Keynote Address from ATLIS Annual Conference 2024 - Jeff Shields

Narrator 00:02
Welcome to Talking Technology with ATLIS, the show that plugs you into the important topics and trends for technology leaders all through a unique Independent School lens. We'll hear stories from technology directors and other special guests from the Independent School community and provide you will focus learning and deep dive topics. And now please welcome your host, Christina Lewellen.

Christina Lewellen 00:25
Hello everyone and welcome back to Talking Technology with ATLIS. I'm Christina Lewellen, the executive director of the Association of Technology Leaders in Independent Schools.

Hiram Cuevas 00:34
And I'm Hiram Cuevas, the Director of Information Systems and Academic Technology at St. Christopher's school in Richmond, Virginia,

Bill Stites 00:40
and I am Bill Stites, Director of Technology at Montclair Kimberly Academy in Montclair, New Jersey.

Christina Lewellen 00:45
Gentlemen, it is such a pleasure to be with you. Here we are live at the ATLIS Annual Conference 2024 annual conference here in Reno, Nevada, we have a sold out event happening here, there are just so many people so much energy, and what we just experienced. And what we're going to present on today's show is the keynote that was delivered on the first morning by Jeff Shields from NBOA. I know that obviously, the listeners are about to hear his presentation, we had the pleasure of experiencing it just a little bit ago. And it was pretty stunning. What I thought was especially impressive is just the ground that he covered, talking about that relationship between the business office and technology leaders. And of course, there's just no better energy on the stage than Jeff shields. So before we launch into that presentation, what did you guys take away? Like? What do you think our listeners are going to enjoy the most out of hearing his keynote,

Bill Stites 01:41
I think one of the things that stood out to me was when he was talking specifically about the trends that he was seeing when he started at NBOA. And the things that they were focused on from a technology perspective at that point, and then where we are now. And the ways in which with anything, you think I can Oh, my God, I was worried about that, at that point, you know what I mean? Where I was really spending this much time focusing on this other piece, and then where we are now and just seeing how things have changed and evolved, but also how things have remained somewhat consistent. So I think when the listeners hear that, I think they'll hopefully take away the same level of interest. And all that I did in terms of what Jeff shared with us. The

Hiram Cuevas 02:21
best part of the presentation for me and Barry's takeaway was the concept of minding the gap. And how K 12 institutions in higher ed institutions are really in this strange habit of not really having the budgets that they need, based on their spent expenses. And the best example he provided was and pleased listeners, be sure to listen carefully about his BMW example,

Christina Lewellen 02:43
oh my gosh, that was so impactful. Definitely pay close attention, essentially,

Hiram Cuevas 02:48
the point he's trying to make is, let's say you go out and you buy a BMW for $30,000. And it's great. You love it. The year later, BMW calls you and says, hey, it actually cost me more to make that BMW than you paid for it. Do you mind donating $2,000 to the cause? That is perhaps the greatest takeaway. Yeah, that puts it in really simple terms for people to understand.

Christina Lewellen 03:09
You know, I think that we've not had Jeff before talking at this really high level about the relationships and how important it is to stay away from the silo mentality. And he says during his talk, you know, no head of school is going to say to us, Hey, y'all go into your corners and don't work together. So is there something that you will take back to school or something that you were reminded of, in his talk in terms of, oh, yeah, maybe I could be better about that. Or have you guys worked really hard on your relationship in terms of crossing departments.

Hiram Cuevas 03:42
So relationships is the key to success in this field, for sure. In my particular case, I don't have the same situation. For those of you who didn't hear Molly Rumsey earlier about where the location of her tech office is, it's central. So she has contact with everybody. Minus is way off to the side somewhere. So I actually conduct rounds. And I go, and I visit areas of campus, often on a daily basis, just to see how people are doing, what are the problems that they're experiencing, or just to sit and talk about what they would like to do. So fostering that relationship. And to Jeff's point, that collaboration can be informal or formal. But I find that informal conversations are often the most valuable. I

