bof march 2011 - finance & fees presentation

8/6/2019 BOF March 2011 - Finance & Fees Presentation

1/11

Open Forum Format

Finance Presentation And Questions

Director Search Presentation And Questions

Written Questions answeredCoffee Break( 10 Minutes)

Q&A With Questions From The Floor

International School of Tanganyikawww.istafrica.com


2/11

IST Finances & Fees Presentation

Board Open Forum 17th March 2011

y Financial Budget & Fees for 2011/12y Benchmarking with leading AISA schools 2010/11

y Cost Center Analysis 2010/11

y Major Cost Drivers & Cost Management Approach

y Financial Planning Approach


3/11

Enrollment Trends drives all key financial decisions

2007/08 2008/09 2009/10 2010/11 (proj) 2011/12 (bgt)Non-Fee Paying Students 43 52 53 60 63

Fee Paying Students 870 945 974 975 970

Total Enrolment 913 997 1,027 1,035 1,033

750

800

850

900

950

1000

1050

Average Class Size 22 20 20 19 19

Tuition Fee % Increase 10.1% 10.6% 9.1% 8.0% 7.4%

CHALLENGES GOING FORWARDStable Enrolment Trend - lower fee income growth, operating costs going up (salary, inflation, class size)Tuition Fee Increases Operating & Capital Budgets currently running deficits, Building Reserve buffers the incomegaps, but need to avoid deficits & aim for nominal surplus in future Capital Fee Stable Capital budget costs are decreasing ($1.57m LY, $1.37m CY, $1.17m NY), but the need forongoing facilities upgrades & replacement/addition of equipment remains high Building Fee $500 increase for 2nd+ child will add only about $50k to Building Reserves. Reserves not growing to

meet future MSRP needs


4/11

Operating Budget &Tuition Fees

2007/08 2008/09 2009/10 2010/11 (proj) 2011/12 (bgt)

Operating Revenue 12,001,977 13,386,635 14,666,443 15,474,661 16,509,617

Operating Expenditure 10,357,740 12,230,531 13,926,691 15,535,608 16,337,194

Operating Surp/(Def) 1,644,237 1,156,103 739,752 (60,947) 172,423

(2,000,000)

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

Operating Expenses 2009/10 2010/11 (proj) 2011/12 (bgt)

Educational Supplies 1,008,640 7% 1,087,477 7% 1,159,744 7%

Operating Overheads 2,433,465 17% 2,497,300 16% 2,638,512 16%

ontingency - 0% - 0% 110,000 1%

HR & Training 10,484,586 75% 11,950,832 77% 12,428,938 76%Salaries O/S 6,751,527 64% 7,951,114 67% 8,235,985 66%

Salaries Local 1,162,337 11% 1,287,150 11% 1,369,387 11%

ORBS 549,063 5% 641,276 5% 885,973 7%

Staff Welfare 1,792,551 17% 1,845,358 15% 1,687,592 14%

PD 229,108 2% 225,934 2% 250,000 2%

Operating deficit will be funded by buildingreserve. Tuition fee increase at $1,100 pergrade level in order to budget a smallsurplus next year.

HR cost has droppedto 76% of total costsbut PAYE taxes stillhigh at $2.3m


5/11

Capital Budget & Capital Fees

Particulars 2007/08 2008/09 2009/10 2010/11(proj) 011/12(bgt)Facilities Upgrades &Capital Repairs 444,144 827,030 647,910 367,037 504,060

Vehicles& ikes 3,200 35,952 119,711 - 3,675

Educational Equipment 160,722 197,630 383,180 412,056 225,100Classroom &OfficeFurniture,Equipment 132,159 264,657 241,533 395,254 175,000

Software Upgrades - 47,752 34,571 -

Staff Housing 130,371 144,904 144,626 154,413 143,500Security Upgrades/Contingency 50,000 128,000

2007/08 2008/09 2009/10 2010/11 (proj) 2011/12 (bgt)

Capital Income 943,450 1,003,000 1,491,145 1,261,200 1,200,000

Replacement Maintenance & Capex 870,597 1,517,925 1,571,531 1,378,760 1,179,335

Capital Surplus/(Deficit) 72,853 (514,925) (80,385) (117,560) 20,665

(1,000,000)

(500,000)

-

500,000

1,000,000

1,500,000

2,000,000

Deficit funded from

Building Reserve.

Capital Feescontinue to remainthe same at $1200per student


6/11

Building Budget &Building Fees

Particulars 2007/08 2008/09 2009/10 2010/11(proj) 2011/12(bgt)

Overall School Teacher Housing$1m

TeacherHousing$1.3m

TeacherHousing$1.9m

TeacherHousing$1.1m

TeacherHousing$1.5m

Secondary Campus ScienceBuilding$1.9m

ScienceBuilding$0.2m

CanteenExpansion$70k

Elementary Campus ECExpansion$0.

