Read Indicators text version

STRATEGIC INDICATORS FOR INDEPENDENT SCHOOLS Prepared by Sorrel R. Paskin, CMA

The compilation of statistical information and its evaluation through ratio calculations and trend analysis can provide significant indices for assessing the performance of an independent school. In addition to assessing financial condition and the extent to which current operating patterns contribute to the long-term wellbeing of the institution, such analysis can also serve the needs of decision makers and policy formulators as they seek to benchmark best practices among peer schools. The opportunity to view present operating patterns in the context of their historical development, and with respect to the environmental and conditioning factors to which they respond, adds important depth to the planning exercise. When strategic indicators of performance are compared to those of peer schools, perspectives may be broadened and new insights developed. Strategic indicators provide an important framework that enables decision makers to assess a school's strategic position through comparative analysis and to establish direction and formulate policy that will attain essential goals in the future. The capital structure of an independent school, broadly conceived, includes four components: 1. Financial capital: the sum total of economic resources ­ revenues, reserves, investments and endowment; Physical capital: the real and personal property owned by the school ­ land, buildings and equipment; the condition of buildings and building systems and the functional adequacy of spaces for the uses included within them; Information capital: principally, computer and technology resources and the use of technology in support of academic programs and administrative functions; Human capital: the intellectual resources of the institution ­ its students, faculty and staff.

2.

3.

4.

The quality of these assets and their interrelationships drive the strategic position of the school. While there are no "right" or "wrong" values for any indicator, the values generated by the ratios and the other indicators will be favorable or unfavorable in terms of the mission of the school and its capacity to achieve its goals and its maintenance of long term financial equilibrium. The need for changes in operating patterns may be signaled by certain indicators and by comparisons between the ratios of a given school and those of other members of its peer group. In general, however, trend lines generated through the analysis of longitudinal data will be more significant indicators of strategic direction than the ratios or other indicators applicable to any given year.

I.

Financial capital

I-1.

Expendable fund balances as a percentage of the annual operating budget inclusive of mandatory transfers. [Current unrestricted fund balance + gifts and endowment investment return restricted to operating items (the current restricted fund balance) + unrestricted component of the unexpended plant fund balance + quasi endowment fund balance] divided by [budgeted operating expenditures + mandatory transfers] or [Unrestricted net asset balance ­ investment in plant + operations component of the temporarily restricted net asset balance] divided by [budgeted operating expenditures inclusive of mandatory debt service payments] Mandatory transfers represent debt service payments due to external funding agencies which are usually financed by the operating fund and recorded as a transfer to the investment in plant fund. This ratio approximates the extent to which unrestricted reserves and restricted balances applicable to operating items would support the costs of operations in the absence of further revenue inflows. It represents the capacity of the school to weather severe environmental shocks and to respond to unexpected internally generated or externally imposed adverse circumstances. A value of 1.0 should be considered a minimal policy goal.

I-2.

Contribution ratios/revenue-mix ratios. [Gross tuition and fees] divided by [total operating expenditures + mandatory transfers (TOE + MT)] [Total gifts applied to operations] divided by [TOE + MT] [Endowment investment return applied to operations] divided by [TOE + MT] [Unrestricted investment income] divided by [TOE + MT] [Summer camp and other program fees] divided by [TOE + MT] [Auxiliary services fees] divided by [TOE + MT] [Other income] divided by [TOE + MT] Contribution ratios measure the extent to which each revenue source "covers" or contributes towards total operating needs. If the divisor, TOE + MT, is replaced by Total Revenue, the ratios measure the component of total revenue that each revenue source

