Got Orthonomics in your Email Box?

Tuesday, May 10, 2011

Two Modern Orthodox Yeshivot will Not Open Next Year

Note: Blogger went down. I happened to save this post elsewhere because Blogger was doing strange things. So here it is, without a few edits. Let's see if the comments post. If not, I should be able to pull them from email and post them myself.


This week is a sad week in the world of Modern Orthodox Yeshivot. This week, Baltimore's Rambam Yeshiva announced it will permanently close as of the end of the school year, as did theMoshe Aaron Yeshiva of Southern New Jersey.


I don't have enough information to draw any conclusions, but I noted some similarities:


1. Age of the schools: Rambam Yeshiva opened up 20 years ago. Moshe Aaron Yeshiva High School 18 years ago.

2. DEBT: Both schools amassed debilitating debts.

3. Shrinking Enrollment (reference)

4. Big Ticket Spending: A $600,000 gym added to a school campus purchased for $350,000 in a fire sale at Moshe Aaron Yeshiva. Rambam made a decision to separate the boys and girls to save the school.

5. Deferring the inevitable: Related to the issue of debt, both schools made the decision to continue operations despite debt piling up as each school saw their mission to be unique. In the case of Moshe Aaron Yeshiva, it was the only Yeshiva high school in its county.


I don't want to overstep any bounds by pontificating about the finances at either school, as I am not familiar with the finances in either of these schools, or any school for that matter. However, in the Yeshivat Rambam articles, I noted that many comments were inquiring as to what the source of the debts and there were some comments that the teachers are not guaranteed payment after the next paycheck on May 15. In other school closings (see here) the recurring theme is back paid owed to staff and back pay owed to vendors/landlords. I find it refreshing that here there are no reports of such, although there is speculation that the teachers may not be paid after May 15. While emotions are high, there is pain and worry on the part of parents and students, and teachers wonder what will be in the future, there is honor is meeting obligations to staff and hopefully all debts can be met upon the sale of the property.


An important note regarding the economics of the New Jersey school appeared in the article that all need to pay close attention too:


Moreover, some parents were behind on paying the $18,000 annual tuition, a situation that was allowed, said Goldstein, "under the mantra that nobody should be denied a yeshiva education.


And, on a final note (as both communities share another commonality--new startup schools are in the works--in New Jersey Rambam Yeshiva and in Baltimore Ohr Chodesh), I think it is pointing out this great quote: "the definition of insanity is doing the same thing over again and expecting different results."


When it comes to small schools, the conventional school format (single grades, multiple tracks, accommodation for learning differences, the mantra that none be denied) has to be looked at. I think it would be great to see something different develop to fill the voids, as well as to simply pilot a new type of program. But from reading the articles on the new schools proposed, I don't see much that is out of the box on the educational, administrative, or funding end with one notable exception: the NJ (new) Rambam school making a statement that parents who are not paid up at the previous school will not be considered for enrollment. I will be watching the developments. [Flame away as I exit stage left].

27 comments:

Orthonomics said...

From reader L who was unable to post:

My understanding is that MAYHS should no longer be defined as a Modern
Orthodox High School. I do not know whether their slide to the right was a
cause of their financial troubles, a response to them, or irrelevant.

Anonymous said...

I attended a public school with 1523 students in 3 grades. We had one principal and 3 Assistant Principals (total of 4 administrators).

Rambam has 6 administrators. It has what? 200-300 students. Cut at least 2 of the administrators. There, I just found you $200,000.

Frayda said...

This topic is very close to my heart. My daughter just started at Yeshivat Rambam this year and I was really looking forward to her continuing her education there through 12th grade. From many sources, I know that one of the reasons they had so many financial problems is that they paid their staff very large salaries and did not focus on resolving the growing debt. They did not involve parents in the major decisions that ultimately helped the school's demise. They also did not reach out for community and rabbinical support until the very end. The proposed new Ohr Chadash Academy has three things going for it that will be different from Yeshivat Rambam. They are listed in the guiding principals - Fiscal responsibility and transparency, open communication, and community collaboration. Therefore, they will not be "doing the same thing over again and expecting different results". I wish Ohr Chadash Academy much hatzlacha in their new endeavor. I will be attending the 8:30 PM meeting this Sunday at Shaarei Zion to get more information.

