Balancing Day School Financial Sustainability and Affordability

A year ago, concurrent to my starting work at UJA Federation of Greater Toronto’s Koschitzky Centre for Jewish Education, I published a ‘greenbook’ on Jewish day school financial sustainability and affordability for the Jewish Funders Network and the AVI CHAI Foundation.  On several occasions I’ve shared ideas from the greenbook in this column. During this year, working alongside Toronto’s day school leadership, some ideas in the greenbook have been reinforced and others have shifted in my thinking.  What has become clear is that ensuring long-term sustainability will require disruptive changes to the ways we currently operate.

Day schools face two interrelated but distinct challenges: affordability and financial sustainability.  

Affordability is the individual parent’s perception of cost and value—knowing that what their children are receiving is worth the investment in tuition. Affordability factors in both the perceived value of the school and the cost of tuition in relation to household income.

Sustainability is the long-term financial viability of the school—balancing its budget year after year and being able to withstand short and long term financial challenges, including the steady demand for increased financial assistance and the need to invest in a quality educational program.

A school could be affordable (with low tuition and high perceived value) but not sustainable. Similarly, it could be sustainable with high tuition (and sufficient families willing to pay), but not affordable to the breadth of students it hopes to reach. Day school financial sustainability requires a long-term plan to ensure that revenue covers costs. Affordability necessitates a demonstration of the value of day school vis-à-vis the cost of tuition. It also involves a realization that even with high perceived value, some families will require tuition assistance. The challenge is a delicate balancing act between sustainability and affordability.

In Toronto we are blessed by one of North America’s most robust affordability programs.  Decades ago, the leadership of UJA Federation dedicated itself to ensuring that day schools would be affordable to the widest swath of students.  This manifests in an annual allocation of $10mil, matched by schools, to a program that assists 2,300 students each year.  While the program is not perfect, it goes a long way to make school affordable. 

What keeps me up at night is the financial sustainability of this program and of our system.

Year over year, increases in the costs of day schools significantly outpace increases in inflation and household income.  As a result, each year tuition bills take up more and more of the average family’s disposable income and our affordability program, like those across North America, endures greater strain.  

I believe we can address the current issues of affordability through interventions on the revenue side of a school budget.  We’ve seen these kinds of interventions through endowments, middle income programs, annual development, etc. The more I am kept awake at night thinking about sustainability, however, the more I come to the realization that a sea change can only come through a change in schools’ cost structure.

Upwards of 70% of a school’s budget is spent on human resources – teachers, administrators, support, etc.  A meaningful reduction of expenses necessitates rethinking the structure of our schools and what teaching and learning looks like. These changes, however, can only take place with the recognizing that the perceived value is the most important predictor of enrolment and a critical ingredient in parents’ calculus of affordability.   Our schools must be top quality.

Rethinking the cost structure of Jewish day schools requires an audacious embrace of out-of-the-box thinking balanced by a healthy dose of conservatism that is necessary in any educational change.  

In collaborations with professional and lay leaders in Toronto we’ve started this thinking, but it will take many more dreamers and doubters to develop the models that will propel day school into a sustainable future.

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