Thank you to everyone who has already given a gift to our Annual Giving campaign and completed this year’s All-Parent survey. If you haven’t participated yet, please take a few moments to do so at this time. These efforts are both very important for advancing our program, and your contributions are critical. We try to focus on this dual campaign for just one month each year, and with your help we can celebrate its success with 100% parent participation in both Annual Giving and the survey by early March. Please see the class participation levels in ITK Part II, encourage your fellow parents to do their part, and help us get to 100%.
NWAIS Self-Study: Finance
As part of the NWAIS self-study, we looked in-depth at the school’s financial resources, processes, and challenges. TIS’ financial priorities are driven by our mission and strategic plan to reflect our overall school priorities: hands-on and experiential learning opportunities on and off campus, technology as a resource for teaching and learning, professional development for teachers and staff, total compensation that reflects market standards, financial aid for families that need it, and facilities that enable our program goals.
The school’s strategic plan and values direct us to ensure stability in current and long-term operations with conservative and disciplined financial management. This approach has enabled us to move our program forward while keeping tuition in the middle of the pack of established independent schools in the region. Over the past few years, our primary investments have been in facilities, competitive employee compensation, and our International Baccalaureate implementation. These areas will continue to be important in the coming years.
The school’s greatest financial challenge is directly related to its success: a shortage of classroom, office and storage space. This has been a challenge for several years, resolved in part by remodeling existing space and renting new property. The school has proceeded with aggressive efforts to create a campus master plan (2011), and to cement its position as an important long-term presence in downtown Portland by purchasing previously rented property (2007 and 2012). At this point, the school is moving forward to identify potential resources, both donor-based and debt-based, for building new facilities that will not just provide the short-term bare minimum of space, but will properly support our program. To sustain the school’s needs in the meantime, we are leasing and significantly renovating an existing building two miles away from our current campus (John’s Landing area). This building will open as our Early Childhood Campus in September 2014; it is covered by a four year lease with an option to extend for an additional two years.
The Board of Trustees Finance Committee provides primary oversight for the school’s financial operation. Best practice tools enable the Finance Committee, Head of School, and Business Manager to closely monitor and manage the school’s finances. These tools include a detailed annual budget, and monthly and quarterly monitoring of cash flow, income and expenses. Beyond those standard reporting tools, the Board Treasurer maintains regular, often weekly, contact with the Business Manager and Head of School tied to special projects, annual budget development, or scenario-building exercises related to the school’s financial model.
TIS also follows best practices to mitigate financial risk. The school maintains comprehensive insurance coverage that is recommended for the size of our student body, staff, volunteers, earnings and location. Multiple controls make internal fraud difficult and accounting errors rare. Professional audits have been done annually since 2005; no management letter has ever reported significant deficiencies or material weaknesses.
On the income side, tuition constitutes approximately 87% of total revenue. Fundraising, including special events, contributes 8%. Summer Camp makes up 3%, and auxiliary services, interest and rent bring in another 2%. The school recently established its first endowment and does not yet have meaningful endowment income.
The TIS balance sheet shows total accumulated debt of approximately $3.5 million, including the recently acquired property. Loan covenants require a debt service ratio (DSR) of 1.20; the school’s DSR has been well over that for many years and is projected to be 2.6 to 4.2 over the next four years. Based on these levels and at current interest rates, the school has the capacity to borrow another $4-5MM.
The entire school community is invited to learn the details of the school’s financial condition and budget every year at the Board’s Annual Meeting in May. Please watch ITK for details as we get closer.
Robert Woods, Head of School, RobertW@intlschool.org, 503-226-2496 x122