For over 25 years I have operated the Financial Survey for Schools (FSS) which allows non-government schools to enter financial information, select samples of similar schools and generate trend and comparative benchmarking reports analysing ratios for income, expenditure, staffing, operating surplus, debt, cash reserves and more. Reports are presented in a format that maintains confidentiality and helps identify changing circumstances in a school plus areas for improved performance.These facts inform and justify complex decisions and can help reduce financial worries.
FSS for all schools – small or large
The FSS is a powerful tool irrespective of school size and has been instrumental in changing many schools’ financial health. The FSS relies on collegial support – annual and early participation helps the sector, your school, and also helps us to help you if you call for assistance.
91% of FSS participants rank the survey with 4 to 5 stars and 10 out of 10 recommend it to others.
We are in increasingly risky times with high inflation and rising interest rates which will most likely influence the movement of students between schools. Annual FSS participation guides financial decisions and helps prevent and sometimes cure financial stress. Two recent examples follow.
Example 1 | Small School with drop in enrolments – cured stress
Last year we worked closely with a school of less than 200 enrolments that had incurred a significant drop in enrolments which, without decisive action, would have closed the school. The board needed clear guidelines to make difficult decisions to hopefully save the school. Using the FSS to compare staff, income and expenditure ratios with similar schools indicated operating costs were $1 million higher than average, and in which areas.
The board then used these facts to make difficult decisions which reduced the loss and saved the school from closure. The school’s processes now include setting and monitoring staff, income, expenditure, cash, and debt ratios – it is budgeting to produce a healthy operating surplus in 2023. Application of a ratio analysis discipline would almost certainly have prevented this financial stress.
Example 2 | Large School with significant planned capital expenditure – prevented stress.
More recently we met with a large school regarding a planned significant capital expenditure program. Our analysis of operating surplus relative to debt indicated likely financial stress if they proceeded. The school’s past and future trend in key Income, expenditure, staff, debt and debt servicing ratios, including comparing these with similar schools and recommended limits, identified the school was under charging and over servicing. Noble as that may be, this could have placed the school in financial stress.
The FSS provided a clear action plan which included deferring some capital expenditure while working on strengthening operating performance in areas targeted by using FSS metrics. This will enable the ultimate plan but within a more responsible risk profile.
For more information and to view a video on FSS click here.
FSS | Participate now
Even though the survey is always open and can receive participant data at any time, schools are encouraged to complete their 2022 school-year data entry by 31 July 2023 in readiness for the release of 2022 school-year reports on 1 August 2023. Participation starts from $720 plus GST* or if less than 200 enrolments the price is halved to $360 plus GST* per school.
To encourage schools to use both trend and comparative analysis, Somerset Education also offer the Financial Performance Report, Historical Report (school’s results 2017 to 2022) and SKI Report (school’s results 2021 to 2027) as a package. The Package price is $1,580 plus GST per school for all three reports* or if less than 200 enrolments $790 plus GST*. This is a discount of 27% off the sum of individual products – you almost receive three reports for the price of two.
*Early bird price -– Survey completed and invoice requested prior to 30 September 2023.
Flip side of higher interest rates
Higher interest rates are seemingly entrenched and may be the new norm for a while. The flip side of higher interest rates is the opportunity to earn a worthwhile return on surplus cash funds. I encourage schools to discuss this with their bank or a few trusted banks perhaps using an independent provider like Likwidity. As this is beyond my area of expertise, I am not making any recommendations and schools should engage with their independent experts for specific advice.
Q | Any questions?
For more information about the FSS or our budgeting and reporting tools, please do not hesitate to contact Cathy or Jessica at survey@somerseteducation.net or call 1300 781 968 (from outside Australia +61 7 3263 5300).
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.
Disclaimer: We publish this article only for non-government schools in Australia. All material should be regarded as information only and individuals should rely on their own enquiries when formulating decisions for themselves or their clients. In no way do we warrant or guarantee any changed circumstances for a school from use or non-use of this material. As a member of the Institute of Chartered Accountants Australia and New Zealand, the firm participates in a national liability capping scheme. Accordingly, our liability is limited by a scheme approved under professional standards.
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