Disentangling Day School Affordability and Sustainability

Day school is the gold standard in Jewish education. Across multiple rubrics of measurement, in comparison to their peers day school graduates have broader and deeper Jewish knowledge bases and stronger Jewish identities.  Beyond the impact on the individual, a recent study demonstrates that day school graduates disproportionately constitute young Jewish leaders, shaping their communities today and the face of Judaism in the future.   

Notwithstanding their success, I am concerned for the future of day schools.

Often conflated, there are two interconnected crises facing day schools: Affordability and sustainability.  Each requires its own responses.

Let’s begin with sustainability.

Day school financial sustainability necessitates a long-term plan to ensure that revenue – from all streams – covers costs.

Across North America, there are approximately 300 day schools ranging from Reform to Centrist Orthodox (the number doubles when you include Orthodox schools farther to the right).  These schools have a combined annual budget of $1.5bil.  On average – and there is a significant range– 80% of this budget is covered by tuition.

A long-term sustainability plan must take into account the development of new revenue streams as well as strategies to control costs.

Developing revenue streams includes building endowments, increasing annual fundraising, and developing revenue from ancillary services such as rentals. 

To pull out one example, only half of Jewish day schools have endowments with a total of approximately $250mil in day school endowments.  In comparison, the top ten endowments of American independent schools each have more than $200mil in their endowment.  In recent years communities including Los Angeles and Metrowest New Jersey, and Baltimore have significantly increased their day school endowments.

Decreasing costs may include ‘right sizing’ to ensure that classes operate at capacity or cross-institution collaboration on collective purchasing, joint back-office, the introduction of blended learning through technology, etc.  Duediligance, however, has demonstrated that most schools are operating efficiently with 70-80% of a school budget going to human resources. Without significantly reducing the core of the school – the teaching staff – little can be cut.

While sustainability is about the long-term financial viability of the school, affordability is about the individual parent’s current perception of cost and value.

A school can be affordable at $500 tuition but not sustainable.  Conversely, a school can be sustainable at $40,000 tuition, but unaffordable to most parents.

Day school tuition has risen in excess of wages. On a relative basis, day school is more expensive than it was five yeas ago, with tuition rising at an average rate or 3-6% per years for the last decade.  Compounded by the economic downturn, in the last eight years, day school subsidy requests have doubled. 

 

There is no silver bullet.

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