The Potomac School Assets Reach $302 Million, Preserves 91.39% of $76 Million Endowment to Board-Designated Reserves, and Tapping $55 Million in Tax-Exempt Bonds to Finance Construction
By Data Team | Published October 28, 2026
The Potomac School's total assets climbed 22.7% to $302.35 million in fiscal year 2025, supported by a $76.32 million endowment whose $1.33 million annual payout covers 2.1% of the K–12 day school's $62.31 million operating budget, according to its latest IRS filing. Combined with $57.08 million in program revenue and $15.55 million in contributions, the McLean, Virginia institution spends $48,400 per student in direct program services ($58,237 per student in total institutional expenses) while awarding $5.70 million in financial aid.
Potomac's balance sheet highlights the financial mechanics of a large suburban D.C. independent day school. Unlike New England boarding academies that fund nearly half their budgets from endowment draws, Potomac relies on tuition and auxiliary programs for 74.2% of revenue and annual giving for 20.2%. That cash flow funds a $14.63 million operating surplus, subsidizes financial aid for 19.2% of the student body, and underpins its standing in the Elite College Placement Index (ECPI).
By limiting its annual endowment draw to 2.1% of total expenses (with realized investment income equal to 5.5% of the budget), Potomac preserves 91.39% of its $76.32 million endowment in board-designated quasi-endowment reserves while tapping $55.0 million in tax-exempt municipal bonds to finance campus construction.
Institutional & Governance Profile
Founded in Washington, D.C. in 1907 and legally domiciled in the District while operating on a 90-acre campus in McLean, Virginia, The Potomac School educates approximately 1,070 students across Kindergarten through Grade 12. Its governance framework separates board oversight from day-to-day administration, pairing an entirely independent Board of Trustees with a seven-member senior leadership team.
Institutional Scale and Board Structure
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Founding & Workforce Scale: Incorporated in 1907, the school issued 520 Form W-2s in calendar year 2024 and mobilized an estimated 1,000 volunteers across parent and alumni committees.
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Executive Leadership: Head of School John J. Kowalik leads institutional operations alongside CFO and Associate Head of School Dyana Conroy and Associate Head of School Timothy Jaeger.
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Governing Board (Part VI): The governing body comprises 23 voting trustees, all 23 of whom are independent, led by Board Chair Norma C. Ramsey, Vice-Chair Martin W. Sumner, Secretary Noha Abdalla, and Treasurer Christopher D. Graham.
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Fiduciary Oversight (Schedule O): The Audit Committee reviews and approves the Form 990 prior to full board ratification, while the Compensation Committee benchmarks executive pay annually against peer independent schools.
Top-Line Financials
The Potomac School expanded its balance sheet past $302 million in FY25 (covering July 1, 2024 through June 30, 2025). Total assets rose 22.7% as the school issued new tax-exempt bonds for Middle School construction, lifting temporary cash investments to $89.74 million while net assets increased 11.3% to $192.25 million.
Balance Sheet Strength
- Total Assets $302,352,307 (+22.7%)
- Total Liabilities $110,101,307 (+49.5%)
- Total Net Assets $192,251,000 (+11.3%)
- Donor-Restricted Net Assets $25,107,963 (13.1% of Total Net Assets)
- Unrestricted Net Assets $167,143,037 (86.9% of Total Net Assets)
Operating Performance
- Total Revenue $76,946,773 (+7.6%)
- Total Expenses $62,313,929 (+7.9%)
- Operating Surplus $14,632,844 (+6.0%)
- Unrealized Gains (Excluded) $4,865,172
Note: Combining the $14.63 million Form 990 operating surplus with $4.87 million in net unrealized investment gains (and a -$14,954 interest rate agreement adjustment) accounts for the full $19.48 million expansion in Potomac's FY25 net assets.
Revenue Breakdown
Unlike boarding schools that fund operations primarily through investment returns, The Potomac School generates 94.4% of its $76.95 million total revenue from program services and philanthropic contributions. Every primary revenue category expanded year-over-year in FY25, led by an 18.8% increase in realized investment income and an 18.1% rise in donor contributions.