Bill Stites 04:24
think, for me, part of it actually extended beyond the talk in the session, that was one directly afterwards. And for those of you that have access to the slides that the team from NBOA, provided, I think it'd be great to get a hold of those and take a look at those because they really spoke to and Jeff mentioned this in his presentation was not only the communication, but understanding the language that's used. What it is that we as tech directors are focused on the need more information on and what information can we get from our CFOs if we simply take the time as Hiram kind of mentioned, to sit down and engage and have those conversations It's because I think a lot of times, the example I used in the session after the keynote was my background, what I was trained in was teach third grade. I've learned everything that I'm doing from doing it as a tech director over the course of the past 2030 years. But at no point did I ever really have that from a business perspective. And making the time to do that, and leveraging the resources that we have at our school, the resources that NBOA can provide to help build that common language that Jeff was, again, talking about, I think, is one of the best things that I or anyone starting this role, I think about, you know, those that have either just finished the AI program or those that are studying for the Telus stuff in terms of what we talked about, in each of those would only benefit from a closer, more robust relationship with those people in their schools in the business office. Yeah,

Christina Lewellen 05:52
this is gonna be a great keynote for any of our listeners who are looking to build that relationship with the business office or even if you have a great relationship with the business office, Jeff brought up some incredible points, some wonderful reminders. We really hope you enjoy this live keynote presentation from Jeff Shields. Enjoy.

Blackbaud Presenter 06:09
It's Blackbaud’s pleasure to introduce this morning's keynote speaker, Jeff Shields. Jeff Shields, FASAE, CAE, has served as president and CEO of the NBOA business leadership for independent schools since 2010. NBOA is the premier national association, serving the needs of business officers and business operations staff, and independent schools and areas including accounting, finance, tax, risk management, human resources, and facilities. The association has grown from 23 founding member schools in 1998 to more than 1300 U.S. member schools plus member schools in Canada, Mexico, and 25 other countries around the globe during its 25-year history. Today, NBOA provides nearly 1600 member schools, business partners, associations and other organizations with a full range of live events, webinars, online courses, publications, web resources, original research, and volunteer leadership opportunities. Among other services to its growing membership. Jeff is a sought after speaker, delivering keynotes and educational sessions to numerous Independent School audiences that include Business Officers and business operations staff, heads of school trustees, and other school leaders on the state, regional and national levels. Prior to his current role, shields was employed by the National Association of College and University Business Officers for 10 years. At the time of his departure, he served the organization's Senior Vice President and Chief Planning Officer. His current board service includes serving as a director for AMHIC, a health care consortium for educational associations in Washington, DC, as well as a trustee for the Enrollment Management Association. He also has served on the boards of the American Society of Association Executives, One Schoolhouse, and Georgetown Day School in Washington, DC, he holds a BA from Shippensburg University, and an MA from The Ohio State University. Most importantly, his daughter, Samantha, has decided where she's going to college next year – Penn State. Please welcome to the stage, Jeff Shields.

Jeff Shields 08:28
Thank you so much to ATLIS for inviting me to be part of this event, I have to tell you, when I walked in last night, it was such a warm welcome. And I'm reminded what a small, independent school world it is, I ran into people that I know, obviously, through NBOA other people I served on previous boards with, it was just really warm and welcoming. So I really appreciate that.

I'm particularly pleased to be here at ATLIS for a number of reasons. One is that the membership of ATLIS is really similar to the work that I do with our primary membership. And that is and I shared this last night with a few folks is that my members and your members can choose to do what you do in any type of organization, especially it in the current economic environment. But you choose to do it in a pre K through 12 independent school environment, and so do my members. And I think that's really, really special. And we'll circle back to that in a little bit.

So I'm going to talk about the role of technology leaders and navigating the road ahead for independent schools. When I was preparing for this presentation. I came across this cartoon, and it's a frustrated person working at a computer and he thinks it's a technical Which, and the computer thinks it's a human error. So I want to get to the bottom of this before I start, as technology leaders at independent schools, I want to play higher or lower. Okay. And so I'm going to give you a percentage. And I want to know if that human error percentage is higher or lower, based on your experience. Okay, so let me start at 25% of the technical glitches that we experienced at our schools are based on human error one in 420 5%. Higher, okay, 40%. Oh, wow, I can see where this is going. 70% 80%. Thank you, does anyone say 100%? Because I don't want the headline, out of that list to be independent school tech directors think it's all your fault. So I just really wanted to take a poll. But thank you for participating in that. And you gave me knowledge. You know, I can't resist, I want to take another poll. And this is a point of personal privilege. How often is just turning your computer off? And on the solution? What percentage is that? 50? Higher? Is it 90? Oh, my gosh, 95. I thought you had a really hard job. It sounds like, it's really easy. Just turn your computer on and off, problems are solved.

