Finance 101

  • Tommy Hudgins, Head of School, Carlisle School (Martinsville and Danville, VA) ---
  • Kelly Sanderson, CPA, Vice-President for Finance and Administration & Chief Financial Officer, Woodward Academy (Atlanta, GA) ---
  • Pauline Shannon, CPA, Reed, Quinn & McClure, LLC (Lawrenceville, GA) ---

Ask the following questions during an interview for a Head of School position. Ask them of the Board, the departing Head, and the CFO. Do not treat your time with the CFO lightly. The information you get from that person will be perhaps the MOST HELPFUL information you get in your quest to determine whether or not the job is a good fit for you.

TOP 10

  • What outstanding debts does the school have (mortgages, credit lines, long-term capital debt, other loans, etc.)? How does the school manage this debt?
  • What is the value of the endowment? What is the annual draw to the operating budget?
  • What changes in practice resulted from the most recent audit? Did the school receive a management letter in its most recent audit?
  • How much advance tuition money for next school year will the school have spent before July 1?
  • How much of the gross tuition charge, by grade level, does the school forgive each year through faculty remission and financial aid? (In other words, what percentage of each dollar charged does the school collect?)
  • What percentage of families does not stay current with their payments? What is the school’s collection policy?
  • What percentage of the net tuition charge does the school write off as bad debts each year?
  • Does the school have steady income streams other than tuition and fund-raising? If so, what percentage of the school’s income do they comprise?
  • What are the greatest financial challenges the school is facing at this moment?
  • Do you believe that the Board of Trustees knows all of this information and understands its implications?

NEXT LEVEL: BOARD INVOLVEMENT

  • Does the Board (Finance Committee, Development Committee, Investment Committee) get involved directly and/or does it have written guidelines or parameters you are expected to follow regarding developing a budget?
  • Does the Board have a percentage goal for earned income (tuition, summer school, etc.) and unearned income (gifts, interest, endowment income) that they attempt to maintain with their budget planning each year?
  • How and when is the next year’s budget prepared and presented to the Finance Committee? Is the budget adopted in a timely fashion so that combinations of enrollment and changes in tuition charges may be considered?
  • What is the Endowment Investment Committee’s protocol? Who is on the Endowment Investment Committee?
  • What is the nature and level of communication between the Board and the CFO?
  • Are you satisfied with your amount of influence in the school's financialdecisions? Do youwant more or less power in the final decisions?

NEXT LEVEL: DATA

  • What financial dashboard information does the school use, with whom and does it benchmarked these data?
  • Can the school produce some historical data, looking 3-5 years back at cash flow, collections, net tuition, and net tuition as a percentage of gross tuition?
  • How big is your operating reserve? How is it funded?
  • Does the school keep a trend line of aged accounts receivable as percentage of billed tuition over a period of time?

NEXT LEVEL: BUDGETING

  • How much money is put aside each year for capital expenditures? How much is needed annually to maintain your facilities?
  • What is the policy/practice on financial aid? On financial aid and tuition remission for faculty?
  • Do you have a long-range plan for all facilities that encompasses all major anticipated repairs and maintenance?
  • What methods are used to arrive at setting the next year's tuition rates?
  • What percentage of the net tuition charge does the school write off as bad debts each year?
  • What percent of operating cost is covered by tuition and hard income?
  • How are salaries benchmarked?

Helpful hint for comparing schools: Convert key total dollar figures to per pupil cost, per pupil income, per teacher cost, and so on. This makes it easier to compare relative strengths ofbudgets from one school to the other.