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Your Charter School: The Magic 450

Tricia Blum

April 15, 2021


Your Charter School: The Magic 450 - by Tricia Blum

How many students should your school have? You’d be surprised how essential this question can become to your strategic decision-making as a charter school leader.

As the Vice President of Business Advisory Services at Charter School Capital, I often meet with school leaders to advise them on operations, fiscal decisions, governance, long-term strategy, and how to bring their vision for their school into reality. A significant part of that process is understanding a school’s growth goals.  With a solid foundation in these areas, school leaders can provide sanctuary and educate their students.

Despite including a 5-year growth plan in the Charter application, I’ve found that some school leaders haven’t given much thought to their actual growth goals. In their view, they’ll start with the students they’re able to attract, then they’ll try to enroll more students, and then the school will grow organically.

While this is an understandable view, it leads to uncertainties in direction and budgeting. It can, at times, bring divisiveness and conflict to future board meetings as the growth vision remains unclear.

Some school leaders give this question a lot of thought. Even as they start their charter, they may already have a certain number in mind. Sometimes this number may be unrealistic, especially in terms of trajectory, causing worry and anxiety.

The Importance of Having A Destination

You’re probably familiar with the saying, “if you don’t know where you’re going, you might not get there.” There are entire business books on the topic of goal-setting.

I talked about this with a friend, and we landed on the metaphor of going on a hike. It feels very different whether you start walking with no clear goal of where you’re heading. Suppose you set out with a clear understanding that you’re aiming for the lake, or the mountaintop, or a waterfall. You might look at it on a map or GPS and know the destination is at 6.3 miles. This impacts your hike’s length, affecting when you take breaks and when you stop over for a bite. It influences how you ration your water, how much stuff you take with you, and how you plan the rest of your day. Moreover, it influences your state of mind. If you know that this is a four-hour hike, then you’re not likely to grow despondent at the three-hour mark – you know you’re getting close.

Knowing where you’re going tends to put a spring on your step, and it can make your pace a bit faster as you may challenge yourself to reach your destination by a specific time. It can boost morale as you find yourself crossing the halfway point and as you see the milestones along your path.

“How much do I need to grow?”

School leaders ask me whether there is a student enrollment ‘sweet spot’ for charter schools and how they can know what to aim for.

In my view, every school in each state will have a ‘sweet spot’ – at least when it comes to California charter schools. When it comes to California, I call it ‘the magic 450’. This number is specific to California charter schools because California real estate is much higher than in most other areas. Additionally, Some schools in other states make more in revenue, have lower fixed costs, etc. However, you can extrapolate the premise and apply it to your state.

The magic 450

In California, it’s really about having 450 enrolled. In my opinion, that’s the magic number that enables a school to be financially comfortable and to effectively use economies of scale without constantly looking over your shoulder and figuring out what expenses you need to cut.  Of course, fundraising can change the magic enrollment number to a lower number of students (should your charter cap prevent you from getting to 450.

Fixed Expenses

We know a school’s revenue is tied to students. Enrollment is your big variable driver, and to a large extent, it’s a variable driver under your control. When you’re talking about finances, the expenses break down into infrastructure and buildings and staff and supplies, and these fall into two large buckets: fixed costs and variable costs.

Your fixed costs mostly stay the same whether you have 200 students, 450 students, or 1200 students. As your enrollment increases, your fixed costs don’t move. Just your variable costs do, adding teachers, technology, food services, etc. There are expansion jumps, as in the case of moving into a larger building. But aside from these strategic expansion decisions, your fixed costs likely stay the same. My main point is that these are predictable and constant.

At 450 students, your ratio of fixed vs. variable expenses is healthy, with fixed costs becoming a smaller percentage of your budget overall. And your revenue provides for both fixed and variable costs to be nicely aligned.

In my experience, this magic number of 450 is where your enrollment brings in enough funding so that you can have enough leadership, enough administrative personnel, enough teachers in the classroom. You can focus on special programs. You can have offerings that might be different from other charter schools. You can also have a capital investment account so that one day you can build a gym, ball fields or find your school a forever home.

Starting Strong, Growing Steady

Depending on your area, the strength of your ties within your community, and the immediate demand for your school’s services, you can formulate a strategy that will work best for you.

One approach is to have that sweet spot as a goal at the very onset. The leaders of E.L.I.T.E Schools rallied the community behind their vision for a charter school in Vallejo Valley and opened with nearly 400 students.

Logistics and Planning

Knowing your enrollment goal can also help you plan in terms of facilities and resources. Your relationship with your school building can be a comfortable one, where your school building is an asset, or it can be an albatross around your neck.

Suppose that you hoped for a lot more expansion, but you didn’t engage sufficient enrollment marketing, and now you’re facing empty rooms in a building that is much too big for your current student body. This can deplete your reserves, cause you anxiety, and affect your school culture.  A new but unused wing can make a school feel empty and institutional.  There is a specific energy that comes with a full building.

On the flip side, suppose you did not plan for growth, and suddenly you find yourself with more students than your building can handle. Now you have to scramble to find a new building, and it can add stress to everyone involved.

Having a solid growth plan will lead to sound decisions regarding resources, facilities, and hiring.

Strategies for Growth

An excellent approach to growth is the model adopted by E.L.I.T.E. Schools. The leaders engaged the community from the start, and constantly include parents and community in their decisions. As a result, the school has a strong external team of advocates and evangelizers.

Another strong strategy is to learn, through consumer research, the specific programs that families in the area are hoping to see. It could be a specific language, or a strong STEM program, or an organic garden and education about farm-to-table, etc. Then, focusing your efforts on promoting that specific program can result in higher enrollment.

Enrollment marketing is a topic in itself. If you have the time and energy, learning about digital marketing, search engine optimization and social media engagement can prove valuable. However, many school leaders prefer to focus on education, and work with an external resource. Charter School Capital offers a pay-for-performance enrollment marketing solution that allows you to focus on your core strengths while we work to drive awareness, interest and enrollments for your school.

Every School is Unique

Of course, your school is unique. You might find that your school achieves a sustainable momentum before you get to 450 students. This will depend on your school’s specific finances and composition.

But keep pushing for that magic 450. And somewhere along that hike, you will notice that you’ve found ‘the sweet spot.’ Things will get easier. Things will feel like they’re just moving along. The feeling of climbing an incline becomes a sense of walking sure-footed down a path. And soon enough, you’ll find yourself at the mountaintop.

What do you think? What has been your own experience? Share your thoughts in the comments below.

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