Using Data to Drive Your Decisions

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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