January 27, 2022
from Dr. Bill Hudson, Head of School
This is the fourth of a four-part series of Head’s Messages that dives deep into MPA’s new strategic plan, 2024ward. Today we will outline this priority: Enhance institutional capacity by continuing to strengthen financial sustainability. The first article may be found here. The second article may be found here. The third article may be found here. An overview of 2024ward may be found here.
Whenever I am back “home” in Lansing, Michigan, I always take time to drive by my childhood home. When we moved in, it was the first house in a new suburb created from what was previously open fields of a dairy farm. I vividly remember planting several saplings with my dad and impatiently asking him when they would grow to become shade trees to protect my bedroom window from the glaring summer sun. Almost 50 years later, I marvel at their size and find joy knowing they provide shade and comfort to the current family that occupies the house.
In much the same way, our founding families made decisions and took certain actions that benefit our students today. The most obvious example is the generosity of donors over the years that have contributed to our endowment, which stands at $7,104,004 million. While relatively modest for a school our size, the draw on the endowment helps to directly fund programs and services for current students.
The last priority of 2024ward speaks to the need to strengthen our financial sustainability. While the term sustainability is often used in the context of the environment, it also applies to our social and economic reality. It the simplest of terms, sustainability means meeting our own needs today without compromising the ability of future generations to meet their own needs.
Like other private and independent schools and colleges, MPA is a tuition-driven school. Tuition accounts for roughly 80% of our annual revenue. Other sources of revenue include philanthropy, an annual draw from the endowment, auxiliary programs, and facility rentals. On the other side of the ledger, compensation for our faculty and staff is our largest expense with rising cost of health insurance as a critical variable. Instructional and support services as well as plant and maintenance are other major expenses.
There is always a tension in tuition-driven institutions between affordability and sustainability. An independent school education is expensive to be sure and relying solely on large tuition increases each year is unrealistic. One might expect some increase in tuition on an annual basis as the operating costs (supplies, electricity, food, healthcare for employees) of a school, much like a family or a business, increase due to inflation and other factors. What complicates the matter is that while other industries can increase productivity to offset rising costs, a school cannot easily do so without compromising our mission. For example, increasing productivity at MPA would mean increasing class sizes or offering fewer classes (art, music, physical education, theater, etc.), both of which are contrary to our mission.
While MPA has a long history in executing a multi-year financial plan, 2024ward challenges us to go further and create a new financial model that provides for the current and emerging needs of our students while ensuring that MPA will be around for future generations of Panthers. Important components of the new model include determining optimal or ideal enrollment, growing our endowment, exploring alternative revenue sources, finding efficiencies, and investing in our campus.
The MPA we enjoy today is the result of what our first lower school director Joanne Olson termed, “a dream and a shoestring.” As we celebrate 40 years of MPA this year, I am continually grateful for the future-forward thinking of our founders, early board members, founding parents. Likewise, I ask you to join me in supporting the MPA of today and strengthening the health and vitality of the MPA of tomorrow.