Okay, we know that's not the case, I want to talk about my personal, I'm gonna do a little personal sharing this morning, my personal it journey to one of the reasons I've been invited here. And this is something I call myself. I am the OG of the national Independent School Association group. I've been doing this since 2010. I'm on my fourth, and he is president. That's some tenure there. And so I've been doing this for a while. And so I, I want to start off and share with you my observations over my tenure about what's been going on in it, then I want to talk about something that's really important.

In fact, he came up at our tables today, the relationship between the business officer and technology. And I really want to stress that this morning, because I think it's so important. And at the base level, right? Let's just net net this. technology requires financial resources, right? Our schools are built on relationships, the better relationship you have with other members of the leadership team, particularly the business officer, I think will be a huge boon to what you know you need to do to support your school, its mission and strategy.

So we're going to talk about that, then I'm going to cover top tech issues from the business office that I feel like we're dealing with now. I don't have the answers. I'm hoping you have the answers. I have questions. And hopefully over the next couple of days, you'll get some great input in answering those questions. And then finally, talk about our business model. Because I really want you to come into the room and understand what I'm describing as for many, many schools, there's 20% of our schools that are going to be just fine. And you know who they are, you can name them off the top of your head, they have brand recognition, there market leaders, high enrollment demand, high fundraising capacity, large endowments, those schools are always going to be fine. But I'm really going to try and speak to the 80%, who really work a business model every single year. And it really is like turning a new page. But every single year working a business model that's really vulnerable in a number of ways. So let's talk about what I'm here to talk about, you know, the IT journey for this is for me, this is through my eyes.

I started in 2010. And I just think this is it's kind of amazing as of reflecting on the pace of change, and what were the hot topics when I first arrived on the scene. Well, I'll be honest with you from a business perspective, we were talking about four, three B audits. So would you like me to go into detail about four three B audits this morning? Okay. I'm not going to pull the audience much more during my presentation. I'm just kidding. But it was smart boards. And every room had to have a smart board. That's all we were talking about. How can we get these smart boards into classrooms now this is 2010. This was a big deal. And what I think was interesting about it is we got the smart boards in the rooms, but most faculty members were still using them as chalkboards. And so it was kind of like it was a little much to do About Nothing, but it was really kind of my first experience with your role and getting technology into the classroom to advance the mission, etc, etc. Then we had the big device debate, the DIY, or the schools prescribed devices. Now, that was a while ago, and we went back and forth. And frankly, I heard really compelling arguments on both sides. Have we solved that today? Okay, they're laughing.

How many of you are DIY? Okay, and how many of you to prescribe what technology? Oh, that's interesting. So what I was expecting informal poll about 6030. That's my assessment. And then there was another conversation, and this bled all the way in to an NBOA meeting. We were having hot topics in it. And this actually got heated. This was the conversation around, should there be one tech person for academics, another tech person for operations? And should there be someone that oversees both? So that was a big conversation? How do we organize tech? And the good news is, that's because I think schools really realizing how important technology was, it was really getting routed, I appreciated that folks understood the difference between operations and academic tech. But have we solved that one yet? I mean, this is you're educating me. I promise. I'll give you something back at the end. Have we solved that one? Okay, so we're all over the place?

Well, you're in good company, because I haven't seen one business office structured the same way as the next business office, and independent school, but then wait for it. Data security. This was scary, things got really dark. And we covered it at NBOA. And this might have been right before ATLIS was around. But we were talking about hacking, and ransomware and malware. And we thought that was really scary. And we were like, What are we gonna do so that was the beginning of cybersecurity is real, and we need to pay attention to and I'll talk about a little bit more this morning. But who knew a global pandemic was right around the corner, cybersecurity kind of was like, Okay, that was bad. But this global pandemic is definitely far, far worse.

And that's where in in conversations I've had with some of your leaders, I really think two things happen. From my perspective, the importance of technology, leadership, in the midst of what can only be described as a significant crisis. I mean, there's been crises, there's been recessions, there's been other things going on. But really this realization that we have to teach, and for the first time, really unprepared, we're not going to have faculty and students in the same room, and what that's going to look like, and technology came to the rescue. And I think, in all humility, and and I know I don't have an unbiased opinion, I really think both business officers and tech leaders really save the day for our schools, and really got our schools through the pandemic. Some of you, everyone knows that Friday, right when the whole world shut down. And it was really funny.

I could tell you a funny story. It's like Monday or Tuesday. And then I get word that NEA is is closing its offices, and it's dumping its buildings, and they're going fully remote. And it's Wednesday, and I'm still like, I think I'm a cup half full kind of guy. So I'm like, you know, maybe they're overreacting. I'm not quite sure. By Friday. It was like head for the hills. Get outta here. We're done. You know, and I think all of us had that experience. I mean, do you remember that one Friday, where the whole world changed, and no one was coming back.