Orthonomics said...

I hope to stand corrected. Please keep me informed. I'm curious how the new school plans to promote transparency. I've found it is easier said than done.

Anonymous said...

MAYHS is MO, it is not a right-wing institution.

If anything, this only this helped decrease the debt as they ousted the old principle and hired a heimish yid who is more right wing and obviously paid less.

Harry Maryles said...

Sad sad situation. We need more MO schools not less.

But I suspect it is in part the nature of an MO school that is part of its problem. MO schools have higher budgets. That’s because they care far more for secular studies than do Charedi schools and a quality education means quality teachers. As well as more enrichment programs. Quality teachers are more expensive. Enrichment programs are not free.

Tuitions are therefore higher and most people can't afford to pay them in full. That means fundraising has to be increased. But there is just so much money in the community pool. I'm not sure that this is the sole answer to the problem.

OTOH a little tweaking in multiple fundraising events can increase the school’s overall income. Also scholarships should be tightened up as well as enforcement policies WRT to bad tuition payers. The idea that money not be an obstacle to a child’s Jewish education may not always apply when a certain parents threaten to remove a child if the tuition is too high. Depending on the parent they may just be bluffing in the hopes that they can take advantage of this philosophy.

There ought to be more pressure on your Jewish Federation to reprioritize their allocations and give Jewish education a higher priority. Friendships with its leaders should be cultivated and wealthy Orthodox Jews should be encouraged to participate on their boards.

Alumni should not be overlooked either. No doubt some of them have become pretty successful. Even if they live out of town - they should be approached as honorees for banquets or other school projects that will entice them to donate.

And finally the wealthy Jews of these community should tactfully be squeezed more.

Just some of my off the cuff thoughts.

Mark said...

R' hmaryles - That’s because they care far more for secular studies than do Charedi schools and a quality education means quality teachers.

This is true. But MO schools also pay their Rabbeim more than Charedi schools do. In fact, I wouldn't be at all surprised if the disparity (for Rabbeim) is even higher on a percentage basis (than the Limudei Chol teachers).

Mark said...

R' hmaryles - Even if they live out of town - they should be approached as honorees for banquets or other school projects that will entice them to donate.

If their posek is R' H Schachter, then this could be problematic with regards to aniyei ircha. But still some portion of the 25% may still help a little.

Miami Al said...

The problem is mathematical.

Education is labor intensive, schools use more labor hours for education than they did 20 years ago, not less, this isn't MO, this is all modern education. Contrast this to the business world where productivity has increased with lots of cuts.

80% of school budgets are salaries. so the biggest cost driver is that. Salaries will tend to go up with the wage market, historically 1% over inflation. Obviously an aging work force will go up faster, and fluctuations, but let's assume that the board holds costs to wage increases.

Theoretically, tuition revenue = official tuition rate * number of students. Now, what percentage of the school's total tuition is actually collected? Scholarship parents pay what they can afford, teachers get a discount, etc. One of the schools here ran at around a 50% collected tuition rate, perhaps other schools run higher, some lower, but let's use 67% for simple math, and it's higher than down here, but maybe northern MO Jews are magically richer.

We'll call the current year Year 1, and assume that tuition and costs are in line (many schools had structural deficits in boom times, but we'll ignore those for now, they only make it worse).

In Year 2, costs go up 4%, assuming long term inflation of 3%, and wages are 1% higher. The board held costs down, no new programs, no new admins, etc. Now, the board needs to set tuition levels. If they only collect 67% of tuition, they need to raise tuition 6% to cover a cost increase of 4%.

So inflation = 3%, real wage growth of 1% means costs go up 4%, which drives tuition up 6%, or double the nominal inflation rate.

Compound this over 20 years, and you have the current crisis.

Looked at from another angle, you can arrive at the same problem.

Assume 25% of your families comprising 33% of the students are on scholarship, this is in line with most schools. Assuming another 10% of your families comprising 17% of the students are "employee families" getting a discount of 33% (20% - 50% seems "normal.")

