Author: Somerset Education

Home > Articles posted by Somerset Education

The School Financial Survey is Now Open


We are proud of our 26 year history of operating the School Financial Survey (SFS) which is now ready to receive your 2020 school-year data.

Here’s a link to the survey:

Many schools complete the School Financial Survey at the same time as completing the Commonwealth Financial Questionnaire (FQ) which became available on Monday 12 April. The SFS data entry is in line with the FQ so it is easy to complete and a great double check of your FQ submission including a Myschool estimator.

Our research indicates that use of ratios and benchmarks is a crucial attribute of a financially sustainable school. One group of 31 schools that participate annually in the SFS showed an average 21% increase in Net Operating Margin (operating surplus) and another group showed an average 36% increase in Net Operating Margin, 40% increase in working capital and 35% improvement in Debt Servicing Cover. I am not promising a change in performance from use of the SFS but indications are that annual participation contributes to a financially sustainable school.

SFS participant names and data are held confidential by Somerset Education which we know is important to you. Reports are generated in a format that does not allow others to specifically identify your school.

Except for a few days of testing, the SFS is open 24/7 all year for data entry and reporting. However we do encourage schools to complete data entry by July 2021 to allow sufficient data when switching to the new year’s reporting (2020 school-year data) on 2 August 2021.

Participation starts from $715 including GST ($358 for schools with less than 200 enrolments).

If you have any questions in relation to the survey please contact Elizabeth, our survey administrator at or telephone 1300 781 968 (from outside Australia +61 7 3263 5300). To assist you with accessing the Portal, here are the step-by-step instructions: 2021 Navigating the Somerset Education Portal.

If I can help in any way with the financial governance of your school, please contact me at or mobile 0417 618 899.

We look forward to your ongoing support, or if new to the survey, your participation in the FPS.

Kindest regards

John Somerset and the Survey team

John Somerset is a Chartered Accountant. He has extensive knowledge of the independent school sector and is past President of Independent Schools Queensland and a past board member of the Independent Schools Australia.

Three Steps Toward Financial Sustainability

By John Somerset, 09 March 2021

Last week I attended a virtual conference in Washington DC from the comfort of my office. Yes, at 2.30am for three days I attended plenary and breakout sessions, discussion groups as well as virtual trade stands and even on-line yoga. Professionally I preferred this experience as I could download the slides before each session and make notes as the presenters worked through the material. Then for days after the conference, I could do the same for the sessions that I missed by accessing recordings. I also corresponded directly with the presenters via chat functions during the sessions or emails afterwards. I found myself corresponding with a professor in a USA university and a director of S&P Global Ratings – valued contacts for my current PhD research on independent school financial sustainability and this opportunity would not usually occur in a regular conference environment.

The conference was organised this way in direct response to Covid-19. It was brilliant, although I did miss the social interaction which as you know can be just as important as the professional content. I can see conferencing has changed for good and a hybrid of on-line and in-person will most likely be the future.

My point is two-fold – the pace and acceptance of change in the education sector has accelerated, and how can we apply learnings stimulated from our 2020 Covid year to ensure our schools’ financial sustainability?

I believe there is a three-step process toward school financial sustainability:

  1.  Where are we now financially? Identify and quantify financial and operational strengths and weakness by participating in the annual ASBA/Somerset Non-Government Schools Financial Performance Survey (FPS). This quantitatively informs the school’s strategic plan for example, how does your operating surplus, income, expenditure, staffing, debt, debt servicing and cash reserves compare with others, how is it trending and where does it need to be to be sustainable?
  2. Developing a strategy in uncertain times that is mission-centric to ensure investment of finite resources to best meet the needs of current and future students and that is financially viable.
  3. “Dollarise” the plan into a 10-year Income and Expenditure, Balance Sheet and Cash Flow budget to analyse key metrics, assess risk and decide on whether you can afford the plan. Then stress test that model with various scenarios; for example, decline in enrolments, and increase in capital expenditure, operating and finance costs.

