Why Both Are Important
By MATT METCALF
Director of Business and Financial Services, Concordis Education Partners
It’s November, which means Christian schools are up and running. They are filing the prior fiscal year annual information 990 report with the IRS, and likely will soon be reviewing budgets and setting tuition for the next fiscal year.
Many school Board leaders share a common misconception: All due diligence and good stewardship requires is that you hire a good CPA to help you file your annual 990, and his expertise will ensure you are in compliance with the federal and state reporting requirements.
Although having a good CPA or tax professional is needed to ensure a school is compliant with rules and regulations, you still need a Financial Storyteller to help the Christian School Board understand your historical financial data, assess their current financial picture, and have a guiding compass for strategic financial direction to help the school get to where it needs to be over the next five years.
In order to achieve this, your school needs to develop the right financial metrics to assess and periodically evaluate. As you complete and update your Annual Strategic Plan, you can assess how well you are achieving your goals and make changes to improve them for the coming year.
The potential list of Key Financial Indicators (KPI’s) is endless as schools are complex, but here are some basic best practices that relate to most schools:
(Click Chart below)
How often do you review your schools KPIs and how they have trended over the past 3-5 years? Do you have a set of primary KPIs that everyone on the Board and Administration is tracking? Do you review your current year financial reports in light of industry norms and your Board-determined KPIs? When you study your finances, how many years of data do you review to see what the story these metrics are telling to see where your school’s been and how its health indicators are trending? When reviewing the current year data, do you look at the monthly trend data to see how the current year has unfolded month-by-month or just look at the year-to-date figures? When reviewing mid-year, do you have any tools and data to forecast out the remainder of the year?
Running a school can seem like a complex process, but just like running any business or taking on any project or endeavor, contextualized data tells a story of where you’ve been (prior months and years), where you are (current year-to-date), and where you are going (3-5 year strategic plan). Many Christian schools flounder with no plan to become financially viable. Tuition and fees cover all of the required operating expenses, but no room is left for profit margin to build up cash reserves to ensure long-term health.
As decisions are being made by Boards, Finance Committees, and Administrators, they need the right information to know how to drive the strategic initiatives and how to build a sustainable business into the future. Tracking the right information to be able to see the financial story will make it possible to move from floundering to flourishing so that the financial health of your school is blessed, not just your current students, but their children and grandchildren as well.
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Matt Metcalf serves as the Director of Business and Financial Services for Concordis Education Partners where he and his team of bookkeepers supports over two dozen classical Christian schools by providing bookkeeping and financial analysis services. Matt earned his Bachelor and Master degrees in Accountancy from the University of Mississippi. With a multifaceted career spanning public accounting, financial reporting, tax preparation, and non-profit educational financial management, he has navigated diverse roles in both large private Christian schools and small startup institutions, including serving as Headmaster. Matt loves using his expertise in school management and corporate accounting to enrich classical Christian schools, partnering with them to ensure best practices and fostering growth.