When your costs go up, 50% of your students are "full tuition" families. 17% are partial payers, and 33% are "squeezed." If a family can afford $10,000 in tuition payments re: scholarship committee, whether tuition is $10,000, $12,500, $15,000, or $20,000, they are only paying $10,000.

Your scholarship families do not pay more when tuition goes up, they pay what they can afford. A $1 increase in tuition requires a $1 increase in scholarship for them.

Your employee families are discounted, so a $1 increase in tuition gives them a 50c - 80c increase in tuition.

Therefore, 100% of the cost increases are born by full paying families + a proportional rate of teacher families.

This means that even if costs go up reasonably, tuition goes up faster.

BB said...

Isn't there a new high school opening in September to replace MAYHS? I'm sure I just read about it.

Anonymous said...

I'm hearing that a lot of the MAYHS girls will be going to Bruriah and Maayanot.

BB, there is already a new girls HS in the area with the name Reenas, but Reenas is definitely a RW school.

JS said...

JS has left a new comment on your post "Two Modern Orthodox Yeshivot will Not Open Next Ye...":

It's the same story again and again.

Every piece of data published on the issue has indicated that salary and benefits are roughly 80% of a school's budget. And yet, school after school keeps hiring more and more administrators and more and more teachers, part-time teachers, and assistant teachers. The little transparency that schools offer by actually filing required 990's (and very few schools do) indicate heads of schools making close to $300k in salary and discretionary spending accounts not including other benefits (health, etc) and "lesser" admins making well over 6 figures (of which schools have around 8-10).

And yet, the schools constantly bemoan that they have made all the cuts possible, that there is simply no other place to cut. In the same vein, they still give all their staff annual salary increases and one school even sought out a donor to fund this. Add on reports that schools have a "chodesh l'shana" policy that virtually makes it impossible to fire anyone and it's no wonder the schools are drowning.

The schools answer that the parents demand a high level of services given how how high tuition is. But this is circular. Tuition is expensive because of these extras. Tuition goes up, so parents demand more (or are perceived as demanding more), the school adds more, costs go up, tuition goes up, and so it continues.

But of course, those parents demanding more aren't necessarily those paying for the increases. The yeshivas all have a policy of not turning anyone away for lack of ability to pay (or even lack of prioritizing tuition over other expenses). So, scholarships run rampant and now we've reached the point where people earning $200k are being considered for "middle income" scholarships. It's Orwellian in the extreme.

There's a crisis alright, but it's not tuition. All the evidence indicates that Orthodox Jews want to give their children a yeshiva education. And yet, we can't seem to formulate a model that allows for that without bankrupting our communities or leading to widespread "gaming" of the rules of scholarships if not their spirit. That's the real crisis - the inability to turn community values into a sustainable education system. We've had decades to do so, tens of millions of dollars spent, the biggest rabbis, administrators, and thinkers involved...and yet, we're no closer to solving the problem and if anything we're worse off than we were years ago. That's the crisis.

Larry Lennhoff said...

My understanding is that MAYHS should no longer be defined as a Modern Orthodox High School. I do not know whether their slide to the right was a cause of their financial troubles, a response to them, or irrelevant.

In addition to the Rambam proposal, some parents are proposing a Hebrew language immersion charter school. This has produced an interesting reaction from both the parents of public schoolers and the parents of day schoolers.

Anonymous said...

haha I thought the post was taken down b/c ppl were upset at you. Like you mention, you may be overstepping your bounds by commenting on situations which yo uare not familar with enoguh.

e.g.- I know for a fact that the gym was donated by a wealthy man who wanted his sons to play ball in a nice gym, yet you are degrading the school for not using their funds wisely and pay down debt.
(you may argue and say this is like grandparents who pay for the kids vacation but not for their kids tuiton, and it is the schools obligation to to make the wealthy man pay down their debt, but I am sure he would've said not. He gave the money for the gym).

Dave said...

If the donor didn't also give an endowment to pay for the upkeep on the gymn, if they were that cash strapped, they should have turned him down.