I now briefly discuss these three areas:

1. Where are we now financially?

The ASBA/Somerset Non-Government Schools Financial Performance Survey (FPS) has been operating for over 25 years, is the largest financial database of over 600 non-government schools in Australia and New Zealand and is available for you to use to compare 60 ratios for your school against a combined database of 36,000 ratios. You can participate from $650 plus GST (half price for schools with less than 200 enrolments) and the report will quantify (dollars and staff numbers) differences from the average for your school’s income, discounts, expenses by various categories, staff numbers, debt, operating surplus etc.

This means you will go into a strategic planning session knowing what operating surplus is required to be financially viable and sustainable and where adjustments may be possible.

The FPS is very low cost, but it does rely on sector-wide support. I appreciate the extreme busyness of 2020 and no doubt into the future, but it is an annual priority not to be missed.

2. Developing a strategy in uncertain times

We need to predict and plan for the future and build strategies to move our schools into position to survive from, and capitalise on, what is coming. I appreciate it is very difficult to formulate strategies when we are unable to make comparisons with the past. The 2020 Covid experience has poignantly highlighted this. How can we act in anticipation, how can we “run to where the ball is going rather than where it has been”?

My Washington virtual conference is testament to how things can change and are likely to remain. In my blog of 25th March 2020, I referred to the set-up of a laptop and data projector at home so my wife could still attend yoga sessions during Covid. Well, she does not intend on going back into the yoga studio.

One important barrier for success is diffusion of resources. Schools should evaluate all they do, including curricula, co-curricular and other offerings using the lens of school MissionFinancial contribution, current Competencies and Market demand. We must direct finite resources to areas that will most benefit current and future students. Stop doing things that are low on mission, financial contribution, market demand and competency; redirect resources to areas that are high on mission and market demand; and seize opportunities to invest in competencies for these areas.

For example, student wellbeing is likely to be high on a school’s mission and demanded by parents and requires continual investment in competency to identify and manage. But there may be curricula offerings with dwindling demand, not mission-centric and low student/teacher ratios so expensive to offer. With careful reputation and stakeholder management, can resources be re-directed for the benefit of current and future students and overall school sustainability?

Here are seven questions to help your school strategise in uncertain times:

      1. How do current offerings (curricula, co-curricular) align with the school’s mission?
      2. What didn’t happen in 2020 that doesn’t need to come back?
      3. What new initiatives/investments can be leveraged going forward?
      4. Can you imagine some dramatically different but plausible future education worlds taking into consideration social, demographic, technological, economic, ecological, political, legal, ethical and competition environments?
      5. What situations could cause these worlds to occur
      6. What strategies and actions should we take to prepare for these worlds
      7. Is the 5 – 10 year budget of these scenarios financially viable/sustainable?

3.  Dollarise the plan

To be financially sustainable, your school must generate adequate cash from operations (operating surplus) to sustainably fund debt repayments plus asset reinvestment – simply, money flowing in must equal money flowing out.Your school must also maintain an adequate cash reserve to ensure the school can continue to trade during financial shocks like Covid.  Research indiciates schools should maintain bewtween one to three months-worth of expenses in cash reserves.

Once your strategy is formulated, “dollarise” it into a 5 – 10 year budget to assess key metrics such as operating surplus, cash reserves, debt levels, debt servicing and then stress test that model with various scenarios – such as decline in enrolments, increase in capital expenditure, operating and finance costs.

Somerset Education has developed a fully reconciled Income and Expenditure, Cash Flow and Balance Sheet 10-year budget model that makes financial analysis of your future school easy. It includes an assessment of key ratios against industry averages of similar schools available through participation in the ASBA/Somerset Non-Government Schools Financial Performance Survey (FPS) Australia’s largest financial database of over 600 non-government schools.
For the benefit of individual schools and the sector I encourage participation in the annual FPS. And don’t “re- invent the wheel”, save yourselves considerable e and cost by purchasing the Somerset Education Non-Government School budget mode designed in Australia and which has now been used in Australia and New Zealand by over 150 schools since its launch in 2020.

