Ever wonder where our tuition dollars go? Not surprisingly, most students are unaware of this information. Needless to say, the school’s budget is not a hot topic, but it should be. Proving this point, Alexandra M ‘18 said, “I’m honestly not really sure where the bulk of our tuition goes. I would assume that as of recently it is going to the new townhouse that just opened.”
Last week, the Hewitt Times interviewed Mr. Doug Odom in order to gain insight into the financial side of running Hewitt, in addition to how the budget, specifically tuition, is managed and spent. Doug Odom joined us last August after moving to New York from Washington D.C. Mr.Odom is Hewitt’s CFO; his work is mainly focused on financial management and operational activities. His job includes many diverse activities which relate to human resources, finances, and facilities management at Hewitt. You can usually find Mr.Odom in his office on the first floor working on financial planning and tuition.
As Mr.Odom explained, the Board of Trustees and the Finance Committee are “charged with a long-term stewardship of the school and they want to make sure that we’re thoughtful and careful in the resources we’re using to deliver the education that we’ve signed up for.” To make sure that the various priorities are in line when budgets are considered, Mr.Odom stays in close contact with the different school division heads so that he understands each of their needs prior to communicating with the Board of Trustees and the Finance Committee.
This prompted a discussion about how tuition is set and how the funds are allocated. While Mr.Odom acknowledged that other schools’ tuitions are known and considered, to make sure tuitions are comparable, the tuition at Hewitt is not based on other independent schools in New York City.
The comprehensive fee at Hewitt for the 2016-2017 school is $46,700. This means that from the 2015-2016 school year to the 2016-2017 school year, tuition increased by $2000. When asked how the tuition is set year to year, Mr.Odom explained that the following things are considered: the cost of operations (running Hewitt), enrollment, fixed costs (which go up yearly), and variable costs (which are more based upon programming decisions).
The bulk of our tuition dollars is spent on staff. The allocation of the budget for this expense alone accounts for around 70% of the total budget. The remainder of the funds is used to meet curriculum needs, administrative costs, and operating costs for running the buildings themselves.
The amount of revenue raised by tuition has a huge role in setting the annual budget. Mr.Odom explained that “90% of the budget comes from tuition.” He also noted that small changes in enrollment, such as a few incoming students, have a big impact on the budget. “Tuition and enrollment go hand in hand,” Mr.Odom reiterated.
Work on the budget begins in November/December prior to the school year. The Board of Trustees approves the budget in January, according to Mr.Odom. The base price of the budget includes the tuition rate and enrollment. It is also based upon certain assumptions, how many financial aid dollars will be available, and operating expenses. This budget is tweaked as enrollment numbers are confirmed.
While budgets are prepared a year ahead of time, many long range plans are considered 3-5 years in advance for financial purposes. Assumptions are made about what is going to happen and how much it is going to cost to provide the education, in addition to thinking about new plans and initiatives on programs which may require financial resources.
Some might be surprised to discover that the cost of educating a Hewitt student for a year is not entirely covered by the tuition cost. “In round numbers, 90% of our revenue is tuition, and about 10% is everything else,” described Mr.Odom. The ‘gap’ between tuition and costs, as he explained, is guided by reliance upon fundraising and other sources of revenue. The goal for the annual fund this year was 2 million dollars. This goal would be designated to fund ongoing operations and would help to fill the ‘gap’ between tuition and actual costs per student at Hewitt. Another aspect of the school’s finances is major gift fundraising. When large donations are made, the money is often directed toward a specific major project or the endowment. Hewitt’s endowment is around $17 million, which gives the school substantial financial backing.
Financial aid is another very important factor in determining tuition, and it is something that Mr.Odom explained must be considered during budget planning. Since there is little to no external funding for financial aid, Hewitt offers need-based discounts from the full tuition. “We try to make sure that the school remains affordable to a family’s’ level of ability to pay,” Mr.Odom stated. Great care is used in assigning financial aid dollars.
It is important that students are aware of how budgeting and tuition are handled at Hewitt. Thanks to Mr.Odom, hopefully, this information provides clarity regarding Hewitt’s budget, tuition, and endowment. All in all, the financial aspect of the school isn’t as scary as it seems.