The COVID-19 pandemic has resulted in many tribulations for individuals and communities, and one of them is economic stress. Concord Academy is not an exception to experiencing great shifts in finance from pre-pandemic to peri-pandemic, but the school remains financially stable to get through this year.
To consider peri-pandemic and pre-pandemic financial situations, it is important to understand where the revenues and expenses come from. Tuition only covers 76-78% of the total expense each year; as demonstrated by the Concord Academy 2018-19 Annual Report, there remains a 23% shortage between the revenue from tuition and the total disbursement. There are two major sources of revenue that fill this significant gap. The first is the Annual Fund, a fundraising effort that raises about 11-12% each year, and the remaining 10-12% is closed by earnings off of CA’s endowment.
Chief Financial Officer Amy Miller-Fredericks explains, “We have a formula for how we do that because obviously our endowment is our long-term savings for the school so we have to be very careful, first of all, that we are not touching the main piece of our endowment that we are only using the earnings, and […] that we don’t wipe out those earnings in one year and have nothing the next year.”
The revenue is relatively stable and not affected much by the COVID situation, yet the expenses this year have been growing tremendously. The breakdown of expenses in a normal school year includes salaries for faculty and staff (53%), operations to run the campus (19%), financial aid (16%), general administrative fees such as insurances and legal fees (7%), and IT support or new equipment (5%). Because of the pandemic, however, operations will result in millions of dollars of increase in the total expenditure. Over the summer, the operations team spent a tremendous amount of time installing handle-less sinks in all bathrooms on campus and plastic glass in offices and the Stu-Fac and reconfiguring the classrooms such that they are appropriate for social distancing. Further expenses for operations consist of purchasing classroom technologies such as soundbars to facilitate a potential hybrid model and implementing a testing program.
On top of the immense growth in the operations budget, the finance team is also mindful of supporting additional financial aid. Financial aid has been flexible to increase and to accommodate families experiencing job reduction or job loss as a result of COVID-19. The technology grant, which is normally $500 for a full financial aid percentage, increased to $900 in June. In light of the pandemic, the financial aid team decided to keep bookstore accounts open all summer long, which were, in the past, only valid during the school year. Students were able to request financial aid for online classes such as voice lessons, writing courses, and computer programming lessons; products such as fitness apparatus and photography equipment; and devices such as headphones, keyboards, and many different computers.
John McGarry, director of financial aid, shares, “We were very liberal in granting approval in summer enrichment purchases. […] We really tried to open the bookstore account to remind students that they are still connected to CA.”
The same support continued throughout this school year. The financial aid team reached out to each student individually before the semester to make sure that they have the technology and set up to study successfully. McGarry illustrates, “In some cases, we have paid for chairs and desks, and for high-speed internet accesses, so they can participate in Zoom without delays.”
Even though the pandemic has caused a significant increase in expenses, CA has a stable financial operating structure that allows stability during this particular time. The school runs to breakeven each year—this means that not a lot of money is made, but no money is lost, so that the revenue is approximately equal to the expense. Given the circumstances during the pandemic this year, it is very understandable to have a probable significant operating loss. Fredericks explains, “We always work very hard to balance our revenue and our expenses, and I think that’s going to help us. […] I think that we feel very comfortable from CA’s financial stability that we can actually have an operating loss this year and be fine.”
There is no need to be too worried about CA’s financial situation, as Fredericks concludes, “We truly believe that we have prepared as best as we can to get through this year and that we will get through this significant year.”