Kindest regards

John Somerset is a Chartered Accountant. He has extensive knowledge of the independent school sector and is past President of Independent Schools Queensland and a past board member of the Independent Schools Australia.

ISNZ School Financial Governance—Webinar, 5 and 12 March 2021.

Well done, keep going, and best wishes for 2021!

By John Somerset, 14 December 2020

It goes without saying that 2020 has been a most challenging year. However, as we teach the students, meeting challenges builds resilience, and resilience is a crucial factor for success, contribution, and contentment.

I recently read a story of a person who at age 31 started a business and went bankrupt, he then tried to enter politics but lost badly. He started another business and went bankrupt. He then met the love of his life, but she died. He suffered a nervous breakdown after which he tried again to enter politics and failed. Started another business with a little success. At ages 46, 48, 55 and 58 he again ran for politics and failed. Finally, at 60 years of age, Abraham Lincoln was elected to his first public office as President of the United State – a shining example of resilience.

The non-government school’s sector has done a wonderful job in adapting to the challenges of 2020 to maintain its high-quality educational service which, I understand, has been rewarded with maintenance of enrolments and containment of financial stress. I suspect more challenges will follow in 2021 as government financial initiatives reduce. So, I encourage schools to stay resilient, look for efficiencies, adapt processes, focus resource allocation to your mission, reflect this into accurate long-term and short-term budgets, report regularly and respond to variations in a timely manner.

The ASBA/Somerset Non-Government Schools’ Financial Performance Survey (FPS) is a crucial industry tool to help identify and quantify strengths and weaknesses in your school’s operations. A number of factors caused delays in schools finishing the FPS this year. Thank you to over 600 schools that have participated so far this year. However, at the date of writing, we still have 80 schools waiting to complete. Timely completion facilitates timely provision of this crucial data to you. From the 2019 school-year FPS, the average independent school earned $129,000 recurrent cash surplus for every $1 million in gross income (12.9% Net Operating Margin), had average Discounts and Concessions as a percentage of Fees of 11.8% and Gross trade Debtors to Fees of 6.7%. I look forward to receiving the 2020 school-year data (from April next year) to see how these ratios have changed.

I also take this opportunity to sincerely thank the Somerset Education team for sharing their skills to help deliver what I hope the approximately 700 schools that we work with across Australia and New Zealand feel is a high quality and valuable service. I am truly privileged to work with this team (see photos above) and to provide this service to the schools’ sector. I am excited about the year ahead including my PhD research regarding school financial sustainability. Best wishes to all for a safe and joyful rest and a successful 2021.

Kindest regards

John Somerset is a Chartered Accountant. He has extensive knowledge of the independent school sector and is past President of Independent Schools Queensland and a past board member of the Independent Schools Australia.

Our office will be closed from Monday 14 December 2020 and reopening on Monday 18 January 2021. Please accept our apologies for a slower than normal response during this holiday period.


The 2020 (2019 school-year) Reports Now Available

The 2020 (2019 school-year) Reports now available! 
By John Somerset, 04 August 2020

The 2020 (2019 school-year) ASBA/Somerset Non-Government Schools’ Financial Performance Survey (FPS) Reports are now available.

Please log into the Somerset Portal by clicking the button below and then:

  1. Select a sample of similar schools
  2. Generate your reports.

Here is the link to a short video on how to select samples:

To date almost 500 schools have logged in to populate the survey. This year has seen delays, in part due to the extension to 31 August by the Australian Government to complete the annual Commonwealth Financial Questionnaire. As completions increase over the coming weeks, so too will sample sizes.

We appreciate the extreme circumstances of 2020 and the corresponding pressure placed on school business managers’ time. The FPS is a valuable tool for identifying efficiencies but it relies on timely completion by all participants. You can enter/change data and re-generate reports at any time until April 2021 but we implore schools to complete as soon as possible.

