Each year, Moody’s Investors Service rates private-independent schools and the outlook for their ability to sustain debt (and, therefore, the advisability of an investor to support that debt). In the most recent ratings of the 52 schools it currently tracks, the service assigned stable outlooks to 94% of the schools, a positive outlook to 2%, and to 4%, a negative outlook.

In extraordinary times, leaders need to employ extraordinary insight. There is no school that we know of that is not contemplating or undergoing considerable change, and some of the change is negative—letting faculty go, eliminating raises, reducing or cutting programs and support services, increasing work loads.

In difficult economic times, schools with declining enrollments or other financial pressures may feel the need to downsize their faculty and staff. ISM cautions schools to carefully consider the significant negative impact that downsizing can have on a school’s culture. When downsizing cannot be avoided, however, it is vital that a school conduct this process in a way that is legally compliant, doesn’t provoke discrimination claims, and attempts to minimize the negative cultural aspects as much as possible.

Soon after the enactment of the Sarbanes-Oxley Act (SOX), I&P recommended that private-independent schools adopt the “principles embodied in SOX” as “guidelines for schools to use in ensuring that their management of financial affairs instills confidence.” Private-independent schools, acting as nonprofit institutions, are not required to observe most of the regulations found in SOX. However, there are two regulations they must follow.

In 2002, Congress enacted the Sarbanes-Oxley Act (SOX) as its response to the financial and accounting scandals at several large, publicly traded companies. Its primary purpose is to protect investors by ensuring that financial statements are accurate, that Directors and Officers have no conflicts of interest, and that each Board actively works to fulfill its oversight role. SOX also includes provisions spelling out the rules surrounding document alteration and destruction, auditor independence, Audit Committee requirements, and, notably, how Executive Officers and Directors should conduct themselves as they lead their publicly traded companies.

“In my business, we do continuous planning. Planning never ends. We never stop examining our market, making adjustments, and, when appropriate, instituting major changes. Should private-independent schools really be any different?”

When a school employee comes to the School Head with an involved medical condition and asks for six weeks off, the school’s sick leave policy should require documentation from the employee’s physician. But how much private information do you want to know? Can too much information be a liability?

Recently in I&P, we recommended that schools refine or develop three Purpose and Outcome Statements: the school’s mission (more likely a review and refinement), the Portrait of the Graduate, and the Characteristics of Professional Excellence for faculty. While each one has its place in guiding the school’s day-to-day educational activities, they can also be used to clearly differentiate the school from its competition. The three statements and how they are fulfilled provide an excellent opportunity for the school to describe its distinguishing characteristics for its constituencies (internal and external).

As Head of School, you understand the impact full enrollment and successful fund raising can have on the fiscal well being of the school. It is critical to the continued success of student recruitment and retention—as well as the annual, capital, and endowment campaigns—that you promote a collaborative relationship between the Admission Office and the Development Office. These two offices share a common goal: to further the institutional mission and to generate revenue in ways appropriate to that mission and the core values of your school. To fulfill this common goal, the approaches of the Development Office and the Admission Office should complement one another in these three ways.

The number of student discipline-related lawsuits against private-independent schools has been increasing over the past several years. Such actions can be with or without merit. The former may lead to a huge monetary loss at a time when schools can least afford it; the latter can lead to loss of reputation and negatively impact your ability to recruit and retain students (and coincidentally, teachers). A thorough review of the manner in which you handle disciplinary situations can possibly save you a great deal of time, money, and prestige.