But I really, really credit both Business Officers and tech leaders coming together. And like I said, when I heard stories about schools standing up their online learning programs by Monday, it was just unbelievable. It was incredible yeoman's work. And then now here we are today, artificial intelligence. I'm not going to say I'm an artificial intelligence expert. I know what's happening in the space. I know what business offices are thinking about. I think you are way ahead of the conversation. For many of us, I think it's still underutilized in our business office, and rightfully so. Because I think the beginning of artificial intelligence, we were talking about, how's this going to impact faculty and students? Right. That's what we do. That's the business of our schools. So it's right that that was where most of our is where most of the attention goes.

But there are a tremendous opportunities in other aspects of the enterprise, particularly the business office, so I'm going to highlight some of those there. So I want to talk about the business officer and tech leader partners. Yep. And I don't know why this keeps happening. And I will say I've been doing this for a while. And the conversation seems to be the same. Now I know my colleagues at NEA is an EMA and ATLIS. And myself, you know, Christina just shared a number of partnerships. NBOA is very engaged. We have a strong data collection partnership with any ies, we have great partnerships with ATLIS. And with EMA, and we are trying to model for the independent school community, the value of collaboration, the value of work together. And frankly, you expected that from us for a very long time. But I still hear way too often, this silo mentality that happens in our schools. And I don't know where it comes from, because I've yet to meet a head of school that says, goes into his leadership team meeting and says, I don't want any of you to talk to each other. I want you to bury your heads in your office, dig deep into what you're doing. And let's see if the best thing is comes out. No one wants that.

So why does it happen? Why is that in our culture, we know intuitively, that collaborative leadership is the most effective, I do believe that we continue to make progress in that regard. But I'm really going to ask you to think about, especially as leaders see, this is a leadership role. What are you doing to facilitate strong working relationships among your leadership team, among your colleagues at your school, heads of schools, say they expect the leadership team to work together effectively? Again, I think we're making progress. And I think ultimately, in this complex environment that we're working in, it's the best way to support our schools strategy, advance our mission, and remain competitive. I mean, that's the name of the game out there right now, especially as I talked about those 80% of those schools that have that kind of fragile place in the marketplace, and are really working for every student, and making sure that the program and the facilities and the technology is all there. So really, there's obviously a lot to be gained from all of that. So what would I advise you to do?

Since I'm here representing business officers, and I'm speaking on their behalf, what would be most helpful from their perspective, I really truly believe that this is your time. Again, I talk about all of the parallels. I think the business officer role, the CFO role, really elevated right after the Great Recession. I think that was a seismic shift in how schools looked at their independent school finances, because many of us, many schools were caught flat footed trustees, heads of school, maybe Business Officers, but they really realized that they didn't have a clear idea about the finances of the school now, give everyone a break. No one was anticipating that our endowments would take a dive, no one would anticipate that our wealthiest families were no longer our wealthiest families. So Allah happened, but that's when in independent schools, just really briefly, our most popular title, when I first got to NBOA was business manager 40% of my members, their title was business manager. Today, it's two pletely different. They are CFOs, increasingly CEOs, Assistant heads of finance and operations, etc, etc. But it took that crisis of sorts to have people wake up and say, We really need stronger financial strategy and stronger financial acumen.

I think the same thing is happening right now for your industry, where they're looking at it, knowing that it's pervasive, knowing that it can be an accelerant in so many different ways. And so I think our schools really need you at this point in time, but they need you to be leaders, they need you to step beyond the status quo and what is and talk about what could be so position it expenses as investments, they really are investments for the future, because it's rare that you invest in an IT solution just once, right? You invest in it solution for the long term. Right. And I think it's really important as you make your case to go through your school strategic plan. and look for opportunities where it can be part of the solution to support that strategic plan. I think that your ticket in, if you can make the case for how you have an IT solution that really support your school's strategic plan, that's something people want to talk about, that gets the heads attention, it gets the trustees attention, and therefore will get the Business Officers attention. So really, make sure that you're familiar with your school's strategic plan.

And the other thing on the other side of that, that's really important. And it's just a fact of the matter of how we work. But folks are reluctant to take a bet on a big investment in it, unless you have data and benchmarking that supports the impact. I know my members operate that way. And it could be frustrating, because sometimes we're not exactly as risk prone, as we might be, you know, make the big bets. big risk, big reward. So if you come into that space with an IT solution, and can really focus on, it's aligned with the strategic plan, it's a strategic investment. And here's the impact it's had at other schools, in other organizations, here's the data that supports it, I think you'll find entree into the kinds of elevated conversations where I believe you belong.

