budget that is just as bad as the last one and hope and pray for the best.

Common signs that your school has a revenue problem:

• You’ll end the year in the black (or marginally even) only if the annual fund performs

on target.

• Your third-party financial aid processor calculates $300k in need, but your aid budget

only includes $250k.

• Small essential capital projects like replacing an HVAC unit, fixing a leaky roof, or

paving a muddy grass parking area require special fundraising or borrowing from a

line of credit.

• The last two months of your school’s operating expenses are paid for with tuition

deposits or enrollment fees designated for the next year.

• Inflationary pressures on your staff suggest a six percent salary increase would be in

order, but they only get two percent raises.

• Teachers routinely leave after about four years for public school for more reliable pay

and benefits.

• Vital co-curriculars like athletics and fine arts are constantly raising money to support

basic program needs like stipends, new uniforms, or theater rentals.

This list could go on, for sure, but each indicator on this list is part of the financial calculus that the majority of independent and parochial schools compute every year. For many schools, these types of realities might just be a checklist of how they have managed for decades.

If this describes your school and its finances, there is another way to plan and manage your fiscal future. Your school’s mission, your faithful staff, and the commitment of families who benefit justify greater investment.

Your school’s financial problem isn’t that it’s too expensive. It may be that it is not expensive enough.