School financial sustainability: the dam simulator
Somerset Education · interactive companion to the dam cycle diagram
Set gross revenue and a net operating margin — that margin is what actually reaches the dam as operating
surplus, after staff and running costs. Then click Advance 1 year repeatedly to watch the reserve
respond. Try widening the debt floodgate beyond what the surplus can support, or borrowing heavily without
lifting future revenue or margin, and see how many years it takes to run the dam dry.
Units: every dollar figure is shown in $ millions to one decimal place, except the net operating margin, which is a percentage. Operating costs are shown in red, operating surplus in blue.
Units: every dollar figure is shown in $ millions to one decimal place, except the net operating margin, which is a percentage. Operating costs are shown in red, operating surplus in blue.
Reserve level
Target reserve
Risk floor
Campus assets built
Starting position (applies on Reset)
Operating costs (staff & running costs): $7.4M
Operating surplus: $0.6M
Interest at 6% (on average debt): $0.00M
Net cash flow — what reaches the dam: $0.6M
Above risk floor — should be adequate.
Year: 0
Current reserve: $1.0M
Target reserve: $2.21M · Risk floor: $0.74M
Risk floor = operating costs ÷ 10 (Conservative 1-month allowance, since these operating costs exclude interest & depreciation). Target reserve = 3× the risk floor, the upper end of a 1–3 month reserve range.
Outstanding debt and campus assets are now shown directly on the diagram, below the Lender's Dam and the Campus Assets building.
Help us develop these tools
If you have tried the Dam Simulator, the 5-Minute Budget Builder, or both, we would value your feedback. Tell us what works, what doesn’t, and what would make these tools more useful for you and your school.