2

provides. Long-term trends evident in either the contribution ratios or the revenue mix ratios provide information about past growth patterns, the stability of revenue sources, and revenue source dependency. If the school is growing more tuition dependent over time, this may suggest that other revenue sources are not keeping up with the growth rate in the overall budget. Again, increasing tuition dependency resulting from growing enrollment or substantial tuition price increases may affect program quality or composition of the student body, or need-based financial aid budgets in the future. However, tuition reliance may not be a problem if the historical trend shows that this source of revenue is dependable and can be counted upon to meet growing operating needs in the future. Schools that accept a small percentage of their applicants may be tuition reliant without excessive concern; schools that accept a majority of their applicants are at greater risk and may wish to consider developing alternative sources of revenue to ensure long-term equilibrium. Schools set their tuition rates in consideration of several factors. Certainly, the contemplated expenditures and transfers for the period are consulted. Additionally, however, the practices of peer schools, perceived market conditions and recent past experience are also consulted. A five-year financial plan, the construction of which was based upon these same factors, may also prescribe what rates shall prevail within any given year. Typically, both reason and emotion contribute to the debate among the trustees. Parent trustees may find it hard to distinguish between the interests of the institution and their own self-interest in these deliberations. It is clear that, in most schools, the establishment of the tuition rates is more art than science. Trend lines in the ratios measuring gifts and endowment investment return applied to operations are important in a number of respects. Gifts applied to operations should grow at least at the rate of growth in the annual budget, year over year. If enrollment is growing, then the index of significance is the rate of growth of the average gift per student. In schools that enjoy strong parent support, annual giving including gifts restricted to operating needs may supply ten percent or more of the annual budget. Whatever the level of support, however, it should keep pace with the growth in the budget to avoid increasing reliance elsewhere in the revenue structure. It is worth noting that annual giving represents parent and alumni testimony to the value of the school and its contributions to the education of young people. The amount of endowment investment return applied to operations is dependent upon a number of factors, including the size of the endowment, investment allocation policy, portfolio management strategy, and the school's adopted spending policy. In order that this revenue source keep pace with the annual growth in budgeted expenditures, it is important that the spending policy take into account that growth factor as well as provide for sufficient reinvestment to protect the principal against the erosion effects of inflation. The inflation factor in this context is the rate of growth in budgeted expenditures, not the CPI which, typically, is 1.0%-1.5% less than the school's internal cost rise.

3

I-3.

Expenditure and transfer mix ratios. [Faculty salaries expense] divided by [TOE + MT] [Administration + Administrative Staff salaries expense] divided by [TOE + MT] [Other salaries expense] divided by [TOE + MT] [Payroll taxes + employee health/welfare/retirement benefits expense] divided by [TOE + MT] [Instructional programs supplies and services expense] divided by [TOE + MT] [Administrative supplies and services expense] divided by [TOE + MT] [Occupancy expense] divided by [TOE + MT] [Auxiliary services expense] divided by [TOE + MT] [Financial aid expense] divided by [TOE + MT] [Transfers to plant inclusive of PPRRSM funding, debt service payments and asset acquisition costs] divided by [TOE + MT] [Transfers to quasi-endowment] divided by [TOE + MT] Expenditure patterns vary considerably among institutions reflecting size, wealth and mission. Long-term trends in these ratios will signal changing institutional priorities as well as changes in financial strength and vulnerabilities. A sudden decline in the growth rate for funding plant reserves may indicate a shift in priorities to faculty compensation and may signal a growing backlog of deferred maintenance. Outsized rates of increase in financial aid may be associated with adverse demographic changes in the applicant pool or problems associated with attraction or retention of students. Whether shifts in allocation patterns are regarded as desirable or not is linked to the operating context of the school and the extent to which the shifts are planned or unplanned. Analysis of expenditure patterns may reveal opportunities for cost reduction or future cost avoidance without diminution in the quality and quantity of essential services. Since in most institutions tuition revenues must recover 75% or more of the cost of operations, it behooves policy makers to ensure that cost drivers are justified ­ that is, that value received in terms of achievement of mission related goals and objectives (outputs) is commensurate with the costs incurred (inputs). In this regard, each administrative office, the academic divisions and departments, and maintenance and auxiliary services operations are candidates for an audit to assess inputs and outputs and the process flows that link them. The role that technology plays in enhancing productivity is an important part of the overall assessment.