Building Reserve stableat $5m should be

growing in order to avoidborrowing for futureMSRP projects

Critical buffer for cashflow deficits in Operating& Capital Budget

2007/08 2008/09 2009/10 2010/11 (proj) 2011/12 (bgt)

Building Income 984,500 1,444,500 1,352,000 1,544,000 1,560,000

Major Building Projects/capacity exp 1,090,628 3,271,423 2,113,175 1,612,311 1,569,000

Building Surplus/(Deficit) (106,128) (1,826,923) (761,175) (68,311) (9,000)

Building Reserve 2,503,927 (174,197) 5,098,543 4,851,725 5,035,813

(3,000,000)

(2,000,000)

(1,000,000)

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000


7/11

Benchmarking with leading AISA Schools SY 2010/11

ISTs BuildingFee is about$1000 morethan $5000average

Mostschoolschargesimilarcapital fee

PYP tuitionfees areamong thethree lowest

MYP tuitionfees areamong thefour lowest

DP tuitionfees are inthe middle

Small gap between BA & MASalary & at the lower end of allthe schools salary rangeIncreasing the gap

means more of salaryincrease can gotowards higherqualified teachers

TEACHER SALARY BENCHMARKING


8/11

Operating Surplusis $167k

Operating Surplusis $62k

Operating Deficitis $41k



Cost Center Analysis SY 2010/11

86 78 80 94

100

% CapacityUtilization

97 99

96

94

71

% Fee Paying

Students

Secondary Campus continues to produce operating surplus in order to cover the cost of

absorbing the higher proportion of non-fee paying Elementary Campus students of overall

IST faculty.

IST Board will continue to gradually balance the operating budget at each campus through:

1. Fees management balance revenues & costs at each grade level, sustainable cost

management & avoid past practice of cross-subsidizing between campuses

2. Recruiting Strategies increase gap between BA & MA to recruit experienced

teachers, tackle 55yr age limit imposed by Ministry of Education


9/11

Major Cost Areas & Cost Management

Examples of Cost Management Initiatives

A HR 76% of Total Operating Costs

1. Capped O/S Salary increase at average 1.5%2. Teacher Housing apartments constructed, lower architect fees & PM incl3. Introduced Personal Days as a non-monetarybenefit4. Reviewing Medical Insurance Costs

B Tax 18% of Total HR Costs

1. PAYE for New Hire (expatriate) reduced to 20%2. Skills Development Levy(6% of salary) exemption confirmed3. Reviewing Medical Insurance Provider& Premiums

C Operating Overheads 16% of Total Operating Costs

1. Asset Replacement Plan in place for 2ndyear2. 5S process in place all facilities support staff trained3. Generator changeover system at Elementary Campus4. Negotiations with service providers

(security, sanitary, housekeeping, water, electrical)

D Educational Supplies 7% of Total Operating Costs

1. Reduced ISS service fees from 14% to 12%, Negotiated with local suppliers


10/11

Internal & External Audits, andBenchmarking

Facilities Audit

Safety Audit

Security Audit

Energy Audit

Operations Audit

Financial & Statutory Compliance Audits Remuneration & Staffing Benchmarks

Teaching Faculty

Support Faculty

Administration

Academic Benchmarking

ISA, PSAT

MYP, PYP, DP

Best Practice Audits & Benchmarking School & Conference Visits

IBO/CIS Audits

Develop Plans & Strategies

Maintenance Plan

Asset Replacement Plan

ICT Strategy/Plan

Recruitment & Staffing Plan

Remuneration Plan/Proposal Professional Development

Plan

Capex Plan

Building Plan

Capital Funding Plan

Enrollment Plan

Annual Budget & LTFP

Annual

Operational Budget

Capital Budget Building Budget

LTFP (5yrs)

Budget Forecasts

Enrollment Forecasts

Capital Funding &Repayment

DevelopPlans &

Strategies

AnnualBudget &

LongTerm

FinancialPlan(5yrs)

Internal &ExternalAudits, and

Benchmarking

FINANCIAL PLANNING PROCESS


11/11

Get Involved

y Please get involved if you have professional experience iny Facilities Audit in the areas of

y Energy Utilization & Conservation

y Risk Assessmenty Tax Management of PAYE for Expatriate Employees

y Construction Tender & Project Evaluation

y Legal

y Thank You

bof march 2011 - finance & fees presentation

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