Since the emergence of COVID-19 in early 2020, I have been saying that while we are surprised, we’re not unprepared to deal with this moment. Over the next few weeks I will share some specifics that allow me to say we’re not caught unprepared. This week, I’m focusing on the steps we’ve taken over the past few years to lower our overall operational expenses.
When I arrived at Winebrenner in December 2015, I inherited a fiscal year budget with operational expenses totaling approximately $2.3 million. The approved budget for 2020-2021 is approximately $1.4 million. Translating this to a percentage, our 2020-2021 expenses will be approximately 60% of what they were five years ago. What steps did we take to lower expenses by almost one million dollars?
First, we established an approach to budgeting that we term “revenue first.” This approach seeks to establish clear and realistic goals for what our anticipated revenue will be during a given fiscal year. Once we have that figure, we adjust our expenses to be equal (or, ideally, less than) our expected revenue. Please note, the first year that an organization makes this shift may be a challenge since there are likely some expenditures that will need to be cut.
Second, we made a commitment to not take on additional debt to finance day to day operations. This is the proverbial “kicking the problem down the road.” In order to develop a sustainable approach to finances and maintain a view aimed at good stewardship, we should learn to “live within our means.” Early in my tenure, there was an opportunity to pursue a significant loan that could have provided some financial relief. In hindsight, we made the much better decision to forgo the loan and worked, instead, to develop ways to match our expenses with our revenue.
Third, we made “tough” decisions. For us, that included transferring a property in Pennsylvania to different ownership, selling our building facility, and eliminating a variety of full-time and part-time positions. Each of these came with a significant amount of risk and unknowns on the other side of the decision.
A key to working through these three items was a strong and supportive Board of Trustees. I worked hard to keep them updated and frequently invited their input. We held many meetings with the Finance Committee, a subcommittee of the full Board, throughout my first few years at Winebrenner.
As I reflect upon the decisions we’ve made, it’s clear that one person can’t take credit for these changes. Each choice came with a great amount of prayer and conversation. In many ways we were doing our best to respond to concerns raised by our accreditors and auditor. Even though our culture has changed, there is still much work to do to make sure we don’t slide back into our previous patterns for handling finances.
Next week I’ll explore how our steps to move courses online allowed us to be prepared for the current moment.
– Dr. Brent Sleasman
– Image by Scott Graham, accessed via Unsplash and Adobe Spark