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IS heads plan for budget shortfalls

by Forrest Broman
01-Apr-09


Over 110 IS heads recently attended the OASIS session conducted by The Academy for International School Heads in San Francisco, on planning for the economic recession. Additional sessions during the AAIE conference (Association for the Advancement of International Education) focused on investment priorities and administrative challenges in this difficult economy.
The message underscored by every presenter was that schools cannot be complacent about their enrollment and financial stability during the coming academic year. The dangers were emphasized because previous surveys indicated that heads were overwhelmingly certain they would need the same or more teachers for next year. The comments of many heads also indicated a high degree of certainty that their schools’ enrollments would not be seriously impacted by the growing, world-wide recession.
All heads were strongly advised that while hoping for the best, they had better create some emergency budget options with plans for handling a 10%, 20% or 30% drop in enrollment next year. AISH participants were also given a unique “Funding Tiers Model” produced at AS Frankfurt and presented by Mark Ulfers, which enables a school to sharply identify their strategic goals and to sharpen their priorities should serious cuts be required.
Many suggestions for deterring costs and arranging for emergency funding were also presented. And with salary and benefits making up 70 to 75 percent of most IS school budgets, strategies for cutting staff, reducing their costs, and modifying school classes were also vetted. Heads were advised to have a reduction in force provisions in all employment contracts, to ensure clarity and authority in the case of a drastic fall in students.
Investment advice was featured during AAIE, bolstered by the report of Blackrock, a prestigious investment firm. While these experts predicted a sharp upturn in the equities market by 2010, others felt strongly that school funds should be kept in the most safe and conservative cash accounts available to them.
In terms of marketing, schools were advised to continue their efforts if they are in competitive environments. But they were also warned not to take steps which might change or dilute their mission, such as accepting far more local students in order to resolve budgetary problems.
Key to all of this advice is how to manage crises and to deal with everyone involved. Here the best advice comes from Triangle Associates:
THE PEOPLE SIDE
First 4 from Triangle Associates
1. Be exceptionally transparent. Rumors sprout quickly during tough times, and, for the most part, those rumors will be far more dramatic and extreme than the real story. It is difficult for constituents to trust these days, but CCL encourages “authenticity” from senior leaders, while Peters says, “Be absolutely straight with people, especially those at the front line.” But, keep in mind that much of the power words have comes from their context—the surroundings that give statements meaning. Wharton’s Shea says that “part of what gets shredded [in a crisis] is context. The context is changing all the time, which means it strips language of its meaning.
2. Be visible and engaged. Even if it goes against every survival instinct in your body. Peters admonishes, “march toward the sound of the guns.” CCL says that “one of the insidious effects of prolonged crisis is the way it saps time and energy from what matters most” in terms of the people side of things. This is a time to renew your MBWA skills (“management by wandering around,” for those with short memories).
3. Have the right generative conversations. BoardSource points out that the way topics and issues are framed tends to drive subsequent discussions. “… if the board asks, “Where do we cut expenses to make sure we can balance our budget?” the discussion will center around expense reduction. If the question is framed as, “How do we maintain a balanced budget?” the discussion will include expenses and revenue. If the board asks, “How best do we serve our mission despite changes in our economy?” the board is likely to have a broader and more fruitful discussion.”
4. Don’t panic and don’t let others panic around you. Financial crises, especially those of a global scale and scope, have a paranoiagenic quality; that is, they tend to inspire paranoid thinking and rumors of impending catastrophe all out of proportion to reality. Peters says to, “Banish “gloomy” from your persona, even if it kills you!” Yet, he also cautions to avoid false optimism and perkiness.
5. Keep the right people on the team. Guidestar points out that, “[every organization has a small group of people who are critical to its success—current and future.” The current crisis will abate at some point, and continuing success once things brighten up requires having the most important human assets still in place. “These are the people who should be receiving the lion’s share of your attention, so that they can feel like allies and partners in keeping the organization focused on its mission and pulling through. This is a time for shared goals and creative solutions, not individual priorities and business as usual.”




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