Message from VWS Board of Trustees
At our last Board meeting on Wednesday, October 12, we met with Catherine Miller from Manning Elliott, the accounting firm that provides the review engagement report on our 2015/2016 financial statements. She gave us a presentation on the contents of the statements and we are very pleased to report that they show a significant improvement versus 2014/2015, with a more than 50% reduction in our operating deficit over the prior year. This significantly surpassed our budget expectations from the beginning of the year. In addition, Huy Pham presented and we approved the budget for the current 2016/2017 year and while it is still early we expect another significant improvement in finances this year, with current projections of our results of operations showing us just on the cusp of breaking even (even after accounting for depreciation). These achievements are all the more impressive given that our 2015/2016 results were done with 22 fewer full time equivalent (“FTE”) students than we had at the end of the tumultuous 2014/2015 school year, and to be cautious our 2016/2017 projections assume a further 10 FTE reduction. This means the reduction in our deficit last year and the expected reduction this year is being driven not by enrollment growth or simply by putting non-recurring expenses relating to 2014/2015 behind us, but by identifying and implementing operating efficiencies and other initiatives that the Board believes will be sustainable over the longer term.
In addition to significant improvements in the results of operations the statements show we ended the 2015/2016 financial year in an extremely strong cash position (as would be expected after selling the two properties on Lynn Valley Road), with almost $1 million in the bank (with just under $700,000 unrestricted), undrawn credit facilities and a reduction in our mortgage debt from over $1.6 million to less than $400,000. However, we still remain somewhat limited in our ability to spend this unrestricted cash due to the impact of the budgeted enrollment decline on our per student operating cost (or “PSOC”) calculations, which can directly impact our government grant levels. Essentially, if a school’s PSOC figure exceeds a benchmark public school figure, the school loses a significant amount (approximately $250,000 in our case) in grant money. That means while we may have a lot of money in the bank, it is still important that we monitor and manage our spending, so that we do not spend too much on a per-student basis and give up a quarter of a million dollars in grants. It is important to increase enrollment, so that we can spread the school’s operating costs out across more students. Our hope is that we will continue to improve our finances and enrollment year over year until we are eventually in a position to budget without having to be so concerned with our government grant levels, and we can just focus on our needs and wants. Until then, though, we believe it has the benefit of imposing fiscal discipline, and we believe we are on the right financial track. Further details on the 2015/2016 financial statements will be provided at the upcoming AGM on Wednesday, October 26.
The remainder of the Board meeting primarily consisted of discussions around the updated salary plan for teaching staff, which we have approved and will start rolling out this week. We are excited to be in a position to offer teachers a competitive wage and feel confident that doing so will serve us well into the future. It is not only the right thing to do, but it also has a financial benefit – we believe attracting and, more importantly, retaining excellent teaching staff is the best way to attract new and retain existing students, which will in turn further bolster our already much improved financial position. Based on our projections, with a few more students we will be running a surplus, which will give us more funds to further invest in our school and the curriculum and at the same time improve our PSOC figures.
We very much hope to see you at the AGM next Wednesday. Remember to apply for or renew your VWSS membership prior to the meeting.
Eric Doherty, VWSS Board Chair