Primary Revenue Streams
FY25 Revenue Distribution
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Program Service Revenue Up 4.2% YoY$57,083,505 (74.2%)
- Tuition $52,528,911
- Summer Programs $2,850,303
- Transportation $1,057,171
- Enrichment, Extended Day & Other $647,120
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Contributions & Grants Up 18.1% YoY$15,548,043 (20.2%)
- Direct Gifts & Capital Grants $14,456,172
- Fundraising Event Contributions (Spring Auction & Fall Frolics) $1,091,871
- Noncash Publicly Traded Stock Gifts (51 Items, Included Above) $942,747
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Investment Income Up 18.8% YoY$3,415,699 (4.4%)
- Dividends & Interest $2,548,663
- Realized Capital Gains (on $36.2M Gross Sales) $867,036
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Other Revenue Up 23.0% YoY$899,526 (1.2%)
Endowment Performance and Asset Allocation
The Potomac School's endowment grew 10.5% in FY25 to $76,316,565, or $71,324 per student. Unlike boarding schools where donor-restricted permanent funds dominate the corpus, 91.39% of Potomac's endowment sits in board-designated quasi-endowment funds, giving trustees broad flexibility to direct capital toward strategic priorities.
Across its $70.52 million in long-term investment securities (excluding $5.80 million in endowment cash reserves held within its $89.74 million money market and savings accounts), Potomac deploys 54.3% through Commonfund institutional vehicles, 22.5% in publicly traded securities, and 22.4% in limited partnerships. Because Potomac is a K–12 school rather than a college or university, it is exempt from the federal IRC Section 4968 endowment excise tax.
Portfolio Performance & Asset Allocation ($70.5M Securities Portfolio)
Part X & Schedule D, Part VII Securities
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Endowment Balance (EOY): $76,316,565 (up 10.5% YoY), representing $71,324 per K–12 student and 122.5% of the annual operating budget.
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Net Investment Gains: $5,440,504 in endowment investment returns (with $4.87M in firm-wide unrealized gains and $867K in realized gains).
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Multi-Manager & Offshore Structure: 77.5% of long-term securities sit in Commonfund vehicles, limited partnerships, and private REITs, including $237,137 deployed in Central American and Caribbean investment structures (Schedule F).
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Total Payout & Budget Coverage: $1,332,624 distributed for facilities, scholarships, and academic programs, covering 2.1% of the $62.31 million operating budget.
Detailed Securities Mix
5-Year Endowment History
Over the five-year period reported on Schedule D, Part V, Potomac's endowment grew 44.4% from a $52.84 million beginning balance in FY21 to $76.32 million at the close of FY25. During that span, the fund captured $11.88 million in new contributions and $21.72 million in cumulative net investment earnings—absorbing a $2.99 million market pullback in FY22 while distributing $10.13 million to support financial aid, faculty salaries, science and arts programming, and campus facilities.
FY25 Endowment Waterfall (Schedule D, Part V)
Visualizing the bridge from Beginning of Year (1a) to End of Year (1g) in millions.
5-Year Historical Endowment Balances (Line 1g)
End of year balance progression in millions (FY21 - FY25).
| IRS Line Item | FY25 (Current) | FY24 (Prior) | FY23 (2 Yrs Back) | FY22 (3 Yrs Back) | FY21 (4 Yrs Back) |
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| 1a. Beginning of year | $69,079,917 | $66,767,285 | $62,576,002 | $62,134,652 | $52,840,311 |
| 1b. Contributions | $3,128,768 | $843,089 | $2,316,595 | $5,315,479 | $278,776 |
| 1c. Net investment earnings | $5,440,504 | $5,158,627 | $3,346,725 | ($2,991,007) | $10,765,467 |
| 1d. Grants or scholarships | $0 | $0 | $0 | $0 | $0 |
| 1e. Other expenditures | ($1,332,624) | ($3,689,084) | ($1,472,037) | ($1,883,122) | ($1,749,902) |
| 1f. Administrative expenses | $0 | $0 | $0 | $0 | $0 |
| 1g. End of year balance | $76,316,565 | $69,079,917 | $66,767,285 | $62,576,002 | $62,134,652 |
Per-Student Spending and True Cost
Across its 1,070 K–12 students, The Potomac School recorded $51,787,842 in direct program service expenses ($48,400 per student) and $62,313,929 in total institutional operating expenses ($58,237 per student). Gross tuition collections of $52,528,911 ($49,092 per student) narrowly exceed direct program spending before financial aid discounts, but cover 84.3% of total institutional expenditure per student.