We sincerely thank schools for participating in the survey, which is the largest of its type in Australia and New Zealand, and trust that the reports help individual school and sector financial sustainability.

Kindest regards

John Somerset is a Chartered Accountant. He has extensive knowledge of the independent school sector and is past President of Independent Schools Queensland and a past board member of the Independent Schools Council of Australia.

SEA School Financial Governance—Webinar, 26 August 2020.
ISNZ School Financial Governance—Webinar, 27 August 2020.

ACS School Financial Governance—Webinar, 10 September 2020. 
AISSA School Financial Governance—Webinars, 15 and 21 September 2020. 

Think like a Chameleon

Figure 1 indicates over the 10 years from 2008 to 2018 the average number of staff in an Australian Independent School of 500 enrolments increased by 5.7 FTE (+11%) representing about $630,000 per annum in additional wages. This contributed to a 50% increase in total operating costs over the same period.


Figure 1 Average number of full time equivalent (FTE) staff in an Australian independent school of 500 enrolments

My previous blogs included, Is Your School Recession Ready? (October 2019), Accounting for Your Customers including using the ASBA/Somerset Non-Government Schools Financial Performance Survey (FPS) to “Identify and quantify financial strengths and weaknesses” (February 2020), Using Data to Drive Your Decisions (April 2020) and A Financial Crystal Ball – Key to School Sustainability (June 2020).

My blog dated 26 March 2020 referred to the Covid-19 pandemic as presenting an opportunity for change, being grateful for the continued need for education services but acknowledging challenges including reference to the growth in staff and costs as presented in Figure 1. I also called for schools to consider how processes could be re-engineered to improve efficiencies going forward. So, today’s blog offers some practical suggestions.

The ability to adapt to changing circumstances is an important attribute of financially sustainable independent schools. The FPS, a tool which facilitates benchmarking of revenue, expenses, surplus, staffing, debt, working capital and asset reinvestment with similar schools, is a crucial tool to help identify strategies for improving efficiency.

I implore schools to pro-actively consider how they can adapt to what is likely to be difficult economic and financial times ahead, like Chameleons that are infamous for adapting to changing environments!

How did Dutch local Authorities adapt to financial crisis? 
(Steccolini, Saliterer, Singh Jones, & Berman, 2017)

I know what you are thinking, “he’s gone mad, what do Dutch local authorities have to do with Australian Independent schools?”. Well the similarities are striking, and innovative schools engage in “out of the box” thinking. So, bear with me for the discussion.

Similar to schools, public sector organisations have a primary objective to meet service delivery and financial commitments now and into the future without debt rising continuously. Sustainability requires maintenance of service quality and volume while producing operating surpluses sufficient to repay debt and replace/improve assets.

Summarised below is one country’s deficit-reducing responses to adapt to a financial crisis.

Dutch local authorities are structured like Independent schools with a governing Council, Chair, and an Executive to run the organisation and inform the Council on policy and budgetary issues. They receive most of their funds from central government (like federal and state grants in independent schools) and charge for services plus local taxes (like fees in independent schools). Asset reinvestment is funded from operations and reserves.

Since 2010 Dutch City Councils have been coping with serious levels of financial stress due to a decline in central government funding and reduced fees and taxes from an economic downturn and with limited ability to diversify their income. Moreover, the vulnerability was increased by a high level of debt. Respondents to this Dutch study referred to this event as being the largest financial challenge in their careers due to the severity and suddenness of the crisis.

I could not help but draw parallels with the Covid-19 pandemic and its likely adverse effect on the Australian economy and Independent school enrolments resulting in probable reduced income and financial stress.

In spite of the serious issues and consequences from their crisis, Dutch local authorities used it as an opportunity to improve transparency, introduce organisational innovations, reduce organisational slack, and stimulate team spirit and pride. So, what did they do?