And the other thing I'm going to say, and this is again, based on my experience over the years, is that any new IT solution has to have professional development to support it. And it's really up to you to figure out what that looks like. Back in the day, the most frustrating thing I would hear from business officers is they find the resources, they invest in the IT solution, and they go into a teacher's room, and it's sitting in the box in the corner. And we've got to build a bridge, I don't fault, the faculty member, I think we have to think about how do we build a bridge, and there's ways to do that we can buy it, we can build it, we can host brown lunches, where we invite in kind of our ambassadors around that, and they can talk about how to use it. But I really think with all the pressure and expectations our faculty is under, if you're introducing a new solution that could have significant impact, you've got to build that bridge. And I really think that's your responsibility. So when you think of the investment, it's not just the investment in the solution, it's the investment and how am I gonna support faculty in actually using that solution?

So with that, I'm going to move into top tech issues for the business office and think about starting with AI that's on the top of everyone's agenda, and how is the business office? Looking at AI? You may or may not know. And my impression is that tech departments are very creative and innovative, and that you talk about opportunities. And is that accurate? I get the sense it's a very dynamic, creative conversation that you're thinking about ways to do better, what are the products solutions out there that can do that? Good, bad, or indifferent. The Business Office has a lot of very routine activities that it has to do on a weekly and monthly basis, which is probably why many of you aren't in the business office. But it's necessary. And it's important. AI could play an incredible role with helping them automate those routine activities, like reconciliation, like payroll, like going through the audit and finding significant variances that don't make sense. All of that, under my impression is being done manually. And it takes people to do it. And it's a long arduous process, audit and fraud protection, the audit is a big deal. The audit is what communicates to external audiences, why our schools are worthy of its nonprofit status. So I know it seems boring. I know it seems laborious, and it probably doesn't get a lot of attention. And it's not your problem to solve. But the fact of the matter is, AI could be a key area where your school's audit process and fraud detection, which is a big deal could be accelerated could be better supported. And when that happens, we're freeing up resources, right? We're freeing up resources to do other not routine work, but much more meaningful and strategic work, predictive analysis, taking a look at the school's data over three or four years and saying, What does this mean? Coming down the Road, what does this mean for our school financially coming down the road. And that analysis can really lead to strategy.

Here's some other areas, I talked mostly about accounting, but there's opportunities for the database, improved customer service. The other thing our members have in common with you all, is that we're internal customer service providers, right. So we're not just strategy. We're not just serving students and families. But internally, we have customers that we're serving our colleagues and peers that need us. So database management, customer service, analytics, routine automation, or communications, vendor screening, looking at insurance, etc, etc. So I really hope that at the next phase, once you feel like we're optimizing, or at least we're on our way, with AI and its impact on the classroom and the program we're delivering, I hope we look at other key areas. And I would say the business office is ripe for automation only because it has so many routine functions that right now require people and could be done far more efficiently. And then think about what could those people be doing differently? I think I hear you say this all the time, anyone talks about ai, ai is not going to replace the person, the person is going to be replaced, because they're not using AI effectively. That's where the danger is. And so I've got to be honest, I love Business Officers, I really, really do. But anytime there's a really good thing that comes in Business Officers have to talk about the risks, and the dangers, and what could possibly go wrong. I say to my CFO, at NBOA, at least once a week, I pay you to worry about stuff, I pay you to tell me what could go wrong. And it scares me and I don't like it. But I'm really glad you think that way.

Well, you have to have that in your schools as well. And so I will share with you, we invited an expert into our staff at NBOA to talk about AI. And the staff was all excited and all engaged and talking about the possibilities. And we have a great CFO, but she raised her hand. And she went through like five different things that could go wrong. And it was a little bit like, well, but it's important, right? You have to go in with your eyes wide open. So when we talk about i We're gonna do a town hall meeting later this month, in partnership with one schoolhouse, I hope you all check it out, not sexy, but it will involve all the risks related to AI and implementation to schools. So obviously at the baseline, and you all know this, I'm preaching to the choir, any AI tool has to be vetted for fairness, accountability and equity, right? A transparent process, you really need to know, what is this particular platform you're using? What data is going in? What data is being shared? Where are the vulnerabilities, etc, etc, you really have? What are the biases, that could change the output that doesn't align with my school's mission or philosophy? So we have that on the left side?

