By John Somerset, 14 December 2020
It goes without saying that 2020 has been a most challenging year. However, as we teach the students, meeting challenges builds resilience, and resilience is a crucial factor for success, contribution, and contentment.
I recently read a story of a person who at age 31 started a business and went bankrupt, he then tried to enter politics but lost badly. He started another business and went bankrupt. He then met the love of his life, but she died. He suffered a nervous breakdown after which he tried again to enter politics and failed. Started another business with a little success. At ages 46, 48, 55 and 58 he again ran for politics and failed. Finally, at 60 years of age, Abraham Lincoln was elected to his first public office as President of the United State – a shining example of resilience.
The non-government school’s sector has done a wonderful job in adapting to the challenges of 2020 to maintain its high-quality educational service which, I understand, has been rewarded with maintenance of enrolments and containment of financial stress. I suspect more challenges will follow in 2021 as government financial initiatives reduce. So, I encourage schools to stay resilient, look for efficiencies, adapt processes, focus resource allocation to your mission, reflect this into accurate long-term and short-term budgets, report regularly and respond to variations in a timely manner.
The ASBA/Somerset Non-Government Schools’ Financial Performance Survey (FPS) is a crucial industry tool to help identify and quantify strengths and weaknesses in your school’s operations. A number of factors caused delays in schools finishing the FPS this year. Thank you to over 600 schools that have participated so far this year. However, at the date of writing, we still have 80 schools waiting to complete. Timely completion facilitates timely provision of this crucial data to you. From the 2019 school-year FPS, the average independent school earned $129,000 recurrent cash surplus for every $1 million in gross income (12.9% Net Operating Margin), had average Discounts and Concessions as a percentage of Fees of 11.8% and Gross trade Debtors to Fees of 6.7%. I look forward to receiving the 2020 school-year data (from April next year) to see how these ratios have changed.
I also take this opportunity to sincerely thank the Somerset Education team for sharing their skills to help deliver what I hope the approximately 700 schools that we work with across Australia and New Zealand feel is a high quality and valuable service. I am truly privileged to work with this team (see photos above) and to provide this service to the schools’ sector. I am excited about the year ahead including my PhD research regarding school financial sustainability. Best wishes to all for a safe and joyful rest and a successful 2021.
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.
OFFICE HOLIDAY CLOSURE:
Our office will be closed from Monday 14 December 2020 and reopening on Monday 18 January 2021. Please accept our apologies for a slower than normal response during this holiday period.