Sunday, December 7, 2008

Recession Rescue for Schools

As the economic news turns bleaker and bleaker it is probably time Catholic school principals begin looking at budgeting in light of the coming recession. Every school, given their socioeconomic makeup and geographic location will face the coming storm with varying levels of severity. I've been digging into some research into Catholic school enrollments during the Great Depression but have begun to realize the makeup and economics of private schools were radically different then. Our students are not by and large immigrants and few of us operate with 95% religious staff, no technology needs, and no employee health premiums to pay. Therefore comparisons go only so far. I'm hoping those of you who were school administrators during the most recent tech bubble burst and slide in the late 1980's can offer some words of wisdom.

In general i've been discussing these issues with some long standing members of various school finance committees and local principals and we've come up with some general ideas and points of action that may be helpful in weathering the storm. Take them all with a grain of salt because every recession is unique.

1. Evaluate School Foundations and Explore Options for Tapping them in an Appropriate Way: Most Catholic high schools operate with some type of foundation. Usually these foundations manage or oversee the investments of the school's endowment. Earnings are typically applied towards operating costs at a certain rate or earmarked towards financial assistance at many schools. Exploring the nature of your endowment and the willingness of whoever manages it to reexamine its use protocols in light or emergency situations is important. Granted accessing these funds when the market has given them a rather awful beating may not be wise. But if the recession is for a few years it could provide the cash flow needed to prevent major staff cuts.

2. Evaluate and alter R.I.F. policies to give more freedom: Some schools and diocese have reduction in force (RIF) policies some don't. They are often based on seniority. Deciding who to let go is never fun. Although the policies provide some guidance they also raise other issues. Most base cuts off of seniority or religious affiliation. Last one in first one out or sacrifice the non-Catholics first are the usual procedures. Another issue revolves letting go of staff who are already receiving pensions from the public school. Although it could probably be construed as ageism it certainly feels more just to try to keep around those who need the job to survive and feed their families as opposed to the double dip.

3. Freezes and Frills: Freezing or halting contributions to 403 b and defined benefit plans for a year or two is another way to avoid laying off staff. It is fairly easy to calculate your annual savings. Freezing pay for a year or two saves money as well. These decisions of course come loaded with massive negative affect if the direness of the situation is not explained. Most people can go along with the halting of the 403b for a while, suspension of free lunches, and watering down the free coffee in the lounge but let's be fair most of the cost is associated with salaries so the bulk of savings will have to come from there. Going paperless and handing out less chalk isn't going to slash 300 k from anyone's budget. Cutting out "frills" is another way to cut back. Maybe the soccer team wears the same uniform for another year, the parking lot lines fade a bit more, and the roof with a patch is much more cost effective than a new one. Pay freezes across the board also save money but can cause some staff to look for employment elsewhere.

4. Staff Cuts: No easy way around them. Basing the cuts on the least minimal impact to the quality of education is the best way to go. This translates into cuts across departments and administration not just throwing out art and music. Schools need fine arts, PE, and broad curriculum offerings to remain competitive and advance their mission. They need counselors, administrators, and support staff. Spreading the cuts across the whole school at least helps maintain the integrity of the academic programs. It may make you universally hated by the staff but at least the kids suffer the least.

If you have any other ideas please share the with our readers by commenting below.


Mberenis said...

I think this is a great blog, and I would like to Post a Comment

There has been some recent news you might like to hear.Obama is making it better for us already! There has been an increase of money availability to everyone. Due to recession there is increased funding for all types of grants. Even lenders are bending over backwards to bail you out too. Regardless of statistics, there is people getting tons of cheap money for personal use, investments,start businesses, buy homes, pay off debt, and more. Bailout is for YOU

Anonymous said...

I hope we do not have to cut staff as most of us stretch numbers already. I would rather cut new orders of textbooks and supplies than cut benefits or people.
Maybe our staff would be more willing to participate in our phonathons, fund raisers, etc.
I hope Mberenis is correct!!
Joy Allen, Central Catholic HS

Anonymous said...

To me the greatest challenge is to do everything we can to maintain enrollment- this likely means the need for greater financial assistance. The reallocation of dollars from Capital Repairs (needs v. wants) and to make our tuition increase as modest as possible.

Souly Catholic said...

I think Mberenis is an online marketer being paid to promote that site. I agree that cutting staff is a last resort but you can only save so much money with chalk and paper.