On the right side, I think are the risk considerations that we're thinking about and Business Officers are talking about will be part of that town hall. Absolutely privacy. We sit on so much sensitive information within our schools, Social Security, grades, health records, donor information, etc, etc. We've got to pay attention to how we're using AI and how we're still protecting that cybersecurity, which has been around for a while. My prediction is, it's only going to get more daunting. I think about AI in that space. And I think I'm gonna use an example later. Oh, here it is fraud and deep fakes. I mean, I'm the CEO of a little dog and pony show that we run out of DC. But I get phishing emails, quick, send me $10,000 I really need it today and blah, blah, blah. So we've got that already. What about the deep fakes where now someone's calling a member of my staff, with Jeff shields voice and saying, You really need to wire $10,000 Right now it needs to go into this account. I mean, that's the next level that I think we're all concerned about. I mentioned bias before insurance, depending on your profile at your school. And depending on your risk history. It's not unusual for you know, cybersecurity insurance. And again, I've been around a while used to be this nice little add on that you would add into your insurance coverage say, Oh, sure. And it was basically like business continuity, right? There was a terrorist attack or if there's something really bad or I had a breach, you'd help me get through it. That's why we bought it.

Now. It's not unusual for schools to be paying probably in the last two years. They're pretty NIAMS are doubly so there's a huge opportunity there for you to partner with your business officer to say, what can we do to mitigate our risk in this area? And how can we do it successfully, and really reduce or work towards reducing those premiums? Natural partnership right there. So I mentioned insurance. And then obviously, I know you're focused on classroom implications. I want to move a little bit to independent schools as online learning leaders. One of the things that we never imagined and one of the Silver Linings from the pandemic, is that before the pandemic, we know, we talked about faculty and online learning. And there was always a little resistance, right? There was a little bit uneasiness changes hard, what were they doing, et cetera, et cetera. And I would have never imagined, I wouldn't imagine that you never thought of that. Thanks to the pandemic, we trained a whole lot of faculty to do some version of online learning. Isn't that amazing? To think about that?

And what are we doing with that? How do we harness that, I still firmly believe that because of the freedom of independent education, there is nothing holding us back from being leaders in online education. And I still don't think we're taking full advantage of it. We know it can be personalized in the classroom experience. We know it can create flexible scheduling, which by the way, a lot of students and families during the pandemic really enjoyed. And there's an opportunity there, it can be scaled up and down as needed, which is a really important business case. For schools. We know it's cost effective. And I think to our external audiences, it shows that we're being innovative, we're increasing the value proposition, we're offering choices. And I think it also positions more of our teachers to be facilitators of education. So if I sound like a strong advocate, I was on the board of one school house for six years. And so I've been completely indoctrinated in online learning. And I really do believe in it. We offer a lot of online learning at NBOA as RPD. But I really what is our role? And what is your role for helping your schools to really embrace or maximize online learning?

And my case to you is, we've gotten so far, because of the pandemic we've exposed, so more families and students to it, how are we leveraging that. And I really see that as a leadership role for the folks in this room to help partner with our faculty. And help us do that. I think this was already mentioned, we did a great publication with ATLIS, where we talked about guidance on cyber insurance, a lot has changed, probably, since we put that out, it's probably ready for version two, because it really is probably in the insurance realm. If you really think about all the reasons we carry insurance, it's probably the one area that's really just skyrocketing. For schools. And again, any money that's going towards an insurance premium is not going to technology initiatives, it's not going to our students. And so it's a really significant spin right now

So I just want to make sure that you're engaged in that process, use this resource, we might update it, but I really think you can play a key role in helping schools manage their exposure to cybersecurity. Well, the first conversations I had with Christina, it feels like it was a long time ago. And we were just sitting there talking. And she kind of went on this mini tear about technology leaders not being involved in capital projects, until it's way too late. And really educated me on the different issues that come into play. Were incompatibility phone lines, trunk lines that are taken away during construction and never replaced. But we think we're going to open this building in like a week, and no conversation.

