Guest Post That Dovetails with Rabbi Adlerstein's Much Shared and Talked About Article

An embarrassingly long time ago, I received a guest post that dovetails nicely with Rabbi Adlerstein's much shared and talked about article that ruffled a few feathers: A New, Ugly Wrinkle in the Tuition Crisis.  I should have posted it then, but sometimes blogging takes a 5th place!  After having cut my tuition checks, I'm in a tuition blogging mood.

Obviously yeshiva tuition is the hot button issue of the contemporary orthodox Jewish world and appears to account for the majority of the ink spilled on this blog. Most of what I have read focuses on the consumer of the yeshiva education – the parent (as representing their child) with some additional discussion around alternative yeshiva models and potentially untapped revenue streams to help reduce costs for these consumers. Few pieces have focused on the operations of the yeshivas as they are currently structured. That is quite understandable given that 1) few of us have had a chance to see “beneath the hood” of the yeshiva’s finances to adequately dissect this issue, 2) operating budgets and spending priorities vary widely from yeshiva to yeshiva and 3) the reality is unavoidable that private schools will have high fixed operating costs. That being said, I wanted to bring attention to two very narrow aspects of the tuition crisis that underscore an inequity that is inherent in the current system and leaves many well-intentioned (full paying) parents disillusioned with the current system and in some cases antagonistic towards supporting the yeshivas beyond the mandated fees. These basic imbalances should be addressed as part of developing a comprehensive solution to the current tuition “crisis”.

While most yeshivas position themselves as non-profit organizations providing a social benefit for the local Jewish community, in reality some have devolved into a mechanism of cost shifting from the pockets of the upper middle class to the lower middle class, well connected and in some cases the most irresponsible elements of the community. That is to say that in addition to the social service they provide, there are financial determinations that have serious implications on their constituency but are not necessarily handled in a fair or equitable manner. The following two scenarios highlight this point:

1) Most yeshivas have a policy that allows all active teachers and rebbeim to receive a significant discount on their children's tuition with administrators' children attending at no cost. I believe the stated justification is multi-fold including the need to remain competitive for talent, the desire to provide their employees with a fringe benefit for their service and the fact that many of the faculty (read Rebbeim) would in any event qualify for financial aid. My estimate would be that, for my son’s yeshiva, between 5%-7% of the aggregate tuition due is waived simply as a result of this employee benefit.

However, as we all know, the yeshiva's operating budget is not magically reduced due to the yeshiva's largesse to its faculty. The newly formed fiscal hole must be filled by the hard working middle class parents who struggle to meet their full tuition demands. The operating budget is a zero-sum game - money lost from one area must be made up by money paid from a different area, or in this case, everyone else’s tuition bill. This is akin to the government telling all its employees they don't need to pay income taxes as a benefit for working for the gov't, resulting in everyone else’s tax burden to increase. Any non-profit social institution should not be operating in this fashion. The yeshiva would be well within its right to provide its employees with such a perk if it was a for-profit entity producing copying machines and simply desired to eat into its profit margins by subsidizing its employees purchases but as a social service it should not be functioning this way. When the yeshiva then collects for a dinner, raffle, etc. it reverts to positioning itself as a "tzedaka" whom the parent body should feel a responsibility to support.

Regarding the justifications mentioned for such a practice, they won’t necessarily stand-up to scrutiny. The faculty members who do not have children attending the school do not receive any compensation in exchange for missing this perk yet continue to work in the yeshivas. Apparently, adequate salaries are being paid to these employees even without this benefit. The school day and school year is MUCH shorter than the average privately employee's work year and explains in part why salaries would be lower. There is probably less than 8 months of work in the school year with many teachers/administrators making a second salary during summers and after school hours. I am not suggesting that they are getting wealthy off the school system, but I am suggesting that their compensation and workload may be commensurate, if not better, than some of the parent body working in the for-profit sector.

While many rebbeim would be relieved of the tuition burden given their earning capacity, why should they escape the dreaded financial aid system that determines the fate of all the other working parents? There are certainly some rebbeim who can afford full tuition (money in the family, wife working, etc.), but it's simply not asked of them. At the administrative levels, this benefit is even more curious. There are multiple administrators in our local school who are the second incomes in their rather affluent families but are paying no tuition on as many as 5 kids in the yeshiva system. That translates into an after-tax savings of $60k-$70k in addition to their base compensation – and it’s coming from the pockets of the other parents. Certainly their compensation is somewhat suppressed due to this benefit the yeshiva is giving them but I have a difficult time believing it’s suppressed by what amounts to $100k on a pre-tax basis.

Perhaps an argument can made that the talents of these individuals are so irreplaceable that huge compensation packages must be offered to retain them. In reality though, there is a high level of correlation between attaining these positions and having the same last name as the head principal, rosh yeshiva or sharing some other social relationship with the decision makers. These are not truly “open” positions. Many parents struggling to make ends meet would jump at the opportunity to wipe out their tuition bills with an administrative position at the yeshiva.

2) The financial aid system is undeniably broken. Many of those seeking and receiving financial aid are those with significant amounts of equity in their home. I do not know to what extent the financial aid office considers this very obvious asset class in determining what parents can afford, but I find it strangely ironic that those who purchase a home and are then strapped with monthly payments which they can not afford are recognized as deserving of financial aid while those who have kept their limited savings in the bank and can comfortably afford their lower monthly rental payments are required to subsidize that discretionary decision of their neighbors to purchase. Indeed, there are some people who purchase homes with the recognition that it will result in a tuition reduction allowing them to afford that very home. The incentives have been perverted and it creates an unfortunate spiral whereby those who budget and as a result do not purchase a home are increasingly less likely to purchase as their tuition costs increase annually to subsidize those who do. I understand that the notion of homeownership has been so glorified that it will sound blasphemous to suggest people who can not afford tuition be forced into selling their homes, but anything short of that solution fails to address the perverted incentives young couples face. Alternatively, yeshivas need to provide flexibility in subsidizing tuition of the “renters” so that they too can one day become homeowners. The current arrangement only funnels money from one cohort of individuals to the other and is simply unfair.

To put the issue into perspective, my wife and I (27 years of age, with 3 young children) have a combined household income of close to $150k yet we have chosen not to purchase a home until we have the financial footing to afford all of our responsibilities. We will be paying close to $23k in tuition next year for our oldest boys, in addition to $10k in babysitting for our youngest child. In contrast, there are others with lower income levels who believe home ownership is a birthright, and will be saddling us with further increases next year.

Until these imbalances are addressed, I can’t justify sinking any additional funds into supporting this institution. The economics are pretty black and white. It’s a zero-sum game and unfortunately, too often, the playing field does not appear to be level.

Disillusioned young parent.