It’s that time of year when you are no doubt crunching numbers, pulling reports, and populating dashboards in order to get clear on enrollment for the 2021-2022 school year.
Let’s talk about GTR (no, not the car). Gross Tuition Revenue; you’ve probably seen it on the budget report at a finance meeting and it might have looked something like this:
Table 1
Gross Tuition and Fees
|
$5,000,000.00
|
Financial Aid
|
($1,500,000.00)
|
Net Tuition and Fees Revenue
|
$3,500,000.00
|
At this point you may be thinking, well sure, that’s how we describe financial aid. How else would you do it? How about like this:
Table 2
Net Tuition and Fees Revenue
|
$3,500,000.00
|
Even better, break it out the way the line items would appear for the Development section of the balance sheet with tuition assistance recipients, merit grant recipients, and full-pay revenue as analogues to school benefit, golf outing, and annual fund revenue, for instance:
Table 3
Revenue from students receiving need-based assistance
|
$1,000,000.00
|
Revenue from students receiving merit grants
|
$500,000.00
|
Revenue from full-pay students
|
$2,000,000.00
|
Total Net Tuition Revenue and Fees
|
$3,500,000.00
|
The way we talk about our money reveals our values and priorities. Look back at Table 1. When we describe Financial Aid as an expense right off of the top line number (GTR), then we are implicitly stating, “We would have had this $5M in revenue, but then we spent $1.5M on financial aid so now we only have $3.5M to run our operations.” This creates a bias against families who receive need-based or merit aid, because they appear on the balance sheet as a huge expense, a liability, or a burden even if it is not our intention to do so.
Let’s also recognize there is a logic problem with Table 1 as well. The hypothetical school would never have realized $5M in revenue because without the $1.5M in tuition assistance, enrollment would have plummeted and revenue along with it. Table 1 fails to illustrate how the $1.5M in tuition assistance is a key revenue generator.
Therefore, when we look at Table 3, it is clear that families receiving assistance (need and merit) account for 43% of the school’s net revenue. Instead of implying that these families are a burden or an expense as in Table 1, Table 3 shows that families receiving assistance are equally essential to the operation of the school when compared to full pay families.
Talk to your CFO or HOS; there might be an opportunity here to remove some implicit bias about families receiving assistance at your school because equity and inclusion belong on the balance sheet. By all means, keep Gross Tuition in the mix as a reference line to ensure that you are able to track and manage how much you are discounting - that’s an essential metric, but try not to open your budget report with it.
Drew Cocco
Director of Enrollment Management
Montgomery School