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Wednesday, July 01, 2009

Regardless of the Ability to Pay:
A policy that simply is not working

If you are a Lubavitcher, today is a really bad Wednesday. Articles pertaining to the financial crisis of two different Lubavitch schools in two different locations appears on my Google Alerts this morning. The same issues that are causing financial collapse of these schools are certainly not unique to Lubavitch, so read on.

The Canadian Jewish News is reporting that the 68 year old Rabbinical College of Canada (RCC) needs $600,000 to get out of their current cash crunch. Of course $600,000 won't actually solve the issue. The issue is that the school has expanded with a high birthrate to 400 students, but revenue hasn't expanded along with it. The policy of the school is to accept all applicants, regardless of whether or not they can pay. Most, of course, can't pay. Naturally, a growing student body needs a larger building. Two years ago a $1,000,000 was given for the purpose of expanding the building. But construction cost $2,500,000 and the additional amount was borrowed.

So the situation now is that the revenue stream from tuition has not increased, donors affected by the economy are not donating, and a larger student body means more staff costs and more overhead costs in the form of utilities and maintenance. [Something to consider: The hidden costs when accepting a donation].

The campaign to get out of the current cash crunch has been described as "tepid." The solution certainly must include a tuition raise. In a previous post we learned that in (at least some) Centrist/Modern Orthodox schools tuition includes a premium to cover those on scholarship. Yeshiva, Bais Yaakov, Lubavitch, and Chassidish schools generally set tuition lower than the average per student cost. The Canadian Jewish News reports the tuition is set at $5,200, while the average cost per student is $8,000. Of course, the larger problem is that the average family is only paying between $2,000 and $3,000 per student.

I know minimum tuitions are considered abhorrent by many. Part of the reason I support minimum tuitions is because I believe that when parents know that they must be responsible for pulling a certain amount of weight, that they will make decisions that make that possible (simple economic theory).

Meanwhile, down in Flordia, another school, the Lubavitch Educational Center, is being sued by Regents Bank in a foreclosure lawsuit to the tune of $8,000,000. In 2004, the eight million was borrowed to finance three buildings. There is a main campus, another campus, and and an apartment building. The school itself is over 40 years old.

Here too, donations have tapered off in the economic crisis, the school has expanded to serve 800 students, and 90% (!!!!) of them are reported to be on some sort of scholarship. It doesn't surprise me that a school where nearly ever student is on scholarship can't pay its mortgage, just like it doesn't surprise me that families that decided to take out mortgages many times their incomes can't pay their mortgages.

Sadly, the head of the school, is clearly out of touch with the reality. It seems that he believe all should be in the tzedakah business. His response to being sued is reported by CBS4 was: "It's even more difficult and astonishing when you hear a lender say callously to you 'just give us the building and close down.' What happens with all those student that were serving that have no where to go?"

Rabbi Korf, you entered into a contract to pay back an EIGHT MILLION dollar mortgage. The bank is not a charitable institution. The bank is responsible to its shareholders and those shareholders aren't investing their tzedakah money! The bank is not responsible for these students. The bank has no mitzvah of chinuch! [Something to consider: how you will repay obligations in the worse case scenarios].

What happens to those students? I'm not sure, but I figure the parents will figure something out and the community will assist in those decisions. But to expect Regents Bank to "be understanding" is quite frankly ludicrous. They also are living during the "seven bad years" and likely won't be bailing anyone out.

Lest non-Lubavitchers think that they share little in common, this article in the Jewish Week demonstrates that when it comes to finances, there is plenty of commonality. All should take note before the new school year begins.

Reed College has discovered that "no matter what your financial circumstances are" doesn't pay the bills. Now is the time to make peace with this and concentrate on trying to serve the most students and their families, even if serving all is impossible.

21 comments:

Anonymous said...

not to throw fan into the fire...but a couple of years ago the Lubavitch shul in bal harbor was able to build a mortgage free building for $8 million. Where is everybodys communities' priorities? to build large shuls as social centers or schools? Look at the Chicago model where a community foundation was set up...we in the tristate area have alot to learn.

Lion of Zion said...

"Something to consider: The hidden costs when accepting a donation"

among the many bequests of judah touro, the first great american jewish philanthropist, was $50k toward the erection of a hospital outside the walls of jerusalem. the project, which was a nightmare and never materialized (the money was instead used to build an almshouse that became the first community outside the walls) was assigned to moses montefiore, who later complained something to the effect of "touro's nice donation of 50k cost me another 20k."

hopefully the florida school won't be as dumb as the other school MIAMI AL described and will try to get as good a deal for a charter school

Squooshball said...