Orthonomics said...

I've received no complaints on the post. Blogger was acting up and Google closed the entire operation.

I am not degrading the school! Just pointing out some similarities I noted in the articles. The first one I noted was the age of the schools. The big ticket spending similarity is perhaps the least significant on the list.

But, speaking of spending. . .
A restricted donation is a restricted donation and can only be used as directed. It is an unfortunate and objectionable practice to "borrow" from the building fund to pay the operating budget, although it happens often enough.

If the $600K was donated for a gym, the school has to decide whether to take or leave the donation. What is the benefit of taking the donation for this purpose? (Difficult to calculate in dollars and cents. . . greater attractiveness to schools, rental income possibilities, etc) What are the costs of taking the donation? (Increased utilities, cleaning, insurance, repairs/maint, etc) There are easier to calculate, but still not an exact science either.

I am most certainly NOT arguing that the wealthy donor pay down debt. I have no interest in paying down operating cost debt and don't expect others too.

I do think that when such donations are given, they need to be considered carefully. I don't think Pesach trip is a good comparison. There are better example.

Anonymous said...

Dave- you make no sense.

There are obvious rental/ attraction of student benefits. You don't just turn down a 600k gym for dollars and cents (as orthonomics) pointed out. very short-sighted approach

Dave said...

Anonymous:

If you cannot afford to maintain it, you cannot afford to accept it.

Remember, the gymnasium is not a liquid asset -- the school cannot easily sell it or transfer it to someone else.

As a young man, I knew that I could not afford a car, even if one were given to me (which was a possibility for a used vehicle) because I could not afford the insurance needed to operate it.

So, if the gym (operating expenses and all) is cash positive, accept away. If it is not, then a school in financial distress should not accept it. Getting a million dollars does not help you if it costs you 1.1 million to do so.

Anonymous said...

MAYHS , in the last few years, literally built a wall to separate the boys from the girls. They could not offer AP classes- or offered too few of them, because each AP class required one for boys and one for girls. If you do not take an AP class in a subject, you will not do well in that subject's SAT II. Sat II are needed if you want to get into many secular colleges. Combining Grades 9 & 10 or 11 & 12 to save on teachers in boy's or girl's classes was a frequent occurrence. Having the same English teacher for all 4 years of HS is unacceptable ( boring, too subjective and not exposed to different views and different styles of writing). We sent one of our children to MAYHS, but we could not give such an inferior education to our next one- so she was sent to a coed school. It was more important to MAYHS to separate the boys and girls, which incurred extra costs, than run a coed school, which would have freed up money for additional resources.This is a modern orthodox school??? Not in my books!

Alexis said...

Rambam did the same thing with separating boys and girls when they didn't have enough students to sustain that model (and not everyone was happy with that choice). They did it for the elementary schools too, claiming it's what the market demanded--a market which is shrinking as Baltimore becomes more polarized between secular and RW.

Now what will happen?

Parents can:

1) Send to Beth Tfiloh, the community school (reputedly around 20% Shomer Shabbat), all co-ed

2) Shlep their kids nearly an hour to the DC suburbs - and Berman is co-ed (separate Jewish studies for the older kids). I don't know if any would send to the more RW schools in DC.

3) Send to TA/TI/BY.

4) Leave Baltimore.

I don't live in Baltimore, but I have been hearing about Rambam's management issues for some time now.

Larry Lennhoff said...

Multi-denominational Shalom Torah academy in central NJ is consolidating.

tesyaa said...

It seems a lot of schools have problems when they separate sexes for ideological reasons, despite the fact that they lose a lot of economies of scale. Often, struggling coed schools in frummer areas take this step when they feel they need to attract more students. It rarely works that a school can satisfy its existing MO parent body and still attract a frummer clientele.

Anonymous said...

Shalom Torah is not multi-denominational. It is a kiruv school where the administration has a Lakewood hashkafah and the students are a mix. Until recently it had a very low tuition.

Anonymous said...