Responses included:

  1. Acting immediately once consequences of the crisis were identified
  2. Using reserves to restore the fiscal gap
  3. Participating annually in benchmarking and stress testing programs to generate insights
  4. Initiating organisational reforms and optimizing work processes including
    • introducing shared services to improve efficiencies
    • redesigning jobs
    • merging units
    • introducing online services
    • reducing staff and costs – across the board and targeted
  5. Ending some services
  6. Evaluating capital expenditure to continue, postpone or cancel projects
  7. Preparing multi-year forecasts and budgets
  8. Optimising procedures and risk analysis of new policies and projects
  9. Calculating precise financial consequences of new proposals to advise council/executive
  10. Introducing professional risk management systems including a risk officer
  11. Developing early warning systems
  12. Improving the control, monitoring and transparency of finances
  13. Improving capacity of financial managers and executive
  14. Developing partnerships e.g. tapping additional income sources such as co-sponsoring investments
  15. Changing relationships between community and the Council.

As well as the above measures to restore fiscal deficits, long-term responses included realigning actual operational outputs with strategically desired outputs. Another interesting observation was a realisation that they operated in a broader web of stakeholders “Having a deficit is not a problem of the municipality, it’s a societal problem. The society therefore needs to be involved from the beginning, to solving it.”

Somerset Education offers tools to help facilitate many of the actions listed above including the annual FPSBudgeting and Reporting and Training.

We are in unprecedented times and I encourage schools to act now to consider strategies to navigate the current and looming financial crisis. I hope this brief summary provides useful insight into what others have done to restore fiscal balance when faced with similar circumstances.

Kindest regards

John Somerset is a Chartered Accountant. He has extensive knowledge of the independent school sector and is past President of Independent Schools Queensland and a past board member of the Independent Schools Council of Australia.

SEA School Financial Governance—Webinar, 26 August 2020.
ISNZ School Financial Governance—Webinar, 27 August 2020.
ACS School Financial Governance—Webinar, 10 September 2020.
AISSA School Financial Governance—Webinars, 15 and 21 September 2020.

Steccolini, I., Saliterer, I., Singh Jones, M. D., & Berman, E. (2017). Governmental Financial Resilience : InternationalPerspectives on How Local Governments Face Austerity. Bingley, UNITED KINGDOM: Emerald Publishing Limited.

A Financial Crystal Ball – Key to School Sustainability


More than ever the contribution of the Business Manager is crucial to navigating their school through the troubled financial times we are experiencing now and most likely into the foreseeable future. What the school needs is a financial crystal ball and I will explain why and how to build one.

Schools need information and advice in a simple format that will help guide their financial health during the adverse financial effects of the Covid-19 pandemic and the likely world-wide recession to follow.

The Reserve Bank of Australia, together with bank economists are predicting a negative (5%) GDP this year and unemployment peaking at between 9% to 12% by mid-2020. Also of concern is a declining job participation rate meaning less people looking for work, mostly affecting the second household income and youth. It is often the second household income that pays school fees. Low interest rates (monetary policy) and significant government financial incentives (fiscal policy) are trying to hold off a recession. But a recession-like economy is probable for Australia and World-wide.

History may or may not be an Indicator of the future 
Figure 1 indicates that during the 1990’s recession and the 2007 Global Financial Crisis (GFC) enrolment growth in Independent Schools reduced, but still grew. During the recession enrolment growth for Catholic schools reduced but increased for Government schools. During the GFC both Catholic and Government school enrolment growth increased.

Indications are that Independent schools are holding enrolments for now, but it is possible growth may flatten in the future.

Figure 1 Source Independent Schools Council of Australia Student Growth

Somerset Education has conducted the ASBA/Somerset Non-Government Schools’ Financial Performance Survey (FPS) for over 25 years, but does not have data from the 1990 recession. Figure 2 indicates that during the GFC the average Net Operating Margin reduced slightly but remained at about 11%. The average 2018 Net Operating Margin of 12.6% means an operating surplus of $126,000 for every $1 million in gross recurrent income. This surplus is usually spent on facilities and debt servicing.

During the GFC, debtors (outstanding fees) increased as they are now during this Covid-19 pandemic period.