4

It is worth noting that the overall cost structure of an independent school comprises six principal cost centers: personnel costs; instructional supplies and services; administrative supplies and services; auxiliary supplies and services; occupancy costs; and reserves funding. Reflecting the labor intensive nature of schools, personnel costs typically comprise between 60% and 70% of the annual operating budget, leaving just 40% to 30% for the other cost centers. Again, tuition revenue net of financial aid underwrites approximately 75% to 85% of the operating budget in most schools. From this perspective, there is a clear and high degree of articulation between changes in the tuition price and changes in compensation. Another issue concerned with revenue and expenditure composition is the financial performance of auxiliary services. The operations of food services, transportation, boarding departments and school stores represent significant cost to many schools. Some or all of these costs may be recovered through fee-for-service pricing policies. Policy makers will want to know the extent of and recent trends in cost recovery pricing and how these characteristics compare with peer-group schools. I-4. Instructional expenditures per student, constant dollar value. [Total instructional expenditures] divided by [number of students] expressed in constant dollar terms. Viewed longitudinally, instructional expenditures per student measures the extent to which tuition dollars purchase their objective. Presumably, the allocation of institutional resources to the instruction function expresses the major service effort of a school. Institutional priorities should be such that the constant dollar value of this ratio keeps pace with or increases faster than the constant dollar value of the tuition price. I-5. Administrative expenditures per student, constant dollar value. [Total administrative expenditures] divided by [number of students] expressed in constant dollar terms. Beyond a basal or threshold level, service levels for many administrative functions are based upon enrollment. Thus, many operations of the business, admissions and development offices, as well as division offices, in both volume and complexity, depend upon the number of students enrolled in the school. However, given this fact, it remains an important aspect of effective and efficient management that task accretion not automatically result in increased numbers of administrative personnel and declining productivity. The value provided by the services of any organizational unit to the goals of the institution must be commensurate with the cost of that unit in order to avoid productivity declines and loss of economic efficiency. Measuring administrative expenditures per student in constant dollar terms provides information concerning the cost of producing the outputs; the school will want to be satisfied that growth in that cost

5

beyond the school's internal inflation rate is warranted by the added values included in the outputs. I-6. Excess (Deficiency) of current fund revenues over current fund expenditures. [Total current fund revenues] minus [TOE + MT] Most schools budget a balanced operation in which total revenues equal total operating expenditures, mandatory transfers, transfers for routine furniture and equipment acquisitions, and plant and endowment reserves funding. Oftentimes, tuition revenues and annual giving serve as balancing factors in the exercise. Two items stand out as important in this process. The budget maker must ensure that all relevant costs are included in the expenditures and transfers side of the budget and that these costs are stated at their "real" values. That is, the PPRRSM transfer should be based upon the replacement cost of depreciable assets and not the historic book cost, and the transfer to endowment should give effect to a spending policy that ensures preservation of value without creating intergenerational wealth transfers through excess or insufficient reinvestment. Again, occupancy costs and major plant renewal and replacement costs, whether resulting in capitalized assets or not, should be sufficient to reduce the deferred maintenance backlog over time or prevent the formation of such a backlog. Finally, schools that earn a surplus on operations through efficiencies or unusual and fortuitous circumstances are in a position to grow their financial capital by way of augmenting quasi-endowment or plant reserves. Operating surpluses provide the wherewithal to undertake innovative, creative or even experimental programs that can contribute to maintaining a distinctive margin of excellence. I-7. Long-term debt as a percent of total liabilities. [Total long-term debt] divided by [Total liabilities] I-8. Total operating fund assets as a percent of total operating fund liabilities. Total unrestricted and temporarily restricted assets as a percent of total liabilities. The total debt burden of a school is a significant determinant of the extent to which revenue inflows are available to support program services. Long-term debt associated with land and buildings is usually not a problem. However, in cases where a school borrows funds to support operations, significant risk is incurred. Debt service payments can easily compromise the quantity and quality of program services resulting in growing disparity between the tuition price and the value purchased by that price. Total operating fund liabilities include payroll and vendor obligations and deferred revenues. The extent of total liabilities that is long-term debt and the relationship between operating fund assets and operating fund liabilities provide useful information concerning the financial condition of the institution and the extent to which it is maintaining financial equilibrium. If the ratio of operating fund assets to operating fund liabilities is above 2.0, the school

