We’ve been in danger of getting bogged down in the details of Mr. Gordon’s presentation, so I’m going to try to cover more ground in this post.
The main point to emerge out of this talk, at least from the perspective of the Save Albuquerque Academy team, is that much of the information offered seemed deliberately chosen and presented in very specific ways that bolster the Board and administration’s version of events. Often, what the slides did not say was just as important as what they did.
Example number one:
This chart was offered as an illustration of the school’s fiscal responsibility. It’s an example of a statistical trick that Andy Watson has used regularly in his communications with parents: it’s not a chart of actual tuition expenses, but rather a derivative of that data. Gary is using it because it shows a downslope, even though the tuition it’s tracking is rising, not falling. The last figure on the graph, at the far right (for 2017), indicates that tuition for the current school year is 2.2% greater than it was last year.
In other words, an actual chart of tuition costs over time would look more like this:
(The numbers at the bottom correspond to the 27 years covered by the chart in the slide above.)
This more straightforward presentation makes it clear that Academy’s tuition has in fact more than tripled over the time shown on Mr. Gordon’s slide, from approximately $6,855 in 1991 to next year’s total of $23,990 (including the lunch fee). It’s the same data – but how we present it makes an enormous difference. Both graphs are true. Which is more informative?
Example number two:
This is a chart showing the Academy’s interest repayment schedule on its $36,000,000 bond. It looks perfectly manageable, doesn’t it? But Mr. Gordon has left out the principal, which must also be repaid! Here’s the actual amortization schedule for the bond payments (from the original bond document, linked at the top of this page):
Just like a standard mortgage, the bond is structured so that the interest will be paid first – but that doesn’t mean we can forget the principal (which will be over $2.8 million in 2040!). Mr. Gordon’s slide, while once again technically correct, is showing us only a part of the story.
Example number three:
This chart, frankly, is all but unintelligible. I’ve been looking at it for quite some time and there’s very little information to be gleaned here. These are rankings of Academy’s endowment performance in comparison to a group of unidentified “peers,” whose number appears to change every year. Mr. Gordon didn’t supply any background on what these institutions are or how they were chosen. (Mr. Honegger has also referenced this peculiar comparison – with no further clarification – in his letters to the staff and community.)
Apparently, Academy’s endowment performed well over the last year (we think; are the years at the top in the past or the future?). However, if we’re looking at performance over time, it would seem clear that the most important number would be over the longest term – 10 years – over which time it looks like we’ve averaged 3.8% growth. Given that our spending targets for the endowment were repeatedly mentioned as “five to six percent,” this means we are not making enough money to replace what we spend. The endowment will continue to shrink until the Academy learns to live within its means.
Finally, the “Peer Percentile Rank” – what is that? Why is it given as a percentile instead of a simple numerical ranking? Are these percentiles from the top or the bottom?
We know Mr. Gordon and the Board worked on these slides for a long time. So why is important information being conveyed in such a confusing manner?
Will the Board and the administration please level with us, the Academy community? Come to the table with honest, open data. Admit that they’ve mismanaged the school’s endowment, take stock of where we really are, and work with the larger community to address the situation responsibly and without obfuscation.
We all want to keep the Academy going. If you can’t be honest with us, how are we going to help?
One thought on “More slides, more questions”
Thank you for this information. I agree with your conclusion “…why is important information being conveyed in such a confusing manner?” and I continue to wonder if there is a lack of financial acumen on both the Board and Academy staff and if this is on purpose.