From time to time you may wonder how the College manages its income and expenditure to ensure we efficiently enable the capacity of the College.
The College exists as a not for profit charity. We don’t have owners or shareholders per se, so we operate in a closed circuit environment where every dollar of revenue earnt stays within the College and is able to be spent within the College in some way – without leakage.
Indeed, our Constitution requires that all income of the College is spent on achieving the key objective of the Constitution which is providing our students their quality education. This is a point that we continually reflect on – and whilst we ensure that the College is at all times run as efficiently as possible as a large business – our reason for existing as a business is not to make ‘profit’ but to ensure that our available resources are utilised to enable the capacity of the College’s core functions as an educational provider.
Our income sources are demonstrated in the chart below. Around 40% of our income is from Government funding, 55% from fee income (tuition costs from parents and guardians) and 5% from other sources (facility hire fees, interest income, vacation care income and other minor sources).
Government funding of the independent school sector is more modest in nature than the public school sector and is based on the demographic of our community and their capacity to pay as determined by the Federal Government. It is based on some complex Government funding models that are regularly reviewed and updated and the College amends its long term financial planning in response to these expected government funding levels. Over the next 10 years, we are transitioning to a new government funding model which will slightly reduce our funding per student, with this having been well factored into our long term financial modelling.
Our annual expenditure each year is outlined in the below chart.
As a people driven organisation, it is not surprising to see that over 70% of our annual expenditure costs are labour costs – salaries, wages and associated on costs. Depreciation, facilities and infrastructure and teaching resources make up the next most significant components of our cost base.
How do we balance, monitor and review all of this to ensure the appropriate prioritisation of our available resources?
In the short term, annual budgets are produced within the College which outline and track our annual income and spending across the course of any given year. These budgets ensure the appropriate prioritisation of the College resources in line with our strategic plan.
From a longer term perspective, we have a rolling 10-year financial masterplan which is regularly reviewed to reflect our expected longer term income and cost projections. This includes facility and property master planning to ensure that our longer term capital project priorities are regularly reviewed and included within our financial capacity projections.
It’s a complex picture with a number of moving pieces. To ensure external review and appropriate governance we are assisted by our Finance Committee and Board of Directors in oversight of the delivery of our financial strategies. We also benchmark some key metrics (or KPIs) of our financial performance regularly with peer independent schools in Tasmania and Australia to ensure that we look for ways to continually refine our approach to the management of College resources.
Within our new 15-year strategic plan “Vision 2035”, we are reviewing in detail the business aspects of the College within the ‘Capacity’ strand. Our aim is to ensure that our financial capacity enables us to efficiently and flexibly resource our learning objectives and maximise every dollar earnt in achieving those strategic objectives. I’d welcome any comments or suggestions on the business aspects of our College operations at any time via the Business Office as we work together to achieve these goals.