6

probably has sufficient resources to enjoy some measure of flexibility and to weather short-term adversity. I-9. Market value of endowment per student. Endowment investment return occupies an increasingly important position in the overall revenue structure of a school. Unlike tuition and most gift revenues, endowment return is independent of the number of students in the school. In cases where it represents 10% or more of the revenue inflows, it can provide an unparalleled level of support for financial aid and faculty compensation. It can also provide program resources and venture opportunities beyond the capacity of tuition to afford. A candidate target for endowment per student can be established as that principal amount expected to provide a level of total investment return applied to operations that is 10% of the tuition price. Under this scenario, if tuition is $10,000, the endowment investment return applied to operations should be $1,000. In a conventional portfolio comprising 60% equity/40% fixed income securities (about 9% average total return), and utilizing a 5% spending rate, the principal per student is about $20,000. I-10. Quasi endowment as a percent of total endowment. Quasi-endowment represents the corpus of unrestricted monies that has been set aside and invested to function as if it were true endowment. The funds are usually derived from operating surpluses and large unrestricted gifts as well as reinvested return on restricted endowment investments. A substantial quasi-endowment fund is a significant factor in ensuring institutional flexibility. While the intention is that the fund be treated as if it were endowment and retained intact in perpetuity, the fact is that these monies are unrestricted and can be utilized at the discretion of the governing board to meet any future need. While not a critical factor, the larger the ratio of quasi-endowment to total endowment, the more flexibility the institution enjoys. I-11. Development gift profile, results and effectiveness. [Gifts from parents] divided by [Total gifts for operations] [Gifts from alumni(ae)] divided by [Total gifts for operations] [Gifts from past parents, grandparents and friends] divided by [Total gifts for operations] [Gifts from trustees included in above categories] divided by [Total gifts for operations] Percent of current parents participating in annual giving Percent of solicited alumni(ae) participating in annual giving [Total gifts for operations] divided by [Number of students]

7

[Total direct development expense] divided by [Total gifts for operations] Development efforts and results are critical determinants of success in independent school operations. In addition to promoting inflows of essential resources that support operating needs, the marketing, publications, public relations and other outreach activities characteristic of mature development operations help to favorably position the school within its constituent communities. The school's "press" ­ its image within those communities ­ can contribute markedly to the support of admissions goals. These dimensions of the development effort are, however, difficult to quantify beyond a few conspicuous indicators of their success: the indices included above that report on gifts received and their sources. The annual fund is an integral component of the revenue structure of an independent school. Some schools consider it the tax-deductible component of tuition ­ funding for the "implicit scholarship" which each student receives by virtue of the fact that tuition does not cover the per student cost of the education provided. Others market annual giving as sustenance for the margin of excellence that characterizes the institution. Tuition provides for the core program; annual giving supports program service enhancements. It helps to ensure that the school will achieve its diversity goals; that compensation programs will remain sufficiently attractive to retain the best qualified faculty available; that professional development opportunities will extend the performance of the faculty; that the quantity and quality of instructional materials, supplies and services will be optimized; among other goals. Schools that adopt this strategy believe that tuition covers the cost of an adequate education; annual giving adds the margin of excellence. Principal donors to independent schools are current parents. Alumni giving is present in all schools including grade 12 but is usually strongest in boarding schools. Trustees are expected to provide leadership with respect to giving programs by contributing an outsized share of receipts and participating at the 100% level. Many schools solicit and receive special gifts providing for specific operating programs or projects. Current financial aid, faculty salaries or professional development underwriting ­ as opposed to endowment to support these functions -- is often a philanthropic interest of donors. However, the school must guard against assuming long-term obligations that will necessitate budgetary funding in the future in the event that these gifts are nonrecurring. It is clear that annual giving programs that cover 10% of the annual budget and that are derived from 75% or more of each solicited constituency are effective contributors to a financially healthy institution. These gifts are conspicuous symbols of personal support for the school and as such can provide leverage for additional fund raising within the broader community. Foundations and other entities that receive grant requests from schools are rightly interested in the degree to which those individuals who know the school best support it. Strong parent, alumni and trustee support can advance a case for a grant proposal.

