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Friday, October 03, 2008

Some Frum Financial Factiods

Given that there have been no statistical studies on the financial health of the Orthodox community, we have to take whatever bits of information that we can get to try to gain some perspective on the "State of the Union." My Baltimore correspondent sent me two pieces of information published in the recent Where What When that might help give some perspective.

The first from an article "An Affordable Baltimore Wedding:"

"I did not set out to write an article concerning the issue of expensive weddings, however allow me to make a point: Since I spend a lot of time working with frum families discussing budgets and finances, I see the issues that plague us. It is my opinion that (much) more than 50 percent of families with children are in some form of financial crisis. This means that middle-aged couples are going to elderly parents for help or are borrowing money from lines of credit or credit cards. The financial pressure takes a serious toll on people."

One can only wonder what the estimated percentage would be if you included those without savings or who are raiding their savings prematurely, not just those who can't live on their salary alone.

The second comes from an advertisement and write-up regarding an event being put on by a Maryland Yeshiva to benefit the scholarship fund:

"[The scholarship fund] benefits 60 percent of its student body, currently numbering 187 girls and 86 boys. . . . . . . Last year, the Yeshiva awarded over $1.5 million dollars in scholarships."

Take out your calculator and do the math to find out the average scholarship amount is and you might be surprised. $1,500,000/((187+86)*60%)=$9,168*. At least in my own mind, this is a HUGE amount of assistance to be providing per student on scholarship.

Many have, rightfully, made the call to support local yeshiva and day schools. I've dedicated plenty of posts to this subject myself. But when you see just how much filling in is needed (and I believe most schools have a similar percentage of kids on scholarship--see a past article here where the director of Toras Emes in Los Angeles reveals only 32% of students pay full tuition), your eyes will end up bulging out. Filling in the gap in tuition as it stands currently, isn't a matter of providing a thousand dollars a student, it is a matter of providing nearly $10,000 per student (and this after grandparents are already kicking in significant amounts). Of course there are students who aren't on scholarship, but these families are definitely feeling the squeeze and could use some relief too.

I will leave my comments at that. The figures I find here and there continue to just boggle the mind.

*I looked up tuition at this school online it ranges between the mid-$15,000 to the mid-$17,000.


Anonymous said...

Like you, I do not believe the math. Since this is from promotional material, not audited financials, is it possible that PR hyperbole (possibly inadvertent) is to blame?

ProfK said...

Re the figures for the Baltimore yeshiva scholarships, just having the number of students and the amount of money given out doesn't really tell us anything about how the money is distributed. Also missing is what the cost of tuition is. Is tuition $10K? Is it $15K? More? Did some of the students receive full tuition scholarships? How many? If some did that would leave the others getting far less money than $9100. How much of this mooney was tuition reduction for multiple children from one family in the school? The kinds of figures given by the writer are of no use unless ALL the numbers are known and figured in. It's quite conceivable that one family got $30K in reductions while another got only $2K. But without all the facts we'll never know the truth.

SephardiLady said...

I haven't decided if I believe the math or not. I don't think it would be wise to overstate the need to scholarships. The numbers just make my head spin because I know they don't say anything good at all.

SephardiLady said...

ProfK-The Maryland school claims 1.5 million was awarded in scholarships. I agree with you a lot is missing. I made a footnote about tuition at the bottom of the post. Tuition ranges between mid-15's and mid-17's.

SephardiLady said...

The $9100 is an average. Obviously some parents are only be thrown a bone, perhaps a $500 scholarsip, while others are going for free or nearly free. A distribution would be interesting. i'd love to see every school let us in on this info.

Anonymous said...

i wish you would explain why yeshivas have to charge so much. i just dont see why they charge more than 10k a year. where does the money go?
hey, you can say you give everyone a 20k scholarship if your official tuition were 35k.

Anonymous said...

Some people might be surprised to find that the local public school spends more per student than the tuition at the local day school. Day schools probably need to cover expenses such as health insurance for staff, substantial insurance on the building itself, and many other maintenance related expenses. The most expensive day school in our community is the Soloman Schecter school and high school. These schools want a state of the art secular curriculum as well as the religious curriculum. These schools also employ top notch counselors and psychologists for their students. Most families at those schools however, have 4 children or less and these schools also have rigorous criteria for allowing tuition breaks. Because they don't see day school as an absolute necessity, they don't pity children who can't afford to attend.

