For non-government schools in Australia, Term 4 2020 will be the critical time for school management and boards to plan and respond to the impact of the Covid-19 crisis. Regular reporting is like checking the pulse of a School, and the pulse should be closely monitored over the next few months! For some fortunate Schools, only a decline in enrolment growth will be experienced, but for others, the impact of Covid-19 could mean closure in the near future.

Why is Term 4 2020 so critical?

Term 4 2020 is where parents will start making hard decisions about their children’s education and will be enquiring with the school as to what financial support is available to them. All schools’ 2021 budget should be accommodating for the “worst case scenario”, and the 10-year financial forecast should be outlining how long it will take to recover.

The financial impact on families across Australia is varied, so schools located in some states and suburbs will be hit much harder than others. For some schools with already declining enrolments or who are not at optimum capacity, a small decrease in student enrolments in 2021 could be disastrous both educationally and financially. For those schools that maintain enrolments but at the cost of extending payment terms of fees, the financial consequences for cashflow management and planned capital projects is also significant for 2021 and beyond.

Management and Boards must come together

There are 2 parts to this discussion:

Enable regular reporting to “check your School’s pulse”
Develop strategies for dealing with the information the reports are telling you

While many Schools seem to have the attitude of “We will be ok, we will take a hit and be able to recover next year” - are they aware of the point at which they will not be ok? How many enrolments can they afford to lose? How much debt can be carried? And for how long?

In my experience, I am witnessing a disconnection between the Accounts Receivable clerk taking calls from distressed parents who are reducing or stopping fee payments, and the Registrar who is taking enrolment withdrawals. Is this critical information being collected and reviewed at a higher strategic level by anyone at the School?

Has your School Board started to plan for scenarios such as:

If student enrolments reduce to X level, then….

If the family debt increases to $X level, then….

Check your pulse with regular reporting

From now on, I recommend Schools “check their pulse” and have regular reporting on:

Number of student withdrawals- reasons for, and destinations of leaving students
Number of future student cancellations – reasons for, and destinations of leaving enrolments
Number and dollar amount of hardship fee concessions requested and granted to families
Number and dollar amount of debtors who have ceased or decreased fee repayments

The information that these key reports present, raises more difficult ethical and strategic decisions that must be made at a board level

How does the school support current families with multiple students enrolled at the school who have been financially impacted by Covid-19?
How much can the school afford to grant in fee concessions, or extended payment terms to maintain enrolments?
What support can the school offer to parents to avoid current enrolment withdrawals?
What communication is being distributed to future enrolment parents about financial support in 2021 and beyond?

Manage the impact for 2021 and beyond

At a finance level, your School should develop the financial models needed to monitor the changing situation that will impact 2021 and beyond:

Flexible budget models to easily accommodate changing enrolment numbers and fee repayments
Develop a detailed monthly cashflow forecast and budgeting model
Review your 10-year forecasting model to calculate the recovery time

Now what?

If any part of this article has raised alarm bells, or you need some help with checking your School’s pulse, then Precision can quickly assist your staff and school board with:

Conversations about how to set up your School Management System to capture the information you require
Creating automated management and board reports for students, debtors, and finance
Automating current financial models, or developing new models

Accurate and timely reporting has never been more important! Contact Precision if you need help with getting prepared for 2021.