I was recently appointed administrator of a private school which found itself in financial difficulty. A lot of people have been surprised, assuming that a private school should be financially stable. This is far from the case, this is not the first school we have seen with cash flow issues and certainly will not be the last.
So what are the challenges that are facing private schools?
The number of private schools is increasing, however enrolment numbers are falling and therefore the income is decreasing. As with any business, when cuts need to be made it can be costly to do so, the costs of redundancies can be high, particularly in schools where there tends to be long service for many. Even if staff cuts are affordable, are they even possible?
Schools that offer GCSE’s and A Levels, need to be able to compete. By having less staff they are likely to offer fewer options to the students. This is likely to have a spiralling effect, of less enrolment due to the lower number of options, and therefore more cuts….
Part of the reason some parents choose private schools is due to level and variety of extra curricular activities. This again means higher staffing with lower enrolment, causing more cash flow difficulties.
The issue of enrolment numbers and understanding the predicted income is not something that governors can do on their own. It requires a close working relationship between school management and the governors. Having a balanced team of governors is vital as they can bring skills to the table that management may lack. There is a critical need to ensure the people running the school are accountable for expenditure and capable of controlling it.
But why are the numbers enrolling falling?
As the level of disposable income has decreased for many, the option of private school is no longer there. For others, they no longer want their child to be in an all boys or all girls’ school, instead parents are looking at the social aspect of school as well as the educational in order to give their children the best overall experience. Schools that have focused upon a religion have also experienced difficulties; again diversity now more than ever seems to be key for some parents.
For those that do decide to go for private school the expectation of the parents is usually very high. As they are paying for their child’s education they are seeking the best exam results, the best extra curricular activities and overall excellence. The schools therefore are competing on a different level from those in the public sector. With less funding they need to show that they can provide more. Competition is fierce.
Public sector schools in most areas are improving, with a government focus on education it is not always the situation where private schools are significantly better. Sometimes the difference between the two cannot warrant the fees the parents have to pay. For public sector schools this is great news, but not for private schools.
Often private schools need a competitive edge, something that not only makes them better than the public sector schools, but also better than the other private schools. By offering a unique selling point, be that in a particular language or extra curricular activity this can give a private school the boost it needs to attract more students.
After speaking to teachers in both public sector and private schools, the expectations appear to be more difficult to manage in private schools. Parents tend to be more involved in private schools and demand more of the teacher’s time and want more input in to what is happening. In some schools the challenge between meeting parents’ expectations and managing the teachers can be particularly challenging. A recent survey showed that some parents felt dismissed as being “overly demanding”.
Parents and teachers can overcome this issue with better structured communication. Offering more information online and regularly meeting with parent groups.
In all schools technology can be an issue, as well as having to offer high quality up to date technology schools like businesses are being targeted by viruses which can cause significant costs when the systems and work are lost.
As the technology increases the training needs to improve as well. A teacher’s role even ten years ago is significantly different from now; those that have been in the profession for longer have seen a significant shift towards the use of more technology. Before being able to teach the students the teachers themselves need to be trained on how the new technology works. For some this can be time consuming and takes time away from the classroom. As well as this the technology is not one size fits all, often different roles need different uses of technology.
Although difficult, this investment in technology is key and can lead to improved efficiencies in the school, giving the school a competitive edge and improved grades, all of which should lead to a better financial result.
Although times are challenging it is not all bad news a recent survey shows a demographic and social trends will mostly be in favour of independent schools in the next decade. By 2017, the report says, social mobility will produce an extra half million of children in the managerial and professional “pool”, and the trends towards dual-income households and towards delayed childbirth (to an age when parents have higher incomes) will also help.
So there does seem to be positive news, but times are still tough. It is important to get advice at an early stage, there will still be options to consider at this point and therefore closure can usually be avoided. This is where we can step in and help.