Anonymous said...

I currently have 2 kids in preschool program in the tri-state area. It cost me about $20K a year (and one of the kids is only there half a day). BH we are currently able to pay full tuition and due to a few good years at work our buikding fund is paid off (I was able to get my company to match half b/c i paid before it was an obligation). I do, however, work for a financcial institution which was recently "taken over" and I am waiting to see if I will have a job in a few months. I think this financial crisis is going to crush many of the local yeshivos and they are going to start to fold like the investment banks. There is simply not enough money to go around anymore.

Mike S. said...

Where does the money go? A labor heavy service business like a school needs to take in roughly 3 times the salary of the direct bill employee (i.e. the teacher). This covers employment taxes and insurance + benefits (this will be an extra 30-70% of salary depending on the state and the level benefits), physical plant, that is,the building, both capital and maintenence costs and utilities, supplies, (this will be another .5 to 1 times the teacher's salary typically, depending on how new and elaborate the building--probably a lot higher this year as heat is way up),
and the salaries of the other needed employees, in a school that would be the administrators, nurse, janitor, business office, librarian, specialty teachers and so on.

I don't know what a reasonable teacher's salary is, but I know that the going rate for top engineering grads (bachelor's) is about $65K/year fresh out of school. Figure the teachers work 10 months/year, and aren't as qualified or in as much demand as the engineers I hire, but aren't all fresh out of school either. Let's say they average $60K/year. So you need to take in $180K/year to break even on a classroom. If your kids' school is like mine that is about 15 kids, so you have a cost of around $12K per kid. In my kids class some of those will be children of full-time faculty who don't pay (that goes into the benefit cost) so you might average 12-13 nominally paying kids who will have an average cost of $14-15K. What you charge depends on whether you get enough donations to cover scholarships or have to make it up by charging more to the paying parents. My kids' school says they get about as much in donations as they give out in scholarship and indeed charges about $15K per kid.

JLan said...

"If your kids' school is like mine that is about 15 kids, so you have a cost of around $12K per kid."

Keep in mind that this calculation doesn't necessarily work for high school, which is part of why high school is typically more expensive. What you'll find is that high schools have a higher student:teacher ratio, which ends up leaving the school with a bigger bill. Some of that will be made up by facilities costs- you can constantly keep a room full, so that cost is less per teacher- but it alters the calculations (see below):

If we assume that a student has, say, 40 periods of class per week, and is in a grade of 100 students, then we have 4000 classstudentperiods per week. If we assume 20 students per class, that leaves us with 200 class periods. If each teacher teaches 25 periods per week, then each grade will require 8 full time teachers, leaving us with a ratio of 12.5 students/teacher. If instead we assume an average of 15 students in each class, we have to cover about 270 periods. We'll then have about 11 teachers per grade, and therefore a student: teacher ratio of less than 10:1. And this problem is made worse because if we want teachers to specialize in a subject, we may have to have, say, 8 or 9 full time teachers and a number of part time teachers.

If we use Mike S's numbers and say that just the salary plus benefits for teachers would end up at $100,000. At a ratio of 10:1, a tuition rate of $10,000 would cover solely teachers' salaries and benefits, but leave nothing left over for other staff, building costs, etc.

Of course, depending on the school, Mike S may be overcounting the salary amount (quite possibly for many schools out there), or undercounting it (for a few). It's also going to be highly variable depending on location- somewhere like NY will necessarily drive costs up greatly.

Commenter Abbi said...

"If your kids' school is like mine that is about 15 kids, so you have a cost of around $12K per kid."

Well, there's your problem right there. 15 kids per class? That's an extreme luxury. That's for people who who can pay $20-30 thousand a year in tuition. If you want more reasonable tuitions, you need bigger class sizes.

It's not as great for the kids, but it is manageable. I'm not saying 40 kids per class, but 27-30 is reasonable ie?: the kids will still get a good education.

Seriously, American frum Jews are dreaming if they think they can keep web of mirages up for much longer.

ProfK said...