8

Each school will want to track its annual giving experience, both in terms of dollars and participation, to gain an understanding of performance over the recent past. Comparison with peer schools may also contribute helpful insights. This information may contribute to modifying or extending the donor cultivation programs and other elements of institutional outreach that now exist.

II.

Physical capital

II-1.

Plant operations and maintenance expenditures as a percent of total current fund expenditures and mandatory transfers. [Maintenance salaries, wages and benefits + Maintenance and repair expenditures + Utilities expenditures + Other occupancy costs] divided by [TOE + MT]

II-2.

Estimated deferred maintenance (maintenance backlog) of total plant as a percent of total replacement value of plant. Estimated deferred maintenance of total plant as a percent of the current operating budget. In times of financial stress, when myriad claims to funding outstrip the resources available, schools and other institutions have typically ignored the sometimes invisible needs of buildings and infrastructure to respond to the visible and pressing needs of faculty salaries, financial aid and program support. The outcome of the failure to meet plant needs in timely fashion is to develop a backlog of deferred maintenance. Plant needs comprise two specific elements: the value of the plant in terms of the condition of buildings, building systems and infrastructure; and the functional adequacy of the included spaces in terms of their effective support for the programs and functions housed within them. Functional adequacy describes situations in which the use of specific spaces changes over time as the result of evolving needs, changes in instructional and administrative technology, and changes necessitated by external regulation (ADA, AHERA, etc.). Experience in colleges and universities suggests that reasonable estimates of the funding necessary to maintain plant value through renewal and replacement activities is 1.5%2.5% of plant replacement cost while funding necessary to secure adaption needs (maintaining functional adequacy of spaces and accommodating changes in use and regulatory requirements) is 0.5%-1.5% of plant replacement cost. Schools facing substantial backlogs of deferred maintenance may wish to address the matter through the agency of a professional facilities audit. The audit will identify both components of the backlog, establish a plan that prioritizes the renewal and replacement activities necessary to restore good physical condition, and provide a master plan to

9

address the facilities upgrades and changes necessary to create more effective utilization of campus space. It is important that schools identify their maintenance needs as accurately as possible, develop a plan for retiring any backlog, and ensure that future plant funding will adequately provide for renewal, replacement and facilities adaption activities. II-3. New investment in plant as a percentage of plant depreciation at replacement value. New investment in plant as a percentage of plant depreciation at book value. New investment in plant is the sum of capitalized land improvements, buildings and building improvements recognized during the period and changes in the PPRRSM reserve balance. When combined with maintenance and repair activities inclusive of plant salaries and benefits, the sum total should equal about 3% of the replacement value of the total of land improvements, buildings and building improvements.

III.

Information capital

III-1. Student access to computers: number of students per microcomputer. Institutional policy with respect to funding replacements of microcomputers. III-2. On-campus connectivity. Existence of a central wide-band computer network. Computerization of administrative offices and connection to the network. Computerization of faculty/staff offices and connection to the network. Computerization of libraries and connection to the network. Percent of classrooms and laboratories with connections to the network. Percent of student residence hall rooms with connections to the network. III-3. Internet access. III-4. Presence of a technology coordinator or chief information officer. A substantial and growing capital need at every school is technology resources. It is clear that computers and sophisticated software have permanently changed the instructional strategies in many academic departments and have revolutionized administrative process. It is reasonable to expect that all academic departments will be changed by technology in

10

the near future. Growth of the internet has been of major importance for schools and colleges during the last few years. The "net" has become an information superhighway available to virtually anyone. Faculty and student users can communicate with one another freely via electronic mail, regardless of distance and can access library catalogues and documents from authors, publishers and archives from virtually anywhere in the world. It is not uncommon for students to face homework assignments for which use of the internet is a prerequisite. To take full advantage of technology's potential to leverage learning, schools need to ensure that all students have computer access. Both capital and operating technology expenditures should be budgeted on an annual basis. Recognizing the pace of external technological change and the growth rate of internal implementation and augmentation of computer, software and media resources, funding for technology claims an increasing share of institutional resources. A possible accommodative strategy is to budget reserves funding for technology utilizing a threeyear replacement cost cycle for equipment hardware and software. In the face of growing demand for technology, and in recognition of the capital investment and ongoing operating costs it entails, it is important that schools develop and periodically update a master technology plan. The plan expresses the school's position with respect to the role that technology will play in its academic programs and administrative services. Such matters as what role computer labs will play in the future, whether each student will have his or her own laptop computer on campus, the use and presence of technology in each classroom, the integration of library, media and technology resources, among others, need determination to inform the technology plan. The specialization and technical character of the information required suggest the need for a technology coordinator to provide counsel, oversight of use, faculty professional development, and implementation management services.