Once $5.70 million in student financial aid grants ($5,331 per enrolled student) is subtracted, net tuition revenue of $43,761 per student falls $4,639 short of gross program service spending ($48,400) and $14,476 short of total institutional spending ($58,237). Potomac closes that gap—and generates a $14.63 million operating surplus—through $15.55 million in annual fundraising, $3.42 million in realized investment income, and profitable summer and auxiliary programs.
Operations vs. Revenue
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Regular Session Program & Total Spend: $51,787,842 in K–12 program services across 1,070 students ($48,400 gross program spend per student; $43,069 net excluding financial aid grants), within $62,313,929 in total institutional expenses ($58,237 per student).
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Tuition vs. Total Cost: $52,528,911 in baseline tuition ($49,092 per student before aid; $43,761 net of aid), leaving a $4,639 net program gap ($14,476 net total expense gap) per student covered by philanthropy and investment income.
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Regional Bus Transportation: $1,057,171 in student transportation revenue (including $13,439 in unrelated business income), supporting regional bus routes across Northern Virginia, Maryland, and Washington, D.C.
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Departmental & Campus Dining Spend: $1,751,081 in academic departmental expenses and $1,739,311 in food and entertainment expenses across the 90-acre McLean campus.
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Summer & Auxiliary Surplus: $2,850,303 in Summer Programs revenue against $1,280,465 in direct summer expenses, generating a $1.57 million net contribution alongside $572,521 from Enrichment and Extended Day programs.
Financial Aid: How Potomac Spends $7.26M on Access & Remission
Per Schedule I, Part III, The Potomac School awarded $5,704,329 in need-based financial aid grants to 205 domestic students in FY25, supporting 19.2% of its 1,070-student body with an average grant of $27,826. In addition to Schedule I student grants, the school recorded $1,555,975 in employee tuition remission on Part IX, Line 24c, bringing total institutional tuition discounting to $7,260,304.
As disclosed in Schedule I, Part IV, Potomac evaluates family financial need using the standardized Clarity application platform to calibrate award levels. Unlike boarding schools that report separate noncash stipends or external grants on Schedule I, Part II, Potomac directs 100% of its Schedule I disbursements to internal K–12 tuition grants while funding community service and enrichment through its operating budget and endowment.
Internal Student Support
- Aided Student Share 19.2% (205 students)
- Need-Based Tuition Grants $5,704,329
- Average Grant per Student $27,826
- Employee Tuition Remission $1,555,975
- Total Tuition Discounting $7,260,304
Aid Governance & Community Programs
- Clarity Need-Analysis Protocol (Schedule I, Part IV) All financial aid applicants complete a standardized Clarity evaluation, which produces baseline recommendations used by the Enrollment Management committee to allocate $5.70M in need-based grants.
- Endowed Community & Academic Support (Schedule D, Part XIII) Endowment draws specifically fund student scholarships, community service initiatives, science and global studies programs, theater and music, library acquisitions, and faculty enrichment.
Executive and Senior Leadership Compensation
Employee salaries and benefits represent The Potomac School's largest operational commitment, absorbing $35.28 million—or 56.6% of total expenses—across 520 W-2 employees. Eighty-four staff members earned more than $100,000 in reportable compensation in calendar year 2024, reflecting the competitive labor market for experienced educators and administrators in Northern Virginia and the D.C. metro area.
