In keeping with what I said about
charging tuition above, I would recommend
going into these conversations assuming
that your families will continue paying
full tuition. But, you need to be sensitive
to each family’s situation, and if someone
says they need help, you can find out what
they’re up against and let them know that
you’re exploring ways to help if you can.
I would also recommend being careful
not to make any commitments at this point
about specific amounts of financial aid and
explaining clearly that you can’t promise
anything. But, you can let them know that
you’re working on this and say that you are
trying to get an initial sense of what the
needs are and what you may be able to do.
Once you know roughly how much
each family can afford to pay, you can tell
what your tuition income is likely to be for
the next school year.
• Analyze your expenses to see what
you can cut most easily. One way to do
this is to divide your expenses into four
categories:
a. Mandatory for ongoing operations.
b. Critical to doing business in
your preferred way.
c. Useful but optional.
d. Simply a luxury.
Once you have identified the things
that are “mandatory” or “critical,” you can
see how much you can save by cutting some
or all of the things marked “useful but optional”
or “simply a luxury.” Depending on
how things work out, you may or may not
need to make all of these cuts, or you may
need to cut more, but this gives you a place
to start.4
Consider whether any of your expenses,
like internet service, cell phones, or copier fees,
could be reduced to a lower cost tier instead
of being cut completely. That wouldn’t necessarily
help a lot, but in some cases, even a few
dollars a month can make a difference.
• Analyze your expenses even more
closely and think about how you could
make more extensive cuts if these become
necessary. This is where things get really
hard. If you can’t bring in enough tuition
and fundraising income to cover your budget
even after you have cut the “luxury” and
“useful but optional” items, what else can
you do?
One thing you can consider at this
point is cutting staff salaries. I would recommend
doing this by cutting a consistent
amount across the board, so everyone
knows they are all sharing the same sacrifice.
If you and your most highly paid staff
are comfortable with it, you could also
consider cutting your salary and theirs by a
larger amount. However, I wouldn’t recommend
doing this unless you talk with them
first and get their consent.
Another way to approach this is by
looking at the items in the “critical to doing
business in your preferred way” list
and asking yourself if there are cheaper
ways to do these. There may be real value
in proceeding in the way you prefer, but if
another way would be less costly, it could
be worth changing -- at least for now. This
could include:
• Eliminating helpful but non-
essential positions, such as an administrative
assistant position whose work you
could take on for a while until the school’s
finances improve.
• Asking teachers and assistants to
take on extra responsibilities like aftercare
so you can stop hiring aftercare staff.
• Exploring work trades (barters)
with families who need tuition assistance.
For example, one of your parents might
be able to replace your lawn service in
return for a tuition discount.
I would definitely not recommend cutting
too much from your marketing budget.
If you do, you can easily get caught in a vicious
cycle where marketing cutbacks lead
to lower enrollment and lower tuition income,
which in turn leads to further cuts
in marketing. I know of at least one school
���� ©MONTESSORI LEADERSHIP | WWW.MONTESSORI.ORG/IMC | VOLUME 22 ISSUE 4 • 2020
that experienced this several years ago,
and their enrollment declined so much
that after a few years they had to close.
Hopefully, this will all remain hypothetical.
But, it’s important to think about
scenarios ahead of time so you won’t have
to make hard decisions on the fly without
any preparation.
DEVELOP CONTINGENCY
BUDGETS
Depending on what you learn from talking
to your families and from analyzing your
budget, you may be able to create a new budget
that includes a reasonably accurate estimate
of how much tuition income you will
receive and how high your expenses will be.
Ideally, of course, you would like to be able
to cover all of the difference between your
tuition income and your expenses through
your fundraising. So, if you feel like you can
raise that amount, you can set it as your
fundraising goal.
However, if you’re not sure how much
tuition income you’ll receive and/or how
much money you’ll be able to raise, you
can create several contingency budgets
with different levels of tuition income,
fundraising income, and budget cuts. If
your budget is $300,000, for example, you
could develop contingency budgets like
the following:
Contingency 1: Budget $300,000 (no
cuts). Tuition income: $240,000. Fundraising
income: $60,000.
Contingency 2: Budget $275,000
(after cutting $10,000 in “luxury” and “useful
but optional” items and $15,000 by cutting
salaries 2%). Tuition income: $230,000.
Fundraising income: $45,000.
Contingency 3: Budget $250,000
(after cutting $15,000 in “luxury” and “useful
but optional” items and $25,000 by cutting
salaries 5%). Tuition income: $220,000.
Fundraising income: $30,000.
The specific numbers in each case will
depend on your school’s situation. But,
4 I have taken this system for categorizing expenses from Stephanie Bogan, “If The S&P 500 Falls To 2,000: How Financial Advisors Can (And Should)
Be Preparing For The Next Crisis” (www.kitces.com/blog/stephanie-bogan-limitless-adviser-educe-crisis-preparation-business-modeling-uncertainty/).
As her title indicates, Bogan focuses on planning for financial advisors, but her system for analyzing expenses can apply to any business or
organization. Her article also includes a downloadable spreadsheet that you can use to analyze your school’s budget if you want.
/IMC
/)