And I know that during this conversation, as she was drafted to write an article for net assets, she did a post survey with your membership. And there was some good news or bad news. And the really, the good news was about 60% of the folks got involved in a capital project sometime before groundbreaking, which was really good, a 30%. So they're their ad strategy. So that's a really good thing. The problem is 40% weren't engaged at all or were engaged when it was entirely too late. And not only is that not maximizing the talent of the leadership of our school, but as you'll see also in this same survey, we exposed that in over 35% of the cases, we lost five I percent of a capital project, and even more six to 10%. And close to 40%. Because we didn't plan for technology in the process. Capital Projects, by the way, are probably the most expensive projects we do at our campus. So I know I'm giving you single digit percentages, that's a lot of money. We can't afford that. We can't afford to lose money like that, on these types of projects. Again, I think our business model is far too fragile. So we're going to count on improving that, and carrying that message forward. And hopefully, we continue to improve that.

And I'm gonna leave you with the other hot topic. And that is a growing demand for remote work. And I really believe this is another area where the business office because it's so closely affiliated with HR, and the tech leader needs to come into play. We have to work on our employee handbooks, clear concise telecommuting policy be really specific. I imagine all of you have some telecommuting policy or telework policy. At this point. We're show of hands, do you have an active, okay, okay, we're working on it, that's great. The policy needs to be supported by technology needs. So it can't happen in a vacuum. We don't want HR to make up the telework policy, and create what the access and what the support is going to be. Without a conversation with technology. We can talk about meeting rooms, we can make sure they're hybrid spaces when folks do come in, we can talk about it. And I think the conversation here can get stilted because we can say schools are different, right? Schools are different. And we provide personalized learning. And our faculty and students need to be in the classroom together. To have that personal connection. We're surrounded by administrative functions, etc, etc. And that's fine and good.

We can say schools are different, guess what's not different. The workforce you're hiring from, is not different. The workforce, his appetite for remote work is high and only growing. So how are schools going to compete for the best talent, if we're going to remain tone deaf, to the demands of what's happening in the workforce in the country, again, brought to you from the pandemic. So this really needs to be thoughtful conversations as we move forward.

So with all of those issues that we've discussed in tech, I'm going to use as a backdrop, a quick primer on the independent school business model. And first talk about what a financially healthy school is. And if you want to have a lot of fun, get 20 Business Officers in a room and ask them to define financial health. None of you were there. But you could give it a try. It's a lot of fun, because you get 20 different ideas about what that looks like. But we distilled it down to three specific areas, you sustain their operations for the long term, you have financial plans for both operations, and facilities. I guess if we were really thinking ahead, we could have said technology.

But what was really critical as we talk about facilities in this conversation, because my favorite book is The Lorax. And I always remember the line where he says I am the Lorax I speak for the trees, I speak for the trees for the trees have no tongues. That's how I feel about facilities. When facilities don't get raised. They don't complain. When faculty and staff don't get a raise. They complain a lot. So where does our money go to faculty and staff. And then we just add to the deferred maintenance that can wait another year, because the facility isn't complaining. So we have to pay attention to both. And then we want to cover all current and projected future obligations. But our business model is not ideal.

First of all you need to understand and I think it's probably easier for folks in this room. But sometimes it's really hard for our friends on the academic side, to understand that we're in a luxury service business, we provide a luxury product. Do you know how I know that? Because you pay $40,000 for a service you can get for free down the street. If that's not a luxury product, then I don't know what it is. But here's how our business model works.

So I'm going to use the example of a luxury car like a BMW. So imagine that BMW adopts the Independent School traditional model approach. So you just bought your new BMW. Two weeks later you get a letter, and it says, Dear new BMW owner, we hope you're enjoying your new vehicle. I'm writing to tell you that the cost to build and deliver that car to you is more than your purchase price. So we are Rick question that you send another $5,000 to the BMW Foundation to help us balance our operating budget. Please send a cheque or use ACH. Because if you use a credit card, there will be a 3% service charge on that donation. Sincerely, BMW of North America, folks, that's our business model. That's our business model. And I'm going to unpack it a little bit further.

Here's some business model myths and realities, first of all, not for profit is a tax status. It's not a business model. Okay, we have to have a surplus. The only thing that's different about our schools is that any surplus we generate, a we don't pay taxes on, and B, it goes back to our mission. And it goes back to investing in our students and families. But not for profit is not a business model. There's 100%, nothing wrong with your school's generating surpluses year over year over year, we're in the ultimate people business. And that's our probably our biggest challenge. Technology is great, you will know technology is great. But our primary delivery of our education is still through people. And people are expensive, and people don't get less expensive. So that's something that we really have to pay attention to. Because we're in the ultimate people business, we are still not fully enjoying some of the other industries out there. And, and higher ed is no better. But we're not realizing fully some of the efficiencies that have evolved over time. We too often equate quality learning with class size. That's one of my hobby horses, my soap boxes is because we taught, and we continue to teach an entire community of prospective families, that the smaller the class size, the higher the quality of learning. And I will just say, I don't think that is true. And I don't think that holds water. And we can have a really great faculty member in front of eight students. And we can have a really lousy faculty member in front of eight students. It's really about the quality of the student teacher relationship, but it's not class size. And we got to stop teaching our prospective families, that it's about class size, because, frankly, that is the biggest strain on our business model. Because that person that's teaching those eight students is the same price as if they had 12 or 14.

