Putting Your Vision into Motion

1
Putting Your Vision into Motion Corey McIntyre,
NAIS Chief Financial Officer
2
Afternoon Intention

• Recap
• Financial sustainability challenge
• Trends and forces
• School financial model
• Challenges and responses

3
Independent School Challenge

• Sustainable, Excellent, and Affordable?
• Tuitions out pacing inflation
• Parents demand highest quality
• Improve quality add cost
• Higher cost gt higher tuition gt less accessibility

4
Financial Sustainability Forces

• Workers
• Flex time
• Transient
• Families
• Telecommuting
• Changing demands
• Real estate prices
• Disposal income

• Students
• Differentiated needs
• Changing brains
• Technology
• Exponential pace of change
• Podcasts
• You Tube, Google
• Second Life

5
Financial Sustainability Forces

• Workers
• Flex time
• Transient
• Families
• Telecommuting
• Changing demands
• Real estate prices
• Disposal income

• Students
• Differentiated needs
• Changing brains
• Technology
• Exponential pace of change
• Podcasts
• You Tube, Google
• Second Life

6
Changing Brains

• National Institutes of Mental Health Human Brain
  Project Neuroinfomatics
• Visual cortex 15 larger than 15 years ago
• 3M research, 100 images viewed, recall rates
• Kids 90
• Parents 60
• Grandparents 10

7
Financial Sustainability Forces

• Workers
• Flex time
• Transient
• Families
• Telecommuting
• Changing demands
• Real estate prices
• Disposal income

• Students
• Differentiated needs
• Changing brains
• Technology
• Exponential pace of change
• Podcasts
• You Tube, Google
• Second Life

8
Second Life?
9
Linden Dollar L

• 64 million GDP
• 3,000 entrepreneurs making 20,000 annually
• Anshe Chung, SL real-estate mogul

10
Gov. Mark Warner Interview

11
Virtual Relay for Life

• 40,000 raised
• 1,000 participants walked through Mexico, South
  Africa, Sky-diving from Eiffel Tower

12
Second Life Schools

• Harvard University
• University of Texas at Austin
• Francisco State University
• New York University
• Vassar College
• Trinity University
• University of Buffalo

13
College Classes in Second Life
14
School Financial Model

• Why is this so hard?
• Baumols Cost Disease
• Inherent efficiency obstacles

15
Cost Disease Model W. Baumol1
Activity Productivity stagnant Productivity enhancing
Industries Theater, Heath care, Legal Services, Fine Dining, Education Manufacturing, Technology, rest of economy
Characteristics Labor intense Hands-on commitment Personal attention Automated production Economies of scale Consistency
1 1966 William Baumol, William Bowen. Performing
Arts Economic Dilemma
16
Cost Disease Model
Activity Productivity stagnant Productivity enhancing
Industries Theater, Heath care, Legal Services, Fine Dining, Education Manufacturing, Technology, rest of economy
Characteristics Labor intense Hands-on commitment Personal attention Automated production Economies of scale Consistency
Annual productivity improvement averages Independent schools 0 US economy 2
General inflation 3 3
Market wage increases 5 5
17
Cost Disease Model
Activity Productivity stagnant Productivity enhancing
Industries Theater, Heath care, Legal Services, Fine Dining, Education Manufacturing, Technology, rest of economy
Characteristics Labor intense Hands-on commitment Personal attention Automated production Economies of scale Consistency
Annual productivity improvement averages Independent schools 0 US economy 2
General inflation 3 3
Market wage increases 5 5
Less productivity improvement 0 -2
Price increases required 5 3
18
Education Expenditure per Student
19
Health Care vs. CPI
20
Hypothetical Changes in Spending
21
Inherent Efficiency Obstacles

• Howard Bowen1
• Excellent education replaces profit motive
• Only limit to spending on education is amount of
  money available
• Schools will spend everything they get

11940s U.S. Department of Commerce, Chief
economist for the U.S. House Ways and Means and
Senate Finance committees 1964 named president
University of Iowa
22
(No Transcript)
23
Financial Efficiency?

• Expensive policies and practices
• Need blind admissions need-based financial aid
• Only industry where competition increases price
  Sidwell Friends Trustee
• Resistance to business concepts
• Expectation of language Non-profit
• Creeping incrementalism

24
How do you feel?

• Current financial model and practices are
• Financially sustainable
• Need to change
• Dont know

25
Your Challenges

• What changes do you want to make?
• What are the barriers to change?

26

• It's easier to change the course of history than
  a history course. Salza

27
Your Responses

• Student Teacher Ratios
• Impact of change
• SAIS Statistics

28
Other Challenges

• Sacred cows
• Administrative efficiency
• Shrinking applicant pool

29
Success Factors

• Desire
• Team skills
• Analytical
• Synthesis
• Creativity
• Objectivity
• Realistic time commitments
• Commitment to finding truth
• Radical acceptance

30
Collective Efficacy

• Belief held by members of a group that they each
  have the power through collective efforts to
  achieve shared goals
• Success is expected
• Resilience is encouraged among and between
  members
• Research has linked collective efficacy to
  student achievement, crime reduction in
  neighborhoods, etc. (Bandura 1993 Goodard, Hoy,
  Wolfolk Hoy 2000)

31
Closing Suggestion