Head of School John J. Kowalik topped the Schedule J compensation table at $1,366,694 in total compensation, driven by $633,347 in base pay, a $395,139 payout from a supplemental 457(f) nonqualified retirement plan, $220,071 in new retirement and deferred accruals, and $93,734 in nontaxable benefits (including a $68,979 housing allowance). Despite Kowalik's $1.05 million in reportable W-2 pay, the school reported no IRC Section 4960 excise tax liability on Part V, Line 15.
Payroll Scale and Compensation Governance
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Total Institutional Payroll: Potomac paid $35,283,974 in total employee compensation in FY25 (up 7.6% YoY and accounting for 56.6% of all institutional expenses) across 520 W-2 employees, with 84 staff members earning over $100,000.
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Top Executive Packages: Head of School John J. Kowalik earned $1,366,694 in total compensation (including $633,347 in base pay and $419,542 in other reportable pay), followed by CFO and Associate Head of School Dyana Conroy ($461,162) and Associate Head of School Timothy Jaeger ($407,838).
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Supplemental 457(f) Retirement Plans: The school contributed to nonqualified 457(f) retirement plans for Kowalik ($168,346), Conroy ($25,000), and Jaeger ($25,000), while disbursing vested 457(f) payouts of $395,139 to Kowalik, $26,611 to Conroy, and $26,274 to Jaeger.
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Housing Allowances & Fringe Benefits: Four administrators received nontaxable housing benefits appraised at fair market rental value—Kowalik ($68,979), Jaeger ($60,000), Middle School Head John Mathews ($41,421), and Enrollment Director Douglas McLane ($24,000)—while Lower School Head Donnette Echols ($47,500), McLane ($24,000), and Conroy ($15,000) received taxable fringe benefits, and Kowalik received $10,839 in insurance tax gross-ups.
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Form 990, Schedule J, Part II: Compensation Breakdown (FY25)
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| Name & Title (A) | Base Comp (B-i) | Bonus (B-ii) | Other (B-iii) | Retirement & Deferred (C) | Nontaxable Benefits (D) | Total (E) | Prior Deferred (F) |
| John J. KowalikHead of School | $633,347 | $0 | $419,542 | $220,071 | $93,734 | $1,366,694 | $354,892 |
| Dyana ConroyCFO and Associate Head of School | $332,285 | $0 | $51,547 | $52,000 | $25,330 | $461,162 | $25,000 |
| Timothy JaegerAssociate Head of School | $246,029 | $0 | $29,838 | $45,501 | $86,470 | $407,838 | $25,000 |
| John MathewsHead of Middle School | $184,271 | $0 | $941 | $18,557 | $67,546 | $271,315 | $0 |
| Douglas McLaneDirector of Enrollment Management & Financial Aid | $180,154 | $0 | $24,608 | $15,519 | $48,986 | $269,267 | $0 |
| Donnette EcholsHead of Lower School | $184,767 | $0 | $48,398 | $13,120 | $13,394 | $259,679 | $0 |
| Sarah BeckAsst Head of School for Academics | $215,796 | $0 | $486 | $15,925 | $24,789 | $256,996 | $0 |
Facilities, Debt, and Municipal Relations
To finance a new Middle School facility without liquidating its quasi-endowment, The Potomac School executed a major tax-exempt debt issuance in May 2025. Through the Fairfax County Economic Development Authority (FCEDA), the school issued $55.0 million across two tax-exempt bond series—retiring $37.0 million in legacy 2004 and 2005 bonds while increasing its year-end tax-exempt bond liabilities from $19.18 million to $54.23 million.
Unlike New England boarding academies that make voluntary Payment in Lieu of Taxes (PILOT) grants to host towns, Potomac reported $0 in domestic government grants or PILOT payments on Form 990, Part IX, Line 1 and Schedule I, Part II. Instead, the school's municipal engagement in Fairfax County centers on FCEDA conduit bond financing and local construction contracting.