Re "I don't know what a reasonable teacher's salary is, but I know that the going rate for top engineering grads (bachelor's) is about $65K/year fresh out of school. Figure the teachers work 10 months/year, and aren't as qualified or in as much demand as the engineers I hire, but aren't all fresh out of school either. Let's say they average $60K/year." Your figures for the teachers' salaries are way out of line with what is being paid to teachers in yeshivas.

The following applies only to the public school teachers in NY:
"Under the last contract, teachers' salaries in 2006-07 ranged from $41,773 for a rookie with only a bachelor's degree to $98,347 for someone with a doctorate and 14 or more years of experience. The top pay with a master's degree and no additional education credits was $84,689."

Yeshivas have three tiers of teacher's salaries: rebbis, morot and secular studies teachers. For Judaic studies the rebbis make way more than the morot do. In many cases they also make way more than the secular studies teachers do. The tiers for secular studies are not so clear cut. Some yeshivas will take in secular studies teachers who have not completed college yet; they are going to make the lowest of the salaries. Others will take in new college grads--a little more in salary than the non-degreed teachers, but not by much. The next tier is teachers with graduate degrees and/or certification and experience. Then there is the "specialty" tier--there aren't that many teachers to find in these areas and so they command higher salaries, even in the yeshivas--mostly math and science teachers for the upper grade departmental courses.

What are those salaries for secular studies teachers? Right wing BY type school in Brooklyn: 5th grade experienced teacher is making $19,000 a year, no health insurance benefits given. Same school, high school math teacher is making $18,000 per year but teaching less hours than the 5th grade teacher and also no health benefits. Staten Island teacher, certified, experienced and with Masters degree teaching math to grades 6,7 and 8--$28K per year plus health insurance. Highest salaried secular studies teacher in this same school is making $31K per year but also has supervisory duties in addition to teaching.

More MO schools such as Flatbush and Ramaz, for example, are making higher salaries than the teachers in the schools more to the right, although still not on par with public school teacher salaries, the exception being the math/science specialists.

Every yeshiva has its own salary scale but I can tell you this: I know of no yeshiva secular studies teacher or morah who wouldn't consider herself/himself blessed to actually see your $60K a year--they are making much less than this.

SephardiLady said...

Not only are classes small, but many schools have a teacher and a teacher's aide.

I went to (public) school in what now seems like the dark ages where 25-30 kids was the norm for an elementary class (no teacher's aide either). We managed fine, but now large classes are passe.

Another way public schools can keep prices down is by having very large classes. Choir and band classes can have 100+ students in a single class. I think my smallest high school class was 20 students and the largest was band with at least 80 students.

I don't know where to start in the frum world to consolidate, consolidate, consolidate. But perhaps we could start by combining two or three girls schools for an evening PE class or something.

Dave said...

For comparison, the public school district where I live spends roughly $7300/student.

ProfK said...

Your figures are not complete. You give only the district per student number; the state also contributes, and their contribution is not a part of the district figure. In addition, the federal government also kicks in money to public schools. Nor do district/state figures include capital expenditures for buildings, both maintenance and new construction; that is a separate budget.

For example: Rhode Island, for the 2006-2007 school year, showed a district spending of $8,982 and a state spending of $9,409 per pupil, including only classroom teachers, substitute teachers, paraprofessionals, classroom technology and classroom materials, excluding all other commitments. The RI report also notes that spending for Special Ed students is at a much higher rate: $21,008 for the district and $25,602 for the state. "School district spending per pupil was highest in New York ($14,884), followed
by New Jersey ($14,630) and the District of Columbia ($13,446). States where
school districts spent the lowest amount per pupil were Utah ($5,437), Idaho
($6,440) and Arizona ($6,472)."

Yeshivas have no district nor any state to draw their budgets from,get little or no federal money, and therein lies the problem for parents. Nor is there a separate budget, again paid for by the district and state, for buildings and capital improvement.

Yeshiva parents are attempting to do what it takes three levels of government to do for the public schools.

Anonymous said...

A co-worker of mine who is catholic sends her kids to a catholic parochial school. The kids get a first rate secular education and most go to good colleges after, and it sounds like they have all the extras - music, art, gym, computers, etc. I was shocked to hear that the full tuition is $7,000.00 for the high school. How can they do it, but the Jewish schools can't? The town where the school is located is not particularly wealthy - mostly blue collar. Perhaps the buildings were paid off years ago and the priests and nuns who teach there make a lot less than the rabbis and rosh yeshivas make, but maybe there is something to learn from looking at other systems.

