The Hammond School is a private college preparatory school in
Columbia, South Carolina. At the time of this work, Hammond had a total
enrollment of somewhat more than 500 students in grades K-12. As is the
case with all educational institutions, the balance of tuition and
enrollment is a veritable tightrope that must be walked with great caution.
While Hammond maintained a reputation for a high quality education,
alternative options in the Columbia area required that tuition costs
at least recognize those options.
IMS Quantum was engaged to build an Integrated Planning Model to
be used as a tool for evaluating the financial effects of changes in
tuition and enrollment. While the model would not be considered
exhaustive, it allowed these two issues to be examined quickly and
accurately. Because of a need to evaluate the new budget in terms of
a longer term plan, the model was set up to show the effects of
changes over a period of three years.
The first part of the model dealt with Revenues. It allowed
administrators to chose a tuition plan for the lower, middle and
upper schools using current rates and a rate of increase for the
following three years. Anticipated enrollment numbers were then
entered for the current and each of the three planning years. Here
the model could have included some explicit treatment of the effect
of tuition increases on the number of current students retained and
the number new students gained. In this model, this effect was left
up to the administrator to evaluate subjectively. Tuition income was
then computed and added to income from the Annual Fund Drive and any
other revenues obtained to yield a total income value for each of the
planning years. It should be noted that each of these areas could have
been expended to capture a more detailed understanding of the factors
that drive each of the sources of income.
The expense section of the model starts with a revue of faculty
and staff salaries. A salary worksheet was developed, which allowed
administrators to deal explicitly with each member of the faculty.
Here also student-to-faculty ratios are computed. These ratios
become measures of performance and change as enrollment increases
without a commensurate increase in faculty. The rest of the expense
part of the model looks very much like a traditional budget. Because
of the focus of the project, the assumption was made that these
expenses would remain relatively fixed over the planning period.
In general, the Integrated Planning Model served an important
purpose in providing a tool for evaluating a host of different
scenarios very quickly. As these scenarios were tried, dialogue
could be focused on the pros and cons of each case. IMS Quantum
is committed to providing sophisticated decision-making and planning
tools to meet the needs of administrators seeking success in today's
complex educational environment.