Schools have not had time to adjust for the rapid financial effects of the Covid-19 pandemic, in particular parents/caregiver’s inability to pay school fees due to loss of jobs and decreased job participation rates. We will not know the effect on operating surpluses until 2020 school-year data is analysed next year, however I would not be surprised if the average Net Operating Margin for 2020 reduces to between 9% to 11%.

Schools need to prepare now to prevent operating surpluses falling for 2021 and beyond.

Figure 2 Net Operating Margin (relative operating surplus) and Debtors 

How have schools responded so far 

The recent NAB Education Pulse Check Survey and podcast indicates average school-wide fee concessions of 10% to 15% in term 2 2020 plus targeted reductions. 43% of schools implemented significant cost savings and 36% significantly reduced non-essential staff. Over half of the schools surveyed indicated a moderate to significant concern about pricing, profitability and cashflow and to a slightly lesser extent were concerned about student retention rates.

What to do now 

To build a financial crystal ball schools should consider:
1. Regularly updating the forecast 2020 operating performance and cash flows considering government assistance, enrolments, concessions, outstanding fees, staffing, cost savings, capital expenditure and loan repayments
2. Present cashflows in a simple format, assisted with graphs, showing forecast cash at bank plus borrowing limits on monthly (or shorter) rests particularly at cash low points of June and December
3. Participate in the FPS to generate benchmarking reports comparing income, expenditure and staffing to similar schools to identify and quantify strengths and weaknesses
4. Use the Staff Estimator tool on the FPS portal to guide staffing numbers for enrolment scenarios
5. Consider demographics assisted by the Geo Mapping tools included on the FPS see video
6. Use the above information to inform strategic discussions
7. “Dollarise” strategy into a 12 month/10 year Income and Expenditure, Statement of Financial Position and Cash Flow budget including key ratios to compare with similar schools’ obtained from the FPS to assist integrity checks and risk assessment of the budget
8. Distil data into a simple format, like the Somerset Key Indicator Report (SKI Report) see video, also part of the FPS, that shows seven years (two years past, five years future) data and Key Performance Indicators (KPIs) on one page, facilitating trend and sample average analysis
9. Once settled on the financial plan, use a simple one-page board report to help monitor actual against budget and forecast during the year and respond to adverse variations in a timely manner.

Please see the following video that demonstrates how the FPS together with the Somerset Education School Budgeting and Reporting tools will help inform strategy and build a financial crystal ball.

Kindest regards

John Somerset is a Chartered Accountant. He has extensive knowledge of the independent school sector and is past President of Independent Schools Queensland and a past board member of the Independent Schools Council of Australia.

AISWA Financial Governance in Crisis Times—Webinar, 9 June 2020.
IST Financial Governance in Crisis Times—Webinar, 16 June 2020.
VRQA School Financial Governance—Workshop, Melbourne 19 August 2020.
SEA School Financial Governance—Webinar, 26 August 2020.
ACS School Financial Governance—Webinar, 10 September 2020.

Using Data to Drive Your Decisions

Based on the almost 700 schools that participate in the ASBA/Somerset Non-Government Schools’ Financial Performance Survey (FPS), I estimate the following usual results for the average independent day school of 500 enrolments

  • $11.4 million gross recurrent income (54% grants, 46% fees and other)
  • $10.0 million in recurrent cash expenses (excludes interest and depreciation)
  • $4.0 million in debt
  • $140,000 interest expenses
  • $1.3 million operating cash surplus after servicing interest expense
  • 100% of the operating surplus is spent on debt repayment and campus facilities
  • Debtors (fees owed) between $200,000 to $400,000
  • About 60 FTE staff. (probably closer to 100 persons).

I appreciate the significant affect the Covid-19 pandemic is having on many parents/care-giver’s abilities to pay school fees. On average 77% of a school’s expenditure is staff wages and most are working harder than ever at this time. The temporary and necessary switch to off-campus delivery will not significantly reduce operating costs. However, there is growing public demand for fee reductions. Schools are responding to parent’s financial stress and other demands with extended payment terms and/or fee concessions.

