by Dr. Harry Bloom and Dan Perla
There has been a great deal written about new blended learning schools which are leveraging educational technology to increase the quality of teaching and learning while also lowering teaching cost per student. This post addresses a more conventional pathway to low cost schools, that of lean administration. For the purposes of this post, we are defining “administration” broadly. It includes educational administration compensation, non-educational administration compensation and purchased services and goods. In other words, all costs except direct teaching costs.
We are motivated to write about this topic because of a recent visit to a school that seems to fit the bill of low cost administration and high quality education: the Kinneret School in Riverdale, NY. When we visited Kinneret several weeks ago, we found the following:
- A k-8 pluralistic school with an enrollment of 267 and a waiting list in the lower grades.
- A well-deserved reputation as a Zionistic, academically rigorous, no frills school whose graduates qualify for New York City’s prestigious and highly selective gifted and talented high schools including Bronx Science and Stuyvesant High School.
- A flat tuition of $13,500 for all grades in contrast to nearby day schools with tuition levels fifty percent or higher. It should be noted that there is officially no needs based scholarship at Kinneret. However, according to its Principal, a significant amount of barter – in the form of goods and services – occurs that help parents meet the school’s operating needs in a way that is affordable for them.
- Administrative costs that represent about 20 percent of total costs compared to 30 percent or more for peer schools around the country.
How does Kinneret keep costs relatively low?
- It occupies a very modest leased facility in an apartment complex which enables sharing of the complex’s health club and swimming pool. Space is scarce at Kinneret – every square inch of space is fully utilized.
- Kinneret has minimal educational administration staff and compensation costs. For example, a principal who wears many hats, an assistant principal who is also admissions director and Judaic studies coordinator.
- Kinneret has low employee benefits costs: The school uses predominantly full time faculty members who do not receive benefits although it matches 2 percent of pension contributions. The principal seeks out faculty members who are either retired from prestigious public schools and receive benefits through public school plans or have spouses or significant others with benefits.
Is Kinneret unique from the standpoint of closely managing administrative costs? To answer this question we accessed our benchmarking database of Elementary/Middle schools from communities as diverse as Baltimore, Bergen County, Philadelphia, Dallas, South Florida, Cleveland and Chicago. In fact we found a very broad range of administrative expense to total expense ratios, from 31% to 52%, from a low of $2600 per student to a high of $9600 per student! In fact the low and high figures in the range are experienced by schools in the same community!
Are there independent (NAIS) schools which similarly manage their administrative costs? To answer this question, we spent several hours with Dr. Richard J. Soghoian – Headmaster of Columbia Grammar and Preparatory School. A large and prestigious independent school on Manhattan’s Upper West Side, Dr. Soghoian maintains that Columbia Grammar has an administrative cost per student which is far lower than that of comparably sized schools. While this assertion could not be independently verified by us, Dr. Soghoian noted his relentless focus on maintaining a lean business office, limiting the number of administrative assistants etc. These and other efforts have enabled Columbia Grammar to fund its operating budget purely from tuition (scholarship represents approximately 10%-15% of budget). The school’s focus on holding down administrative costs and funding all non-operational expenses through outside funding lead Saghoian to write “Mind The Gap” An Insider’s Irreverent Look at Private School Finances.
What does this mean? Conceivably it means that a fundamental rethinking of administrative costs might be appropriate for all day schools – particularly if the percentage of their total cost that is accounted for by administration is over 40%, which was the majority of schools in our sample. Using something like zero based budgeting would seem to be a sensible way to approach this. It is conceivable that a school could, over a period of time cut thousands of dollars from its cost base – and not impact teaching expenses! A sample of costs from our sample of 28 Elementary/Middle schools can be seen below. How does your school stack up? We welcome your thoughts relative to our analysis and suggestion.
|Average Spending Per Student: Total Sample||Average Spending Per Student: Lowest Third of Schools||Average Spending Per School: Highest Third of Schools|
|Educational Administration||$1,651 (100)||$1,025 (62)||$2,300 (139)|
|Non Educational Administration||$1,504 (100)||$856 (57)||$2,357 (157)|
|Purchased Services||$1,940 (100)||$1,087 (56)||$3,036 (156)|
|Purchased Goods||$556 (100)||$300 (54)||$904 (163)|
|Total Non-Faculty Compensation Costs||$5,651|
|For Reference: Faculty Compensation Expenses||$6,495 (100)||$5,081 (78)||$7,993 (123)|
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Dr. Harry Bloom is Strategy Manager, Day School Sustainability at PEJE and Dan Perla is AVI CHAI’s program officer for day school finance.
cross-posted at AviChai.org Blog