IV.

Human capital

IV-1. Students: institutional selectivity and attractiveness. Number of applicants. Ratio of number of students accepted to number of applicants in present year (acceptance rate ­ a selectivity index). Ratio of number of accepted students attending in present year (matriculants) to number of accepted students in prior year (yield index ­ measures institutional attractiveness). Total attrition (all causes). The proportion of applicants accepted is a fundamental indicator of institutional selectivity. Admissions yield is the proportion of accepted applicants who attend. Yield

11

is a rough indicator of institutional attractiveness and is a function of a variety of competitive factors that influence student and parent choice among schools. These include the perceived character and quality of the institution, its program, athletic and extracurricular offerings, facilities, cost and availability of financial aid. An additional factor is the number of other schools to which the student has applied and gained admission. Finally, demographics plays a role in determining these statistics. Policy makers will want to view trends in admissions statistics as critical indicators of long-term wellbeing. In particular, the long-term continuation of present trends may bode well or ill and, if the latter, may warrant careful investigation with a view towards developing new policies and procedures. IV-2. Student performance: Median Verbal SAT score. Median Math SAT score. Number of AP Tests taken or Percent of Students Taking AP Examinations. Percent of Graduating Seniors Having Taken at Least One AP Course. Percent of AP Tests scored 5. Percent of AP Tests scored 4. Percent of AP Tests Scored 3. Indicators of student performance should be consistent with the adopted mission of the institution. Schools that view themselves as strong academic institutions will expect consistently high performance in these indicators including a strong and perhaps growing commitment to the advanced placement program. Other schools whose missions serve the broader population will be concerned that performance in these areas is at least level over time. It is evident that an important factor in determining institutional attractiveness is the quality of the student body. Quality can, however, denote a number of characteristics; academic prowess is not the sole determiner of the quality of the student body. In some schools, academic performance as determined by standardized indices and advanced placement results may be irrelevant to the school's mission and objectives.

12

IV-3. Faculty productivity. Average full-time faculty compensation inclusive of salary and benefits (exclusive of tuition remission and non-need-based financial aid). Average full-time faculty salary in constant dollars with change from previous year. Student-to-faculty ratio. Average section sizes by discipline (arts, English, foreign languages, history, science, etc.). Average number of students per teacher by discipline. School-wide student-faculty ratios may mask significant variations among departmental teaching loads. Thus, sections in the upper school mathematics curriculum may be larger than sections in English or science to reflect the nature of the subject matter, the style of instruction, or workload factors associated with laboratory courses. However, departmental teaching load variances may also be associated with choice options afforded students, academic counseling, or parent priorities. Thus, students may take two or even three courses from a single discipline in a given year. The courses receiving these students may become overcrowded or uneconomical smaller sections may be split off to accommodate the demand. Another consequence that may result from this doubling-up is reductions in the numbers of students enrolled in other disciplines. Such enrollment reductions can also lead to uneconomic section sizes. The factors of consequence in these indices point to efficiencies in operating patterns and the productivity of faculty associated with specific disciplines. Under-enrolled sections may need to be accommodated within the mission of the school. However, policy makers will want to assess the added costs associated with such practices and determine the desirability and the feasibility of change. The use of constant-dollar measures in assessing compensation programs is not a useful index for purposes of peer group comparisons. It does, however, provide important information concerning the extent to which the school has promoted the attainment of standard of living enhancements on the part of its faculty and staff through its adopted compensation policies and practices. Policy makers must determine how resources available to the school are to be allocated among the competing cost areas. Faculty compensation statistics may indicate that more resources should be allocated to this area or, perhaps when combined with faculty-student ratios, that other institutional responses may promote more efficient use of faculty resources. It is important to note that turnover savings are masked by measuring average faculty compensation for both continuing and new faculty members. The school may in fact be providing adequate increases for continuing faculty but hiring replacement faculty at levels below those of the departed incumbent.

