Financial Health
Objective 4
Stewardship of St. Stephen’s long-term financial health
Financial health is critical to St. Stephen’s durability and strength and its capacity to help fulfill our mission and retain our distinctiveness. We will continue to adopt prudent approaches to sustain the School’s financial health. In addition to operating with financial discipline within our means and by making wise investments, we aim to maintain our stability by
● embracing sensible pricing policies for tuition and boarding,
● systematically building our endowment, and
● ensuring we have a judicious endowment draw policy.
Initiatives
11. Set tuition and boarding pricing to match the School’s value and track its upcoming investments.
St. Stephen’s tuition strategy to date has been to price at a premium compared with our Rome school competitors, and to price at a level at which St. Stephen’s will at least break even each year. While we believe this policy should continue, in light of the upcoming investments to continually improve our academic product (see Objective 2), we will adopt an approximately 2-3% annual tuition increase above inflation. In addition, given the anticipated new boarding expenses, coupled with the sense that more pricing elasticity exists with respect to the boarding program, we plan a more substantial (circa 8%) increase on boarding fees. The specifics will depend on a number of factors, including competitor schools’ pricing, express or implied parental expectations, and the views of the incoming Head of School. We also will continue to model out the options.
12. Strengthen the infrastructure of the Institutional Advancement Office to make it possible to wage a capital campaign to finance anticipated expenses and to increase the endowment.
Although St. Stephen’s has never yet attempted a capital campaign, the opportunities for one (including some with naming rights) under this Plan are rife and provide an excellent framework for a successful fundraising drive. Most prominently, we may well add new, off-campus boarding facilities, remodel that space to fit purpose, and renovate the on-campus boarding facilities (see Initiative 7); recast existing boarding space in VA3 or locate off-campus sites for new classrooms (see Initiative 8); enhance the spatial design in classrooms and provide new equipment and technology to the classrooms (see Initiative 5); increase the number of student scholarships (see Initiative 3), and help finance access to athletic facilities (see Initiative 9). The capital campaign could also seek donors to the extent of any such interest to support further terrace renovation, upgrade dining space in VA3, construct larger lounges (see Initiative 10), and potentially endow departmental chairs. We will need to develop benchmarks for how much funding we aspire to raise each year through this campaign. All of this will only be possible, however, with a properly assessed and adequately funded Institutional Advancement Office, which we treat as a condition precedent and that would additionally be able to support a robust annual fund drive.
13. Adopt a fiscally responsible endowment draw policy.
Endowment funds are intended to benefit current and future generations of St. Stephen’s students and faculty. Such funds are generally held in reserve in the event monies are needed in an emergency, to make unexpected expenditures that exceed budgeted amounts, and/or to help finance major infrastructure projects. A responsible endowment draw policy will balance the School’s need to expend funds above and beyond its current annual revenues against the need to preserve and grow the endowment for future use. Under this Plan, we will consider a revised endowment draw policy in which the School administration will be permitted to draw annually from the endowment an amount no greater than 50% and no less than 10% of the average annual return for the previous three years. The annualized return number will be based on the results as of March 31 in any given year and will be in alignment with the budget planning process.
Closing Statement
In closing, the Trustees thank all those members of the St. Stephen's community who helped in the preparation of this seminal document, especially given the myriad logistical challenges imposed over the past two years by COVID. The Trustees are hopeful that this Plan will provide meaningful strategic guidance to the incoming Head of School in shaping and advancing the School’s interests. The Plan’s success will depend on a variety of factors – some outside of our control – but will no doubt be aided by close coordination and clear communication between and among the Trustees, the School administration, and the St. Stephen's community, as well as the ability of the School to pivot and adapt to new or unforeseen conditions. We look forward to working together over the coming years to ensure that St. Stephen’s continues to thrive on all fronts, distinguishes itself as an international school, and realizes its full potential.