Anonymous said...

Do any of you accountants know the tax implications of staff members being paid lower salaries and having their own tuition obligations reduced one for one? I know that this is commonplace, but the upshot is that the staff is being paid more than their salaries, and off the books. Does the IRS tend to look the other way?

SephardiLady said...

tesyaa-Complicated subject. But in short I believe a tuition benefit is taxable when it is only offered to a highly compensated individuals. But it it is offered on a non-discriminatory basis to employees meeting certain benchmarks, than it may be non-taxable.

It seems to me that tuition paid to another school is subject to tax and social security in either situation.

SephardiLady said...

ProfK-Where are you pulling your figures from?

JLan said...

"How can they do it, but the Jewish schools can't?"

A couple of major ways:
1) As you noted, priests and nuns making very, very little. This has started to phase out and in some places is putting significant upward pressure on Catholic school tuitions (Catholics have seen a huge drop in those interested in the priesthood of late).

2) Because their religious subjects are typically taught in English, they can double up teachers between religious/secular subjects, which helps to fill in the gaps (i.e., you get lots of full time teachers, and the cost for them is often less than the cost for 2 part time teachers).

3) The Catholic Church typically kicks a lot of the money it gets into these schools. That's something that we don't do in the Jewish community- imagine eliminating the majority of the kollelim and tossing all the money that supports them into the schools (not to mention getting the guys in them who aren't going into teaching, kiruv, or community leadership to go work). That right there would help a lot in terms of school costs.

I am familiar with a rabbi from the Baltimore area (Modern Orthodox), who sits on some sort of community board (I don't recall the type). The parents on that board had families with the same earnings, roughly speaking, as the rabbi and his wife. They were complaining about the hike in tuition- from $3k/kid with a family maximum of $12k to $4k/kid with a family max of $15k. As it happened, the priest in charge of said school was also on the board, and asked the rabbi what he was paying. When he informed them of his cost- $16k/child, no family maximum- they got very quiet and stopped complaining.

Dave said...


Actually, I was looking at the total budget for the year, and dividing that by the number of students. To the best of my knowledge, that includes all federal, state, and local funds.

Laws on funding for schools vary wildly from state to state, and I am quite far "out of town".

Dave said...

I went back to look at last year, since the total expenditures and headcount were available:

Expenditures from all sources: $8633/student

This covers the operation of four schools (two elementary, one middle, one high school), buses, extra-curicular activites, as far as I can tell, it covers everything.

ProfK said...

The figures come from the US Census Bureau which does a report on school spending every two years or so. As they do all 50 states they are able to compare and contrast the various spending patterns. Just an interesting note: real estate taxes in many muncipalities go for funding the school system. There are a couple of districts in Long Island whose district expenditures per child were well over $30K per child. I shudder to even think about what their taxes must be like if they can afford school funding at that level.

And Dave, your figures put your state below the national average for per pupil spending. Perhaps we should look at your state and see how and why they manage that.

SephardiLady said...

Long Island has super small school districts and essentially suffers from the issues of underutilizations that frum schools suffer from. In addition, teacher contracts on Long Island are inflated. Orthomom used to write a lot about this.

Dave said...


Here is the statewide breakdown and report:

The census breakdown is at:

Note that the average in 2006 was $9,138 per student (from all sources), which doesn't have Washington state that far off from average at all.

Here is the New York breakdown (2005-2006 figures):

Per capita spending: $16,800
From Federal Sources: $1,198
From State Sources: $7,241
From Local Sources: $8,360

Anonymous said...

Catholics greatly outnumber religious Jews. They probably have many more people to hit up for donations for all types of Catholic charities. Catholics today in the US practice contraception and no longer have huge families(there are obviously exceptions). Probably the class size in a Catholic school is similar to that of a public school. They may involve parents as volunteers more successfully than Jewish schools do because a)there are more of them and b)they are not always giving birth or working to support large families. Also, alumni of Catholic schools can be hit up for donations even if they move away and the same does not always work in yeshivas where the graduates may not have income at all or in large enough quantity to give a reasonable donation. They may also not be trying to send their kids to full summer residential camps. Non-Jews in general can be employed 7 days a week and usually have some type of post-high school career or military training. A high percentage are college grads. Their lifestyle in general is cheaper (if they choose it to be). Those are several reasons why Catholic schools can offer their services for less tuition.