I estimate that if total 2020 recurrent income banked reduces by 20% due to fee concessions, loss of enrolments, increased debtors (fees owed), without a reduction in expenses, this could result in an operating cash deficit of ($1 million) for 2020, before debt servicing and reinvestment in campus facilities and equipment.

I therefore urge schools to update cashflow forecasts on a regular basis to help inform decisions and ensure the school has adequate cash and loan facilities, particularly at historical low points of June and December.

Staff Estimator
My Masters research identified a crucial attribute of a financially sustainable independent school is the ability to adapt to changing circumstance. With 77% of school expenditure being staff wages, if a school experiences a decline in enrolments it is important to adjust staff numbers to help maintain a financially sustainable school.

We have developed a staff estimator allowing schools that participate in the FPS to select a sample of similar schools which pre-populates sample average staffing ratios. Users simply enter their current student and staff numbers and then “what-if” enrolment numbers. Sample averages are applied against the “what-if” enrolments to estimate staff numbers by category. See the demonstration video here.

I urge schools to participate in the FPS, which is now receiving 2019 school-year data. But if you haven’t yet participated, we developed a complimentary Excel version of the Staff Estimator that estimates staff numbers based on changed enrolments, assuming the school maintains current student/staff ratios. Find the Staff Estimator here.

Geo Mapping of Demographic data
Somerset Education and Spectrum Analysis Australia Pty Ltd are excited to announce that we have formed an alliance to give schools the ability to access web-based demographic mapping information for strategic decision making via the FPS.

Spectrum Analysis have been providing demographics, data analysis and mapping services both nationally and internationally across a range of industry sectors since 1996 and have been working with a variety of non-government schools in Australia for the past 11 years to support better school marketing, enrolment and community development goals.

The FPS, accessed via the Somerset Education website, allows Somerset Education clients access to complimentary demographic geo mapping resources and the ability to subscribe to Geo Mapping Plus.
See the demonstration video here.

I sincerely hope all readers are keeping well and that this information helps you to navigate these difficult times.

Kindest regards


John Somerset is a Chartered Accountant. He has extensive knowledge of the independent school sector and is past President of Independent Schools Queensland and a past board member of the Independent Schools Council of Australia.

WESTPAC School financial Governance breakfast, Melbourne—14 May 2020. POSTPONED
AIS SA School Financial Workshop for Principals, Business Managers and Governors, Adelaide—15 May 2020 and 16 May 2020. POSTPONED
VRQA School Financial Governance workshop (video will be posted), Melbourne—19 August 2020.
National Summit on Planning New Christian Schools, King’s Christian College, Gold Coast—4 September 2020 and 5 September 2020.
AHISA Financial Governance Masterclass for Principals, Melbourne—13 April 2021. NEW DATE

Opportunities, Gratitude, and Challenges


My wife attended her usual Tuesday morning Yoga class from home, complete with data projector and laptop to allow the video session. The unprecedented times that we are experiencing is forcing rapid process re-engineering, an exciting outcome from these circumstances.

Many schools are fast-tracking on-line delivery to allow continued provision of educational services. Some of my clients have been delivering 100% on-line for many years, and it is common practice for me to present to Board meetings by video conference. Somerset Education has not had a physical office for over a decade, all staff working remotely, so our office is fully operational if you need assistance. Over the past week, operating in this way has become the norm for most people. I am not suggesting this will or should remain the norm but can’t help seeing the opportunities.

Costs in Independent schools have increased by 4.4% per annum over the past five years partly driven by an 8% increase in staff over the same period. Besides the current pandemic threat, other threats to the non-government school sector include affordability and supply of teachers. Re-thinking delivery processes may be an opportunity to address these threats.


Last year I attended a presentation by Hugh Van Cuylenburg, The Resilience Project. Hugh spent time with a community in India with no running water or electricity yet the community was happy. One contributing factor was gratitude.

