Somerset Education’s mission is to empower leaders to achieve the school’s vision by offering simple, intuitive financial tools and advice to help make financial decisions with confidence. We work with over 500 schools each year to assess financial health and mitigate risk using the Financial Survey for Schools (FSS), our budgeting, forecasting and board reporting tools plus financial training for senior management and boards.
Similarly, Cole School Experts work with hundreds of schools to help streamline and systematise various tasks, from professional accounting, payroll and HR, cash and fee management, and software assessment.
We are both passionate about your school’s financial health—Somerset Education helps through empowering management and governors with tools and advice; Cole School Experts are more likely to be managing key functions both on-site and remotely.
💬 | What is Financial Sustainability?
John Somerset’s research concludes:
A financially sustainable independent school responds to stakeholder needs by using strengths, managing weaknesses, generating adequate operating surpluses to fund debt, reinvestment and cash reserves, identifies changing circumstances, and adapts in a timely manner.
Simply, set a target Net Operating Margin (operating surplus) to ensure you can adequately meet debt servicing, asset replacement and cash reserves and if things change, re-forecast and adapt in a timely manner.
Generally, schools that find themselves in financial difficulty have either not adequately understood changes in the KPIs and/or not responded. Don’t let this be you because it is so avoidable!
📈 | Responding to trends
Figure 1 shows that over the past five years school expenses have increased faster than income resulting in reduced operating surpluses (Net Operating Margin). This makes it harder to meet capital reinvestment and debt servicing. If this is your school’s trend, do senior management and governors clearly understand this and how is your school responding? The dilemma is how quickly to respond, but schools that delay can often find themselves under financial stress.
Figure 1: Trend in average Independent School financial metrics 2020 to 2024.
🎯 | A 3-Month Action Plan [Download PDF copy here]
We recommend a 100-day approach: gather, listen, and understand before acting too quickly. Focus on insight and alignment.
👀 Month 1 | Understanding the lay of the land
- Review key documents (strategic and master plans, budgets, demographics, policies, reports, educational outcomes and satisfaction surveys).
- Understand delegations of authority and bank limits and procedures.
- Assess financial reporting, governance skills, and finance team capacity.
- Analyse trends in enrolments, profitability, solvency (ability to pay bills on time) and sustainability (debt servicing and asset reinvestment).
- Peruse governing body handbook and KPI risk thresholds. And if you don’t have thresholds, set them
- Use the Somerset Education Financial Performance Report to benchmark strengths and weaknesses with other schools.
- Ensure financial reports, budgets and forecasts are reliable to avert surprises.
- Develop action plans to address immediate risks.
- Align long-term budgets with strategy and required KPI thresholds.
- Conduct financial scenarios to prepare for shifts in enrolments, income, expenditure, staffing, capital projects and borrowings.
- Agree on a final budget that meets strategic objectives plus KPIs for profitability, solvency, and sustainability.
- Strategic plan and its alignment with the budget.
- Financial risks and mitigations.
- Current and projected (five years) financial performance.
It’s not too late to participate in the 2025 FSS and our free data upload service from the financial questionnaire helps keep your time to a minimum. Thank you to the schools that have already participated, and we warmly welcome new participants—the more participates the better the data.
Q | Any questions?
🍎 Somerset Education | For FSS, budgeting, reporting tools, or financial governance training contact us via email survey@somerseteducation.net; or telephone 1300 781 968 (International +61 7 3263 5300).
📊 Cole School Experts | For accounting, payroll and HR, cash and fee management contact us via email office@coleschoolexperts.com.au.
We look forward to your ongoing support, or if new to the survey, we warmly welcome you joining in.