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30,000 Feet Above Annapolis: Trends for Independent Schools

30,000 Feet Above Annapolis: Trends for Independent Schools. Myra McGovern Director of Public Information National Association of Independent Schools mcgovern@nais.org. The Economic Outlook. Key Trends. Higher unemployment and eroding wealth Depressed housing market

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30,000 Feet Above Annapolis: Trends for Independent Schools

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  1. 30,000 Feet Above Annapolis:Trends for Independent Schools Myra McGovernDirector of Public Information National Association of Independent Schoolsmcgovern@nais.org

  2. The Economic Outlook

  3. Key Trends • Higher unemployment and eroding wealth • Depressed housing market • Middle class disproportionately affected (wealth more dependent on home equity) • Charitable giving down, but many independent schools holding their own

  4. College Educated Impacted Less Dramatically

  5. Drop in Net Worth

  6. Middle Class Affected Disproportionately • Pew study on the recession: median wealth of upper-income households, which possess more diverse portfolios, decreased by 12%. • The median wealth of middle-income households, which are more dependent on home equity, dropped by 23%.

  7. Giving to NAIS Schools

  8. What should you do? • Evaluate the economic climate in your area. Is it highly dependent on one industry or employer? • Analyze your school's dashboard indicators. • Develop multiple budget scenarios and plan for contingencies. • Continue to cultivate donors. • Examine alternative revenue streams.

  9. The Legislative/ Regulatory Outlook

  10. Key Trends • Growing federal debt. • Increasing state deficits. • More fiscal pressure on entitlement programs. • Government looking for additional sources of revenue.

  11. Where’s the Money? • CBO estimates that the federal debt will reach 87% of GDP by the end of 2010. • A growing % of GDP will be devoted to interest payments—from 1.4% now to a projected 16.5% in 2050. • higher taxes, budget cuts, or both. • An aging population will put increased pressure on Social Security and Medicaid. • Employer and employee payroll contributions for these entitlement programs will increase along with the age of eligibility.

  12. Threat of PILOTS/ SILOTS

  13. Tax Law Changes Affecting Disposable Income • Health Care Reform Taxes: Medicare surtax in 2013 of 3.8 % on unearned income (single filers $200,000+/married couples $250,000+); general Medicare payroll tax will increase by 0.9%. • State Budgets, State Tax Increases: state revenues in decline, creating budget gaps through 2012—a majority of states have increased their taxes over the past two years. Health Care Reform: 13 Tax Changes on the Way, Kiplinger

  14. What should you do? • Keep up with national legislative and regulatory news in NAIS’s Independent School Advocate newsletter and NAIS government relations advisories. • Share your school’s story with legislators. • Enhance your community relations efforts and develop a community impact statement for your school. Free for NAIS members. Just log-in to the website and edit your communications preferences. Free for all at http://www.nais.org/resources/article.cfm?ItemNumber=147827

  15. The Demographic Outlook

  16. Key Trends • Greater diversity. • Shifting habitation patterns. • Different picture in different counties– even different zip codes.

  17. Today 1/3 of Americans are nonwhite; minority groups represented 83% of growth 2000-2008. Nearly 1/4 of U.S. children have at least one immigrant parent. By 2050, less than half of the country will be white. The Hispanic population will triple in size between 2005 and 2050—29% of the population, compared with 14% in 2005. Hispanics will account for 60% of population growth from 2005 to 2050. Sources: Census Bureau, Pew Research Center, Brookings Increasing Diversity

  18. Anne Arundel • Growth projected in number of households with children 0-17. • White population declining. • Growth in households 100-150K/ year income.

  19. What should you do? • Examine your recruitment area. How will the demographic make-up of your community change? • Is your school reflective of the broader community? • To increase diversity, evaluate whether your school embodies the characteristics that under-represented groups are looking for. Do your messages highlight these characteristics? How do you communicate about financial aid?

  20. Consumer Attitudes

  21. Key Trends • Shaky confidence. • More elaborate, detail-oriented decision-making process. • Families willing to make great sacrifices to continue independent education, but you must prove your value.

  22. Consumer Attitudes • The U Michigan/Reuters Consumer Index: • June 2010: showed that confidence among U.S. consumers had risen to the highest level in more than two years; quick downturn in July—index posting its lowest numbers since November 2009. • Americans’ perceptions of their financial situation and whether it is a good time to buy big-ticket items—rose to 85.6 in June, the highest since March 2008; took a downturn in July to 76.5. Richard T. Curtin, Consumer Confidence Unchanged (Ann Arbor, MI: Thomson Reuters/University of Michigan Survey Research Center

  23. Consumer Attitudes • Pattern in consumers wanting detailed information before making a purchase decision; hugely intensified by the recession. • Consumers will engage in more research and comparison-shopping than ever before; schools will need much more hard data to answer parents’ questions.

  24. 2010 NAIS High Income Family Study • The key drivers—quality of the academic program and the teachers. • Class size is still a major issue • 50% noting that a class larger than 15 students is too big • another 39% saying that anything over 20 is too large for an effective educational experience. • Consumers are keenly aware that the recession has had an impact on the quality of their child’s education. • 40% noted that they had seen a drop in the quality of their child’s education. • 23% said that they would probably be making a different school choice for the 2010-11 school year because of this drop in quality.

  25. 2010 Study (cont’d.) • Parents will forgo most things (vacations, cars, eating out, etc.) to afford a quality education for their children. • The most used sources for information on schools are the schools’ websites and friends and family. • This underscores the importance of having an easy-to-navigate website loaded with hard data and consumer reviews, coupled with the use of school ambassadors (past parents, current parents, students, alumni) who are spreading the word throughout the community and on social media sites.

  26. What should you do? • Survey your constituents. Find out what they value and how well you deliver. • Investigate the competition. Where do families go if they turn down your offer of admission? Are the local magnet or charter schools growing? • Do your marketing messages highlight what constituents value? Using the vehicles that they prefer? Have you evaluated your website’s effectiveness?

  27. Contact Myra at mcgovern@nais.orgor 202-973-9717

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