I don't know why I am so astonished every time I read an article or hear about [supposedly] religious individuals not paying their teachers, vendors, bills, etc. This kind of situation really irks me, because it proves that there is a disconnection between learning Torah and adhering to a Torah-based lifestyle. The halachos that pertain to paying employees on time are very clear, but some "religious" institutions have no problem with violating these commandments. Some administrators even go so far as to hire employees without knowing if or when these employees will be paid!

Note to Anonymous 3:46 PM--Despite a community foundation being set up in Chicago, the yeshiva day schools in that city continue to increase tuition rates each year. The leaders of the city are on the right track, but perhaps they need to manage the fund better. Then again, it hasn't been around that long, so maybe its effectiveness could be measured more accurately (and positively) in another 5-10 years.

Ahavah Gayle said...

I'm sure this is just the tip of the iceberg. We've known for years this day was coming, but no one took it seriously in these communities. They expected money to fall from the sky, and are surprised that it didn't.

Miami Al said...

Perhaps if we like big Shuls, we should build them with classrooms and host Talmud Torah in them. The Reform/Conservative movements have MANY problem, but financial collapse isn't one of them.

Note that the Reform movement is growing... it's easy to dismiss the growth as "admitting gentiles," but somehow plenty of gentiles see value there, while not many Orthodox Jews seems to see value in schooling, at least enough to pay for it.

If they are losing the building, a charter solution seems unworkable.

Lion of Zion said...

AL:

"The Reform/Conservative movements have MANY problem, but financial collapse isn't one of them."

JTS recently fired a lot of staff and cut others to part time.
HUC was on the verge of closing down all its campuses and consolidating into 1 campus. don't assume the non-orthos are any better off.

"If they are losing the building, a charter solution seems unworkable."

why?

Anonymous said...

Miami Al - The Reform/Conservative movements have MANY problem, but financial collapse isn't one of them.

So what's the deal with all those Solomon Schechter schools shrinking/closing?

Mark

Charlie Hall said...

Worthy of a post:

http://www.cross-currents.com/archives/2009/06/28/charitable-giving-and-the-recession/

Charlie Hall said...

This school closed last fall, leaving tens of thousands of dollars in unpaid rent. The synagogue that hosted the school has had to sell its building as a result:

http://www.rabbihorowitz.com/PYes/SchoolDetails.cfm?School_ID=280

Charlie Hall said...

This 146 year old liberal arts college closed:

http://www.antioch-college.edu/

Lion of Zion said...

one of the shuls i daven in had to evict the girls school it rented space to because of unpaid rent

tesyaa said...

To be fair, the Florida rabbi's attitude is not different from that of millions of Americans who expect to get bailed out.

Miami Al said...

Mark asked, "So what's the deal with all those Solomon Schechter schools shrinking/closing?"

The conservative movement is closing schools and increasing camps... they have a problem with lack of young people, that is a problem for their movement.

The Catholic Church has consistently held 25% of the US population for decades, and is still holding. Yet even in Florida, with a large Catholic Latino population, the news always covers the closing of parishes to find critical members that don't want to move to a new parish... yet in the end, they do.

A thriving community will have growth in some areas and shrinkage in others.

The Solomon Schechter schools closing isn't a sign of financial collapse, it's a sign that those schools aren't needed anymore.

We throw money at lost causes, other groups let the lost causes shut down and prop up new ones. Of course the Reform movement needs to decrease their Rabbinic schools, they are graduating 26 year old Rabbis each year for people that are going to work 40 years. No community can support the growth rate that they are looking for.

The difference is, when we graduate too many Rabbeim, rather than letting them starve or find work, decreasing the demand for the Rabbinate, we are pushing more people into it and creating makeshift work for them that is costing the community a pretty penny.

My parent's Reform Temple, with 1000 families now, has a single Rabbi. Our community, with 400 families in the main Orthodox Shul, has 2 Rabbis on staff, others in "protected" businesses, plenty on the payroll in Kashrut, local learning efforts, etc.

We have lots of Rabbi's living off the community, they don't.

A closing Day School isn't a sign of collapse in the non-Orthodox world, because the school isn't the lifeblood of the community. A few Rabbis employed there will go seek out new employment. When a Orthodox school collapses, it does so with 6 months of unpaid salaries wiping out dozens of families, and throwing people with no marketable skills out onto a job market.