13

Standard faculty assignment: express in estimated number of annual student contact hours; include teaching, extra-curricular activities, coaching assignments, committee assignments and all other duties which are included in the faculty contract and for which no extra stipends are paid. IV-4. Administrative staff productivity. Average full-time administrative staff compensation inclusive of salary and benefits (exclusive of tuition remission and non-need-based financial aid). Student-to-staff ratio: the number of students per FTE administrative staff member. IV-5. Institutionally funded financial aid as a percent of gross tuition revenues. Institutionally funded financial aid as a percent of TOE + MT. Percent of students receiving partial or full financial aid. Financial aid awarded to students may be funded by endowment investment return restricted by donors to financial aid support, by current gifts restricted to financial aid, or by current revenues. If financial aid is funded by gifts or endowment investment return, it provides a discount to the student without reducing institutional resources available for program services. If financial aid is funded by current revenues, it is institutionally sourced and diverts funds away from the support of program services. This diversion has the economic effect of increasing the tuition price charged full-paying students over the stated amount by reducing the services received on a per-dollar basis. However, the diversion may be justified if other mission-related goals are thereby served. These might include a commitment to socio-economic diversity or a student recruitment program designed to attract students of unusual talent or promise without regard to financial capacity. The diversion may also be justified if the marginal revenue per added student is greater than the marginal cost of educating that student. It is also important to compare these indicators with those describing selectivity to ensure that meeting enrollment goals is not directly dependent upon offering tuition subsidies. IV-6. Financial FTE. [Gross tuition revenue ­ total financial aid] divided by [Tuition and fee rate] The financial FTE is an imputed enrollment number determined by dividing net tuition revenue by the tuition rate. As such, the index describes the number of full-time tuition payers. Viewed over time, the financial FTE is useful in determining the joint impact of the growth in the tuition price and the growth in financial aid. A declining financial FTE is cause for concern.

14

IV-7. Ratio of long-service faculty to total number of faculty. A school's commitment to the continuing employment of its faculty often reflects the tenure of those employees at the institution. A school may offer a quasi-commitment to continued employment to faculty who have served in excess of eight years. While the commitment may not be formalized, it may, nevertheless, be presumed and thereby restrain actions that would otherwise lead to reductions-in-force or personnel replacement. To the extent that such commitments are in effect or are presumed to exist, institutional flexibility may be reduced. IV-8. Percentage of total FTE employees who are faculty. Percentage of total FTE employees who are administrators. Percentage of total FTE employees who are administrative staff. Percentage of total FTE employees who are service staff. Over time, these indices report the trends in numbers of faculty, administrator and staff employees. They provide a rough guidepost to the priorities that have governed employee additions over time. The policy maker will want to determine that the changes in these ratios have occurred through design and not by accident and that the trends in place do not reflect declines in productivity in each of the functions identified. IV-9. Attainment of Diversity Goals. Progress towards achieving specific ­ sometimes even numerical ­ goals with respect to student and faculty diversity is an important component in the measurement of performance for most independent schools. Gender and ethnic diversity within the total school community has long been recognized as a significant factor in determining the quality of the overall educational experience of children in today's world. Typical measures of diversity express minority representation within the faculty and the student body as a percentage of total faculty and total students. In some cases, it may be more relevant to track these percentages on a division or even a grade-level basis. However measured, the School will want to assess the extent to which its performance with respect to the attainment of diversity goals meets its year-over-year expectations.

15

Information

Indicators

15 pages

Report File (DMCA)

Our content is added by our users. We aim to remove reported files within 1 working day. Please use this link to notify us:

Report this file as copyright or inappropriate

813183


You might also be interested in

BETA
Indicators