When many businesses are closing, due to lack of customers (airlines) or unable to service customers (food and entertainment), we can be thankful for the 1.3 million students in the non-government school sector still needing and accessing education services.  It’s just the delivery that is disrupted for now.


It is natural to worry and feel overloaded with the coronavirus and the flow-on social and economic effects. As best we can, we need to calm ourselves and focus on the tasks ahead. Immediate matters to address include:

  1. Parents and guardians who have lost income may need extended payment terms and/or more permanent concessions depending on prospects of returning to usual work / income.
  2. How should you advertise fee help to target those who really need it and stem enrolment loss which will impact October 2020 and January 2021 grants?
  3. For a school of 500 enrolments with fee income of $5.5 million, if debtors increased from 5% of fees to 33% of fees this could take $1.6 million out of cashflow. Calculate scenarios for your school. If you have the Somerset Education School Budget model, simply change Fee Collection % and Concessions in the FEE INCOME sheet and this instantly updates the 12-month and 10-year CASHFLOW, FINANCIAL POSITION and COMP INCOME.
  4. Present scenarios to the board and consider how this can be funded. Do you have unused loan facilities that can be drawn down now? Contact your state Association of Independent Schools or Catholic Schools Office for advice on emergency funding.
  5. Will your financier defer loan servicing for the coming six months? Several major banks have already notified their willingness to do this. Can you avail of government guarantees to support short-term cash flow funding? Further information: Australian Government / The Treasury website—SME Guarantee Scheme and Support For Business.
  6. If your school experiences a significant and permanent loss of enrolments, use the staffing ratios in the ASBA/Somerset Non-Government Schools’ Financial Performance Survey (FPS) to indicate required adjustments. As a guide, the 2019 FPS indicated the average non-government school of 500 enrolments had a total of 57.5 FTE staff. But that differs depending on SES and total income.
  7. Consider how process re-engineering may improve efficiencies going forward. On-line schools operate with significantly less staff and physical facilities. Not saying you will become an on-line school, but maybe a hybrid.
  8. Ask all departments to look at their budgets to determine what non-essentials can be removed
  9. Put on hold non-essential professional development. But consider PD that is a worthy investment for a re-engineered school.
  10. Assuming schooling continues as a mixture of on-campus and on-line, how do you manage boarding and other staff for which there is no work? Is leave without pay a possibility or can staff be re-deployed into new roles created by re-engineered operations so that you can retain specialised and trained staff when schooling returns to normal, however that may look in the future.
  11. How can school assets, people and equipment be re-purposed at this time to help others, for example food delivery to those in isolation, boarding kitchens to help Meals on Wheels?
  12. Depending on contracts, can you defer non-essential capital expenditure?

The above are a few matters that I have considered in my thinking about the tasks ahead. I hope they help, and I encourage you to please share other suggestions with me.

Regarding the current year FPS, we expect by Wednesday 1st April you can start entering 2019 school-year data via the Somerset Education School portal.   Apart from a few days for testing, the survey is open 24/7 all year for data entry and report generation.   But we do encourage as many schools as possible to complete 2019 school-year data entry by 31 July 2020 so we can release 2019 school-year benchmarking reports on 1 August 2020.

For our own well-being, it is important to find a moment to be still, disconnect and find time to re-charge.  Contemplation and a walk may help clarity.

Kindest regards

John Somerset is a Chartered Accountant. He has extensive knowledge of the independent school sector and is past President of Independent Schools Queensland and a past board member of the Independent Schools Council of Australia.

AHISA Financial Governance Masterclass for Principals, Melbourne—15 April 2020. POSTPONED
WESTPAC School financial Governance breakfast, Melbourne—14 May 2020. POSTPONED
AIS SA School Financial Workshop for Principals, Business Managers and Governors, Adelaide—15 May 2020 and 16 May 2020.
VRQA School Financial Governance workshop, Melbourne—19 August 2020.
National Summit on Planning New Christian Schools, King’s Christian College, Gold Coast—4 September 2020 and 5 September 2020