From The Yield, Winter 2014 

As issues of enrollment management, affordability, financial planning, and financial aid dominate discussions at the governance level, two key stakeholders—the admission leader and business officer—must respond in harmony. However, it is more likely that these two important roles have not been closely aligned for success given daily responsibilities, historical silos, and lack of cross-team integration and strategy building. Given the high stakes (institutional enrollment success), it is critical to change current realities and to build anew the partnership between the two organizational centers.

Building Influence

Data from NAIS’s DASL reveals the size of the entire student population in NAIS active member schools is in decline, down 4.4% since 2010. The rapidly changing market in which independent schools are functioning has been further complicated by the emergence/rapid growth of public charter schools (which offer the independent school model tuition-free), by online schools and programs (which offer educationally ambitious students access to 24/7 teaching and learning, often for free or at reduced rates), and by incipient home/school cooperatives (which allow parents to educate their children according to their own wishes and desires for reduced costs). Who is educating boards on these marketplace issues? In the midst of enormous disruption, how will school leaders learn all they need to know to make sound decisions on behalf of the institution? Our thesis is that both finance and enrollment directors need to work together to build influence and to educate their school’s administrative teams, as well as trustees, on the significant disruption which is having a strong impact on enrollment.

It may be interesting for admission directors to know that recent survey findings suggest that business officers face similar challenges when having a voice at the leadership table. According to Jeff Shields, Executive Director of the National Business Officer’s Association (NBOA), participants at November’s Conference on the Business Office(1) cited claiming their “seat at the leadership table” as one of their top concerns. Shields notes, “Business officers can—and should—play an increasingly important role among their school’s leadership by sharing data, identifying resources, and providing their unique perspective on challenges and opportunities facing the school. But they can only do this if they are part of the conversation.”

Research from EMA’s 2013 State of the Independent School Admission Industry report (SOTI) confirms that a minority of admission directors have impact on critical market-based leadership decisions, despite being responsible for generating 80-90% of the institutional operating revenue. The report uncovered that only 35% of admission directors regularly attend board meetings, just 16% play a key role in deciding their schools’ financial aid budget, and a mere 13% are active in annual tuition setting. It is troubling that enrollment and finance leaders are both feeling left out of the important head/board decisions on institutional success. How might they work together to change this reality?

By building influence together. One of the most famous business management “handbooks” of all time, How to Win Friends and Influence People by Dale Carnegie, focuses on using one’s EQ to first build a network that will eventually progress into relationships that eventually lead to strong bonds based on trust and respect. Written in 1936, Carnegie’s thoughts of valuing EQ above IQ in organizational leadership were revolutionary at the time, yet nearly 80 years later, Carnegie’s insights are the backbone of what needs to happen in independent schools. By aligning to build a partnership, with the end focus on influencing strategic decision making, both business and enrollment leaders will be able to build compelling data that will allow them to command a voice in the head’s office and the board room table. More importantly, these data-driven insights (which will lead to data-driven strategies) are grounds for a powerful partnership that can transform a school’s trajectory.

Know Your Partner

So how do you build that partnership with the business leader? At our 2014 Annual Meeting, Shields presented a featured session titled “The Admission and Business Office Partnership.” He spoke to the prospect of building a strong partnership based on data around all issues related to school enrollment. Shields emphasized the importance of the admission office understanding the wide-ranging roles and responsibilities of the business officer including safety and security, risk management, facilities, board governance, human resources, food service, and IT, along with accounting and budgeting.

However, Shields did not downplay the importance of the knowledge base business officers need relative to enrollment work, insisting that admission officers take equal time to remind and educate the business officer on four key points:

• Enrollment management is a comprehensive process beginning with prospect identification and ending with graduation.
• Tuition revenue accounts for 80% of a school’s operating budget.
• The school’s unique market and value proposition is key to the institution’s financial health.
• Strategies which must be employed to keep student attrition low and student admission rates high.

Shields’s argument was simple—it is no longer acceptable for enrollment and finance directors to operate in silos. Each director needs the other in order to create a powerful partnership to influence school strategy. While an admission director does not need to know how to create a perfect balance sheet, he/should understand how budgets are best developed and how to translate customer and market insights into solid budget forecasts. This is particularly important when it comes to tuition and financial aid budgeting and forecasting. Similarly, admission directors should train business officers with information on surrounding marketplace data, incoming applicants, the selection process, and more.