And, and you know, here's the other thing that drives me nuts, I'm feeling a little unleashed today. The other thing that drives me nuts is anytime we talked about increasing class size, the first thing you say is, well, we don't want to have 30 people in our classroom. No, instead to have 30 people in your classroom. But how about go from 10 to 12? Slow your roll? Right? It's important to know we're all on financial aid. And I'll talk about the gap, which is one of our challenges. And oh, but we have an endowment, I kind of already give you a hint about how I feel about endowments and the role they play.

So we know net tuition and fees, highest revenue stream, we've got other revenue streams. summer camps are great, the endowments great fundraising, your annual funds, great. But if you look at this slide, they only each contribute about 5% of the revenue that supports your school every year. I don't want to give that revenue away. Don't get me wrong. But we have to understand proportionally how it contributes to our bottom line. I've already told you that our most expensive line, which you all know, is compensation benefits. We've got two challenges on cover quickly. It's a growing gap. What does that look like? We calculate the cost to educate a student. No business operates like this. No business in the world operates like this.

But let's go back to BMW. They say it costs us $30,000. To build a car, I have an idea. Let's price it at 25,000. That's what we do every single day at independent schools. So we have the cost to educate a student, but there's no way we're going to use as our published price. So we publish it tuition price, it's less than that. And then we give away financial aid tuition remission merit aid, and that gets to our net tuition revenue. And TR you have to understand what MTR is. It's the only number that matters. And what I like to say is the NCR number is that that little number that's dancing on top that students had, that's how much it cost for them to attend this school. That's how much we collected to educate that students. So we've got the gap.

And you may think it's not a big deal, but I'm going to talk really quickly about ABC school. 500 students fairly typical school, their cost to educate each student is about 30 grand, but they don't charge 30 grand, they charge 28 That's not a lot of money. That's $2,000 that's fine, right? But we also financial aid, tuition remission. Very important, let's just say that nets out to about 4000 per student, so not a big deal. So we got 24,000 per student is our net tuition 6000 per student, we gave away, guess what little ABC school starts the year with a $3 million gap. That's not a new or an AW, I don't want to start my year with a $3 million gap in my operating budget. So we spend the rest of the year hoping that fundraising and auxilary programs, and every other smaller revenue stream can help us fill that gap. That's a huge challenge. And that's at your typical school. And you're gonna say, But wait, the endowment will help us cover that. No, it won't.

First of all, about a third of our schools have an endowment of less than $5 million. We've got 17% of our schools that don't have an endowment at all. And if you want to find the endowment size, that will save ABC school, that $3 million, it needs to be $100 million to kick off $4 million dollars 1% of our schools has that much money. And I guarantee you, it's not the ABC school with their 500 students. So that's real top risks, I just want you to know, people are paying attention YUI issued this, I hope you're happy to see that you're number four on the top risks with data security. And even better, you're emerging to number two, with the emerging risks. So bravo, you're on the radar screen. And there you have it, you've hit the big time. This is all of the difficult decisions we can make to manage our people, which is why we came out with Mission anchored compensation strategies.

I hope you're aware of it. It was really the first research of his kind, ie Ford was kind to us, gave us a little bit of support, but it includes innovative strategies on compensation for faculty and staff. We didn't want to leave staff out. It offers case studies, real case studies from other schools, and it offers an implementation guide to help make that happen. And so I'm going to leave you with this. What we really need an it is someone who has superpowers. And I think going back to the very beginning, that you choose to share your expertise and knowledge at our pre K through 12 Independent Schools is really your best superpower. And I want to thank you for everything you do for our schools every day.

Thank you for your time and attention.

Narrator 52:44
This has been Talking Technology with ATLIS produced by the Association of Technology Leaders in Independent Schools. For more information about ATLIS and ATLIS membership, please visit the atlis.org If you enjoyed this discussion, please subscribe, leave a review and share this podcast with your colleagues in the independent school community. Thank you for listening.