MAYHS had two major problems that led directly to it's downfall:

1-The relative local MO population in Highland Park did not send their children there for either hashkafa or education reasons and the large population that bussed in from Cherry Hill (60 miles away) dramatically declined over the past 5 years when more local options became available.

2-The retirement of their long term principal 3 years ago.

Frayda said...

As I mentioned in a comment that was "lost", I live in Baltimore and sent my daughter to Yeshivat Rambam this past year. I was really looking forward to seeing her graduate through YR but that will no longer be possible. I have hope that the new Ohr Chadash Academy (http://ohrchadashacademy.org/) will be able to provide a similar program to Baltimore. One thing that is very different about this school is that they will not be relying on donations to carry the school's costs. In their words (not an exact quote), they have created a realistic budget based on sound principals that were discussed with professionals in the field. They need exactly 75 children enrolled paying full tuition to meet the financial needs. The school also plans on having open communication and partnership so that the staff, faculty and parents are on the same page. In addition, there will be a fiscal oversight committee with a publicized member list. We can only hope that Ohr Chadash will follow through on these goals and succeed in all their endeavors.

Anonymous said...

WE always assume that putting our children into public school will be a "death sentence" for religious Jews. But is that true?
If there were no Jewish day schools, and ALL kids went to the local public school, there would be a lot more religious kids in our children's classes.
Right now, I know of no religious after school programs for children who attend public school ( NCSY is primarily social). Isn't it time we start them? So parents can send to Public school?
I have heard about the gangs, drugs, sex and alcohol that happen in public school. I am also a mother who actually did send her child to public high school, even though I could afford FULL day school tuition.I felt my child would do better in a public school. It was a well regarded suburban public school, and my child got a great education. I don't think there were any gangs in the school and drugs and alcohol were no worse than in Jewish day school. My child was offered AP( advance placement) classes, and a list of electives that would rival many college courses.
Many courses were quite challenging-although the religious folks think that public school is "easy".That is a myth. Honors courses and many regular classes were extremely competitive and rigorous.
Then there is the fear of public school in the religious community. Many kids told my child that he/she would not stay religious. This had to come from their families. Religious families justify Jewish day schools and its tuition by making it seem like public school is a horror. My child has remained religious, but ironically, several of those friends who criticized my child's choice, have had enough!
Why not explore the public school option and offer a
religious after school program, like they used to do 30 years ago or so?( Right now, I don't know of any after school HS programs- so you must send to Jewish day school to get a religious education). At least let's look at the issue with an open mind instead of labeling "public school" as a horrific option..

Anonymous said...

Kudos to the previous Anonymous poster for promoting public school as an option. Of my 3 kids, 2 are in Jewish day schools and one is in public school.

A few observations:
1. Not all religious school teachers and administrators operate in a way that I'd consider completely religious.
2. Public schools can be an excellent alternative, depending on your child's needs. Local public school systems vary in how well they operate and what they can offer, but it is far from a "horrific option".
3. The fear and stereotypes in the frum community towards public school are sometimes outrageous. This is especially true when you consider that the Jewish schools in my area have a reputation of dealing with bullying situations in a far less effective manner than our local public schools.
4. If the family's religious observance is sincere and not a matter of maintaining appearances or lip service, then being exposed to the secular world of public school is not as dangerous as you might think. They actually do teach and encourage good middos in public school -- this gets overlooked because they just don't use frum buzzwords. Maybe it's too hard for people in some insular communities to translate from the English when public school teachers teach kids about "showing kindness", "demonstrating good character" and "choosing to behave appropriately." Jewish schools don't have a monopoly on these subjects! No matter what school your child attends, the question is, do they walk the talk there?
5. In Jewish day school, it's quite possible for your child to encounter people who will turn them off from staying orthodox. This is happening to one of my kids in a Jewish school right now, who has a teacher who is turning her off completely. (I know of another family who encountered the same teacher a number of years ago, with the result that their daughter appears to no longer be at an orthodox level of observance. I'm sure this one religious studies teacher was not the only factor, but who knows? It may have been the tipping point.)
6. Given all of the above, I am no longer convinced that the tuition burden and the sacrifices entailed to send children to Jewish schools are worth it.