Positioning RGHS for the future

Rationale:

Rustenburg has consistently been ranked in the top 5 schools in the Western Cape. The education department has ranked it as the top public girls’ school in South Africa. This has been achieved through the high levels of professionalism of our educators and the commitment of our girls to excel.
There has, however, been a big price tag and we have had double digit school fee increases in 4 of the last 5 years. Contributing factors to high school fees have been:

• Significant annual salary increases granted by the state to educators. Whilst we have welcomed improved salaries for educators, this in turn has impacted our budget. We employ 29 educators and we have sought to match state salaries so as to retain the best educators.
• A large backlog of maintenance work that has needed to be done on the campus. Our buildings are between 40 and 80 years old. Whilst they have an attractive design they also require significant maintenance. We have not received any support from the WCED in at least the past 15 years to assist with this
• Small capital projects that have been tackled each year. Our aging campus, not only requires maintenance it also requires improvement. Educational and sporting needs have changed over the years. We have attempted to make one or two improvements each year but this is an expensive way to develop a campus as builders and the professional team charge a premium for small projects

Despite these increases, our capital reserves remain dangerously low and make the school vulnerable to unexpected expenditure or shortfalls in income.

There are not only historical drivers of increased school fees. There are also future drivers of increased school fees.

• The need for additional management capacity. In the past year we have conducted 2 assessments to evaluate how we are performing in critical areas of school life. A key finding has been that the management structures of the school are inadequate and not conducive to the effective and efficient running of the school. At present most of the management responsibility is carried by the principal and deputy assisted by the hostel superintendent and the estate manager. The school has 53 educators, 22 non educator staff and 16 hostel staff making a total of 91 staff. These management needs require urgent attention and the SGB has included, in the 2012 budget, a number of new internal posts to introduce realistic (less than 7) spans of control for managers. These include the appointment of an additional deputy principal and the introduction of 4 faculty heads.
• The need for additional administrative support. We sometimes receive complaints that the school is being “run like a business”. The reality is that we have 91 staff, an annual budget in excess of R20million and property insured for R90million. With this in mind, SGB has included, in the 2012 budget, the appointment of a business manager from mid 2012.
• The need for adequate classrooms and specialist facilities. Parents were presented with a first draft of an Integrated Campus Development Plan (ICDP) at last year’s budget meeting where it was warmly received. A comprehensive needs assessment was conducted during 2011 and the ICDP has been developed further to meet these needs. This will be presented at the annual budget meeting. In the meantime we include a brief description of the improvements that have been identified in the ICDP as well as the costs that have been estimated by the Quantity Surveyor

If we receive the necessary funding, we would like to proceed in the 3rd quarter of 2012 with the following projects which we have identified as the first phase of the ICDP.

The QS estimates this work will cost R11,136,000. Obviously this is a large sum of money and so it would need to be financed from different sources including loan finance, WCED grants, and donations from corporates, trusts, foundations and old girls. Other projects in the ICDP will need to be implemented as funding is available over the next 5-10 years or longer if necessary.

Estimates for these projects (assuming commencement in 2012) are as follows:

Given the historical drivers and the emerging needs, RGHS will continue to be expensive to run. We do not want to lower standards and so we need to make some critical decisions now so as to ensure that our girls enjoy excellent education in the future.

Preconditions for any future plan:

In assessing any plan for the future, we need to agree on certain preconditions or non-negotiables that will guarantee that RGHS continues to grow as a school of excellence in the future. The School leadership team and the SGB believe these to be the following:

• We will maintain the open curriculum which gives RGHS the competitive edge against all other girls’ schools in the Western Cape. “Open curriculum” refers to the opportunity our girls are given to take any combination of subjects they choose.
• We will maintain class sizes at present levels. Smaller classes, particularly in Grades 10-12 allow for more interaction and greater personal attention. Grades 10-12 Maths in particular benefits from an average class size of 22.
• We will put in place a management structure for the school that will result in manageable spans of control and greater efficiency and effectiveness.
• We will develop new classrooms for Maths and Science. Apart from the specific needs of Maths and Science, the provision of 7 new classrooms will address the present unacceptable situation where teachers have to share classrooms. This places a lot of strain on the teachers and hinders the academic programme.
• We will continue to upgrade and develop new facilities for the school as funds become available so that our girls have suitable facilities for academic, sporting and cultural activities.
• We will seek to move from small and costly projects each year to tackling large projects so that we get the benefits of scale and so that the costs of funding these new developments are spread across a greater number of generations of learners.
• We will fund new developments at the school with a combination of funding streams. These include:
  • Raising a loan of up to R10million repayable over 10 years. The estimated repayments on R10million are R1,6million per year. The source of this funding could include financial institutions, debenture schemes and parents and old girls standing surety for portions of a bank loan.
  • Allocating R1,6million per annum in the budget to pay back any loans we take out over the next 10 years.
  • Sourcing donations from corporates, trusts and foundations.
  • Active fundraising amongst our old girls to fund particular projects in the ICDP. We have already started a process to connect with old girls and we are, at present, working with a database of 4,000 old girls.
  • Developing new income streams through small business ventures on campus e.g. tuckshop, school shop and nursery.
  • Growing our fundraising activities e.g. My School Card, recycling, events.
• We will build the reserves of the school so that we have a minimum of 25% of annual expenditure in reserves. This will increase our ability to absorb shocks in the economy and also give us the means to secure loans in the future.

Options

The following 3 options are being placed before parents. The first is more of a scenario than an option. Parents will therefore need to choose between options 2 and 3.

Option 1
Maintain our present enrolment and keep school fees to 7% increases each year. This “option” is included because there is often the belief that we can maintain standards and keep school fees at inflation level increases. The reality is that we will run out of money in 2013 and have a R5,6 million deficit by 2019. Obviously the school is not allowed to operate an overdraft so this is not an option.

Option 2
Maintain our present enrolment and increase school fees to fund the future plans of the school. Our 6 year budget projections indicate that this would likely result in fee increases of approximately 11% per annum for the next 7 years (barring any huge calamities in the economy). By 2019 the school fees would be R54,700 p.a.

Option 3
Increase our present enrollment by adding 1 additional grade 8 class each year from 2013 so that we eventually have 6 classes in each grade and our enrolment reaches 900 in 2017. Our 6 year budget projections indicate that this could enable us to keep school fee increases to approximately 7% per annum (barring any huge calamities in the economy) resulting in a school fee of R44,000 p.a. by 2019. Note that this will not result in increased class sizes nor will it result in increased teaching load. Although this will require us to appoint new staff, this will be offset, to some extent, by the WCED granting us additional posts each year resulting in an increase of 5 additional posts by 2017. We are also in negotiations with the WCED and they are open to the possibility of contributing R2,5million towards the costs of building new classrooms (this is similar to a scheme that many other schools embarked on last year).

Budgeting forecasts

Budgeting forecasts have been developed for the 3 options until 2019. Options 2 and 3 have also been projected forward to 2026 and show scenario 2 resulting in school fees that are 25% (R20,000) more than those in scenario 3 by 2026. These budgets are available for interested parents. The following graph shows the fee projections:

Endorsement from parents

At the Annual budget meeting on the 11th October, the parent body will be shown a presentation of the ICDP and be asked to
1. Endorse or amend the preconditions for future planning
2. Choose between options 2 and 3 as the preferred way forward for the school