Capital Debt & Municipal Engagement
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Physical Plant & Campus Operations: Potomac holds $169.70 million in gross land, buildings, and equipment ($107.28 million net book value after $62.41 million in accumulated depreciation), spending $2.66 million on occupancy and recording $4.45 million in annual depreciation.
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$55M Tax-Exempt Bond Issuance (Schedule K): On May 14, 2025, Potomac issued $35.0 million (Series C, for new Middle School construction and bond redemption) and $20.0 million (Series D, refunding prior debt) via the Fairfax County Economic Development Authority, terminating a legacy PNC Bank interest rate swap and recording $1.11 million in FY25 interest expense.
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Schedule I Town-Gown PILOT Payments: Potomac answered "No" on Part IV, Line 21 and reported $0 on Schedule I, Part II for grants or voluntary PILOT payments to Fairfax County or other domestic governments on its $107.28 million net tax-exempt property.
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Top Independent Contractors: Seventeen contractors received over $100,000, led by Coakley & Williams Construction ($2.21M for general contracting), Meriwether Godsey Inc. ($1.95M for dining services), Red Coats Inc. ($811K for janitorial services), Cox Graae Spack Architects ($637K for architecture), and Internetworking Solution Professionals ($500K for IT).
Editorial Note
All financial figures in this report derive from The Potomac School's FY25 IRS Form 990 (covering July 1, 2024 through June 30, 2025 across approximately 1,070 K–12 students) and have been verified by the Chicardgo School data team.
While The Potomac School spends $48,400 per student in direct program services ($58,237 per student in total institutional expenses), Chicardgo School does not imply that financial expenditure mathematically causes higher placement into Ivy+, Top 25 National University, or Top 15 Liberal Arts College tiers. Rather, these financial resources fund the faculty compensation, financial aid access, and academic infrastructure that operate alongside Potomac's college matriculation outcomes.
Accounting Reconciliation: Readers comparing The Potomac School's audited financial statements to IRS Form 990 (Schedule D, Parts XI and XII) will note differences in reported totals. Form 990 reports $62.31M in total expenses, whereas GAAP audited financial statements report $55.55M; Form 990 adds back $5,704,329 in student financial aid grants, an $895,577 adjustment to GEG Phase II, and $168,186 in investment management fees. Similarly, GAAP audited revenue of $75.93M includes $4.87M in net unrealized investment gains excluded from Form 990 revenue ($76.95M), while Form 990 grosses up tuition for the $5.70M in financial aid grants.
Frequently Asked Questions: The Potomac School's Form 990 Financials
As of Fiscal Year 2025, The Potomac School's endowment stands at $76.32 million ($71,324 per student), which equals 122.5% of a full year's operating budget. Its $1.33 million annual endowment payout covers 2.1% of the school's $62.31 million operating budget, while total realized investment income ($3.42 million) equals 5.5% of total expenses.
Potomac spends $48,400 per student in direct K–12 program services ($58,237 per student in total institutional expenses) across its 1,070 students, compared to $49,092 generated per student in gross tuition ($43,761 net of financial aid grants).
In FY25, 19.2% of the student body (205 of 1,070 students) received need-based financial aid grants totaling $5,704,329, for an average grant of $27,826 per aided student. In addition, the school funded $1,555,975 in employee tuition remission.
Head of School John J. Kowalik is the highest-paid employee, receiving $1,366,694 in total FY25 compensation, which included $633,347 in base salary, $419,542 in other reportable compensation (primarily a $395,139 payout from a 457(f) supplemental retirement plan), $220,071 in retirement accruals, and $93,734 in nontaxable benefits.
No. On Form 990 Part IX, Line 1 and Schedule I, Part II, The Potomac School reported $0 in grants or voluntary Payment in Lieu of Taxes (PILOT) disbursements to domestic governments.
Total assets rose 22.7% to $302.35 million and total liabilities increased 49.5% to $110.10 million because the school issued $55.0 million in tax-exempt bonds through the Fairfax County Economic Development Authority in May 2025 to fund construction of a new Middle School and refinance prior debt.
Further Reading
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