Shields offered tips for building a successful partnership with your school’s business leader. First, one must develop or engender trust with the business officer. Second, each must understand the other’s critical role in sustaining the school. Third, each side must understand that surprises are not part of any successful partnership. Finally, Shields suggested that all ideas should be supported with data. Dallas Joseph, former Board Chair at NBOA and current CFO of Baylor School (TX), established a partnership with Jim Kennedy, the Director of Admission at Baylor, long ago based on Shields’s tenets and the result has been nothing but positive. “I couldn’t do what I’m doing in terms of long-term thinking about the school without Jim at the table,” he explained. “What’s my goal for the relationship? To make sure that, if Jim has information, he doesn’t wonder if he should tell me; rather, it’s automatic, and vice versa. We have this relationship because mutual respect is more important than reporting lines, and it fosters support instead of competition. An appreciation for each office’s role in achieving the mission of the institution leads to greater efficiencies.”

Ultimately, both parties must understand that cultivating and nurturing a relationship takes time, energy, and commitment. However, the end game is an alliance or partnership, focused around fulfilling each other’s job responsibilities, while opening the eyes of the “users,” “investors,” and “stakeholders” to the real changes and challenges needed for sustainability via a shared vision.

Planning & Accountability

Approaching the relationship with shared accountability is a surefire tactic to ensure enrollment managers and their business directors build trust and influence. To Shields’s point, trustees and school leaders need data—and this is a perfect starting point for both parties. Since both admission and finance leaders are eager to be informed on national/regional/local trends, why not provide one de- mographic/trend report for your head, leadership team, and board of trustees on a regular (monthly) basis? Specifically, admission leaders can begin to quantify their work with families (numbers of qualified leads, prospective family visits, etc.), while offering important real-time anecdotes to support these data trends. Similarly, the business officer may also have “field” insights from calls with parents regarding tuition and financial aid concerns. Quantifying such “soft” data, trends can serve as the groundwork for identifying market intelligence supported by hard data.

Next, each party should have access to the latest demographic information including birth rates, population shifts, and income levels found in U.S. Census Bureau data. Other resources like Western Interstate Commission for Higher Education’s (WICHE) publication Knocking at the College Door’s demographic trends, HowMoneyWalk.com’s regional graphing on financial changes in local towns/markets, and/or critical international student mobility trends as described in the Institute for International Education’s Open Doors report can also be explored to provide greater context. Along with market reports and competitor analyses conducted by internal admission teams, data and statistics from EMA's Member Access Portal, NAIS DASL, and articles/infographics from industry publications like NBOA’s Net Assets and The Yield can build a joint monthly report in ways that inform budgeting and financial modeling, right-sizing, or financial aid.

Financial aid, in particular, is unquestionably a space where both parties could benefit substantially from shared planning and accountability. According to the 2014 NBOA Business Office Survey, 53% of business officers are the primary administrators for financial aid, as compared to 37% of admission officers. Regardless of organizational structure, admission officers should imagine sharing responsibility and accountability for financial aid policies, cross-training of all staff on the process, and for creating an environment whereby staff are encouraged to track and provide insight into family experiences and opinions on the process. In this way, the admission and business officers position financial aid as a strategic enrollment management tool.

No matter which department oversees financial aid, reporting structure must come secondary to shared goals. In a University Business article titled “10 Rules for a Solid Admission/Financial Aid Partnership(2),” the author argues that enrollment and financial aid goal setting and accountability is a shared responsibility of both offices: “Too often, admission views its goal as the number of new students (or the quality, or the diversity, or the equity of students), while financial aid sees its goal as simply staying within the budget. Why? Those offices are merely responding to the penalty-and-reward system that has been put in place. That is, if admission is only asked, “What are the numbers?” and financial aid is only asked, “Did you stick to the budget?” the attention is placed accordingly. Admission and financial aid should be held jointly accountable for the success or failure of reaching enrollment goals and, in particular, the common denominator of net tuition revenue.”

The Alliance in Action

Kilian Forgus, former Associate Headmaster for Enrollment and Planning at Saint Andrew’s School (FL) and former EMA board chair, has presented at the MISBO conference and EMA's Annual Conference on the importance of an alliance between the admission and business realms. He shared specific insights that he’s built resulting from the partnership he forged with Saint Andrew’s associate headmaster for finance, Phillip Cork. At Saint Andrew’s, the operating budget has been in- creasingly tuition driven (currently 85% tuition dependent, up from 81% since 2006). The school expanded with the addition of a lower school in 2000 and by 2008 the lower school had grown by an additional 55%. A variety of economic factors and demographic concerns about declines in the number of Palm Beach County households with school-age children and with incomes of more than $250,000 loomed over the local market, and yet the school managed to increase enrollment every year from 2000 – 2011. However, after the economic downturn, the school had to rethink its market position, budget position, and net tuition and financial aid strategies. The result was a deliberate reduction of enrollment at Saint Andrew’s, from 1,297 to 1,275 in Fall 2013.

