Opportunities, Gratitude, and Challenges

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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