ProfK said...

An interesting note about where the Catholic schools get their money from. It's not just tuition. They receive money from the diocese. Where does the diocese get its money from? Some from large donations by individuals, but the Catholic church, at least in the US, is a major land owner/landlord in many areas of the US, NY being one of them. One estimate has the holdings of the Church in the US valued in the billions. One commenter in a Pew report mentioned that if the Church were to pay all the back taxes on its real estate holdings, from which it is exempt from paying as a non-profit, those taxes alone would wipe out the national debt. Clearly an area where shuls and yeshivas could have taken a few pointers from the church. If the Brooklyn yeshivas had invested in Brooklyn real estate back when they were first starting out what a difference that might make today.

Dave, correct me if I'm wrong, but Washington State doesn't have a state income tax, thus freeing funds for individuals who might donate more to yeshivas or whose tuition bite would not be felt as badly. And I also remember reading how Microsoft has had special programs that it funds in the public school system. They've gone nationwide with the program now but it was originally done in Washington.

Dave said...


Washington has no state income tax, that is correct. I'm not sure how that would affect the public schools, though. And all of the numbers I've given for Washington were public school districts, not private day schools.

The Gates Foundation has programs in the US Public Schools (this is separate from Microsoft), however, most Washington state schools are not recipients of Gates Foundation grants, anymore than most of the schools in the United States are.

JS said...

The fact that the average tuition grant for those receiving assistance is nearly $9200 makes my blood boil.

Parents paying full tuition are, on average, paying $9200 more per child than their neighbor who gets assistance? That is truly an outrage.

It's no wonder so many people are enraged by the yeshiva system when there is such an incredible disparity between the "pays" and the "pay nots."

ProfK said...

In 2006 the Seattle Times reported that "The Gates Foundation has given about $1.4 billion in education grants since 1999, most of which are tied to improving high schools. The money has been given to states, districts and individual schools, and has helped start or redesign more than 2,000 new schools across the nation.

In Washington state, the foundation has given about $140 million to school districts and schools, in addition to college scholarships." In other words, Washington got 1/10 of the money given out plus scholarships. Seattle alone, in 2000, got 26 million dollars. Sure wish the yeshiva system had a fairy godmother like that.

Re the no state tax, someone in the thread above mentioned that public schools spend more than yeshivas per student. Not having a state tax would help yeshiva parents by giving them more disposable income that could go towards tuition.

Dave said...


I'd expect the overweighting of Washington to tend to go down over time. The Gates Foundation doesn't issue sustaining grants in education. The grants are to make a change, not to continue operations once the change is made.

Moreover, most schools in Washington State do not get funding from the Gates Foundation (at all), leaving them no better off for all of their geographical proximity.

As far as the lack of income tax goes, the answer is really "it might help". For those who live below their means, no state income tax is a win, because all of the state functions are paid for out of consumption taxes (sales tax and property tax). If you are living hand to mouth, then there is no effective difference in money on hand.

wrpn said...

So explain this. I'm Orthodox. I have three university degrees and I work 3 jobs, six days a week to support my family. Please spare me all of these tearful complaints on how dati families lack higher education or work opportunities. That's your choice. No one told you to get married at 18 and hang out in Kollel instead of acquiring skills and getting jobs!

Dave said...

I don't think you're going to see a lot of defense of the Kollel-Lifestyle in this part of the blogosphere.

tdr said...


I don't think it means that other parents are subsidizing the scholarship.

At our school, which seems to be relatively inexpensive from what I'm hearing here ($9k tuition for elementary MO school), they are trying to attract students to build the school and I think they are being somewhat free with the scholarship money. They expect parents to raise a substantial amount AND they are severely in the red. But the parents who want this school to survive *know* that this state of affairs can't continue so I don't really have an ending to that sentence. I guess parents will be more motivated to raise more money? I'm not feeling too optimistic about that after listening to the recent This American Life podcast*.

I doubt this information will help your blood stop boiling though. :-) Hope it doesn't boil it more.

* This week's show explains in very clear lashon what the current financial crisis is all about.