“Enrollment, tuition, and financial aid are so interdependent that an ongoing collaborative process is essential,” said Forgus. “We were at a critical time in determining the future size and financial aid promise to our families last year. Our situation called for increased collaboration between my office and Phillip’s office to employ a highly data-driven approach to the budget setting process and implement a net tuition revenue strategy with regard to financial aid allocation. Despite an increase in tuition, Saint Andrew’s was not seeing a comparable increase in net income at the school, due to the impact strong enrollment had on class sizes and programming, creating the need to add additional faculty and overages to deliver on the quality education valued by our families.

Once we realized this issue, Phillip and I looked at the best total enrollment number upon which we could base our quality value proposition, yet where we could remain cost efficient.” Forgus and Cork took the time to question what sustainable JK-12 enrollment would meet the interdependent goals for net tuition revenue, quality of student body, and programming. The two spent months crunching data, pouring over expenses, and discussing multiple scenarios for success. “We found that our yield rates were decreasing, with finances cited as the primary reason for their decline in our admission offers. We also found the percentage of students receiving financial aid had increased in the last seven years, from 13.3% to 19.3%. We were at a crossroads,” Forgus explained.

With tuition discount rates increasing, and more and more full pay families suddenly applying for financial aid, a change in strategy and school leadership edification was necessary. This meant educating trustees and the school’s leadership team on all of the findings accumulated by the admission and finance officers. After presenting their shared data with the board, Cork joined Saint Andrew’s financial aid committee, which instantly provided a more collaborative understanding of the enrollment management challenges faced by the school.

Furthermore, Cork’s financial experience also provided an important voice as the committee reviewed atypical applications and tax returns. As a result, having the CFO available to support financial aid interests at the board level provided an increase of approximately $450,000 in additional financial aid, after the initial financial aid budget had already been approved. The updated allocation generated approximately $475,000 in net tuition revenue. “Our collaboration resulted in the re-enrollment of 47 students who may otherwise have withdrawn, while building goodwill amongst many multi-year families,” explained Forgus. “Having Phillip understand our position and serve as an ally for budget funds taught both of us the power of collaboration in driving enrollment strategies home to the board.”

Profiting Together

Gettysburg College (PA) Vice President for Enrollment Management Barbara Fritze indicates that the partnership with the CFO or business officer “needs to be every enrollment manager’s number one priority. Successful enrollment managers know the value of collaboration.(3)” It’s a collaboration that Fritze believes:

• Engages faculty, students, parents and alumni in the admissions program;
• Educates key campus constituencies on the enrollment traditions and future challenges, and
• Enables college committees and boards of trustees to understand enrollment policy decisions.(2)

She adds, “There is no stronger partner and co-collaborator than the chief financial officer. In today’s challenging economic environment and changing higher education landscape, every enrollment manager needs the strategic thinking, insight, and partnership of a CFO.” Forgus agrees that the business/enrollment management alliance helps both officers build the school community necessary to support the financial models and admission policies that boards can embrace and support. “These two positions can be poised to transform data and information into a persuasive argument for a more entrepreneurial financial model, led by a team jointly responsible for revenue generation and cost containment,” he said.

NBOA’s Shields concludes that the complexities of the current environment for independent schools requires an integrated leadership approach. He asserts: “Since enrollment and financial aid are so closely tied to an independent school’s overall net revenue outlook, it’s critical for the business officer and admissions director to develop and maintain a close partnership.” The time has come for independent school business officers and admission leaders to consider anew how to collaborate in support of school sustainability. It is a unique moment for the “business” of independent schools, and it’s best to be each other’s checks and balances when it comes to this partnership. The admission office’s success and the future of independent school market depend on collaboration between those with the responsibilities to manage finance and market forward towards a positive end for the institution.

Citations:

1. Bottomline Newsletter, NBOA, Jeff Shields Viewpoint, November 14, 2014
2. http://www.universitybusiness.com/article/10-rules-solid- admissionsfinancial-aid-partnership
3. http://www.universitybusiness.com/article/new-finance-and- enrollment-partnership