A Reform Rabbi has an undergraduate degree, and probably NOT in Judaic studies, (required for their program)... Our YU Rabbis have college degrees, the rest don't.

I think that they are in a much better financial circumstance. Financials, birthrates, and retention all play a role in a movement's success. Every BT has a story of an Orthodox family that hosted them for Shabbat or an Aish Hatorah/Chabad Rabbi that got them excited. Continue to starve the community for funds, and that will dry up. Orthodox revitalization took place as Orthodoxy became an acceptable lifestyle combined with success, and has tremendous appeal to burnt out overworked young professionals. Starvation 19th Century Orthodoxy didn't have much appeal for people in the 19th century, I doubt it will appeal to 21st Century Jews.

Shalom, Cherry Hill said...

To add to Miami Al's point--
besides the financial points made, perhaps another aspect of the situation is how one views Torah Judaism.

The more 'right wing' model seems to view it as a walled off escape from the world. Not only should you minimize as much as humanly possible any interaction with non Religious Jews unless they are coming to kiruv programs (let alone non Jews), but you should aspire to avoid anthing that is not Torah learning. Work? Only for the 2nd rate.

As has been previously noted, during a time of prosperity this model seemed to work as the subsidies from grandparents, other ba'alei tzedakah, and government give aways like WIC rolled in.

As times have gotten tougher, perhaps it spotlights the differences in philosophy that exist. Are we really meant to ignore the larger world, unless we are in the middle of accepting their subsidies? For the MO this is less true, so we can restate the issue as 'are we really meant to ignore basic economic realities, as we have in the past twenty or thirty years?' While we do interact with the larger world, the costs have gotten entirely out of control.

Charlie Hall said...

"Are we really meant to ignore the larger world, unless we are in the middle of accepting their subsidies? For the MO this is less true"

For this MO, it is not true at all! That doesn't mean I understand what all they hoopla regarding Michael Jackson is about. But the isolationism of the past 200 years was never the norm prior to the 19th century unless imposed on us from outside (as in ghettos).

Charlie Hall said...

"Are we really meant to ignore the larger world, unless we are in the middle of accepting their subsidies? For the MO this is less true"

For this MO, it is not true at all! That doesn't mean I understand what all they hoopla regarding Michael Jackson is about. But the isolationism of the past 200 years was never the norm prior to the 19th century unless imposed on us from outside (as in ghettos).

Charlie Hall said...

"My parent's Reform Temple, with 1000 families now, has a single Rabbi."

And membership dues at Reform synagogues tend to be substantially higher than at Orthodox synagogues. Yet the Reform movement has about three times the dues paying members today, and has 200 more congregations today than it did 30 years ago.

Shalom, Cherry Hill said...

To Charlie Hall,

Let's not ignore the fact that having wealthy people throw money at an empty edifice to assuage their guilt is not a model for long term success either.

ProfK said...

Charlie,
The Reform Movement may have 200 more temples than 30 years ago, but peopled with whom? A woman I worked with at CUNY is 100% lapsed Catholic married to a reform Jew. She never converted, but there was no push to do so since their temple is egalitarian and welcomes in the non-Jewish spouses without prejudice. This woman's kids--not Jewish k'halacha--both married people from their temple, both of whom also have non-Jewish mothers. Yes, they belong to the temple.

I asked her how she answers when she takes a census survey that asks if she has a religious affiliation and what it is. She answers both Catholic and Jewish. She says that one of her kids answers the same and the other answers only Jewish.

Comparing the Reform and Orthodox movements isn't a fair comparison--kind of like comparing tzitzis and matzahs.

Anonymous said...

Where does one go to find info on the Bnot Shulamith situation? Anyone know what's happening?

Miami Al said...

ProfK... we can't be compared to other American Ashkenazim, the Reform Jews. We can't be compared to other ethnic groups (Blacks, Hispanics, Asians, etc., because we believe that Jews can meld into being white)... We can't be compared to the Catholic Church, the Mormon Church, Evangelicals, or Muslims because we have special requirements that they don't.

Seems to be we simply have lousy leadership and a "specialness" problem where we can't learn from others, so we are going down the failed path of other ethnic/religious groups.

The Catholic Church abandoned universal Catholic school as the public school system picked up... we haven't even looked at what worked and what didn't for them.

I think you make excuses for our crappy leadership and poor communal decisions... and reject the comparisons where we could learn from others to stop making bad decisions.