But They Aren't Funding EVERYTHING!

There is a new tuition blog, Yeshiva Sanity, that I'm keeping an eye on. One early post that caught my eye asks "Are WE the Problem?" Well, of course we are the problem and have been since the days of Mitzrayim, but the implied solution, a more centralized funding solution, isn't the real reason why the Catholic Church or the Church of Latter Day Saints can and do provide a low cost education.

As referenced in the article, the Mormon Church subsidizes the cost of attendance at Brigham Young University (BYU) which is practically "free" all things considered at $2,280 for church members and $4,560 for non-members. Yep, a private university with public university pricing even for non-church members. Likewise, the average tuition of Catholic diocese schools averages approximately $3,400 annually, with the actual cost averaging nearly $5,400, a nearly $2,000 subsidy for school attendees.

One might think, wow, if we were only unified, we could provide a more affordable product too: "If only we had the sense of community that the Mormons and Catholics had we would less of a tuition crisis. People whose kids have grown up and have the most means and least expenses would be subsidizing the younger parents who are mostly at the beginnings of their careers and can least afford to pay." [sic]

I fully believe that with greater coordination, savings could be realized, but those who compare us to them with the belief that if we only cooperated that we could come closer to the BYU result are missing something very fundamental: both groups have put their eggs in limited baskets.

I hope I have my information correct, but here is what I have gathered from various sources, including people I've spoken with:

The Church of LDS is highly centralized. Young Mormon students attend Sunday school and there are numerous social activities within the wards (local churches for which membership is assigned based on residence) and temples (regional). Education becomes more formalized in high school as youngsters attend "seminary" which takes place before public schooling. In areas with religious release time, there are paid teachers. In areas with smaller populations, schooling is provided by (unpaid) lay leaders before public schooling hours or through home study groups. While there are some day schools in the Pacific Islands and in Mexico, in America there is no day schooling movement to speak of. Mormon children predominantly attend public schools. Nor is there a subsidized Mormon Camping Movement with its own fundraising, infrastructure, and costs.

Following high school, post-secondary formal Mormon education generally includes a 1-2 year mission for young men and women (and they pay for the privilege, although the church subsidizes the umbrella structure and going on a mission is more popular among the male set). BYU is a popular choice for young Mormon students, but there are also "institutes of religion" serving the single, Mormon ages 18-30. Many of the institutes are located adjacent to college campuses and there are public universities that are highly popular among young Mormons that do not attend BYU or one of the other BYU branches.

From what I can gather, the Mormon Church has put their eggs in a few baskets. The wards and temples provide the K-12 set with Sunday education, Seminary education, and social activities that promote social identification and attachment. The umbrella structure for missions provides young men and women with an opportunity to develop their lay leadership skills. The institutes serve the educational needs and social needs of the young adults. And BYU is the flagship institution, a desirable place for students to attend college for complete immersion and meeting their match (about half the student body is married).

To briefly touch on the Catholic Church, their educational eggs are concentrated on the K-12 through diocese schools. Non-diocese schools can be quite expensive and Catholic Universities cost a fortune, just as other private universities.

Within the Orthodox Jewish world, we have an educational basket for every age bracket from 2 years old on up, and each bracket is subsidized in some way, shape, or form through fundraising, community infrastructure, etc, to say nothing about the expectation that one participate in the non-unified system from the age of 3 on up. We have preschool. We have preschool day camp. We have day school/cheder/yeshiva/bais yaakov. We have day camp. We have sleepaway camp. We have adventure and travel camps. We have boarding high schools for boys and girls. We have the year or two in Israel. We have beis medrash programs. We have social-educational youth group programs. We have outreach programs of every flavor and outreach yeshivot/seminaries. We have Jewish Universities (YU, Touro). We have college seminaries with relationships for degrees within the daled amot. We have Kollels galore. We have community Kollels too. We have shul and yeshiva sponsored avot u'banim and other learning programs. We have kollel dirshu with a stipend. We have learning within shuls with its own infrastructure and adult education institutes with their own corporate structure. (Did I miss any educational program that is supported directly or indirectly with donor money?)

In other words, even if we were to centralize/coordinate our K-12 efforts, we are funding just about everything under the sun and we have a lot of eggs in a ton of baskets. Therefore I don't think we can expect the BYU result at YU.

Shabbat Shalom.

Oy Vey: Beis Yaakov of Boro Park Slated to Close

Hat Tip: a reader (thanks)

I have to solve some financial issues today, as well as replace an appliance I've been thinking about replacing for 2 years now (yeah for furnish your dorms sales!), but it looks like there is a lot of blogging on deck as readers are sending articles like mad to my email box (thanks all!).

Today, a reader send me a link to this story. My reaction is practically adolescent because the abbreviation OMG flashed through my head, and I have never once sent a text, nor do I even recognize most of the text language out there beyond lol, and I'm certainly not lol'ing.

Boro Park Beis Yakov send out a letter to parents informing them that the school, the largest girls' school in Boro Park (perhaps the largest in Brooklyn, readers?) will not open in September. Of course they are seeking donations from the community in hopes of reopening. I don't know if this is one of the schools I've seen mentioned as being behind on paying teachers. I can only imagine that the board/administration decision was made out of desperation because plenty of schools have floated payments for months, and even years, on end.

I can't even imagine what parents, just 2 weeks away from the opening of school are thinking? What in the world happens when a school of this size announces they are closing? I can't imagine the clientele marching to the public school district office and enrolling their children. I hope parents will jump into gear, rather than just holding off for a miracle instead of concentrating on their children's education which must be a priority. If my own children's school announced it were closing today, I believe I'm not sure if we would try to get into another school or register with the school district to home school. Likely the majority of parents don't have the leverage and money to get their children into other school (after all, lack of tuition paying parents IS the root cause of closures). So, they have few options: fundraising, public school, or homeschooling. Fundraising isn't new in the frum world and obviously a wall has been hit. Public school is unlikely, even temporarily for this demographic. And, homeschooling would be beyond intimidating for the same demographic given the lack of familiarity and the unpreparedness, to say nothing of lack of know how and support. Oy vey!

The Jewish Observer, may it rest in peace, once wrote "Yeshivos have become very creative and entrepreneurial in finding ways to close their budget gaps" and "To an honest and realistic person, our school administrator knows his business very well. He has been successful in steering the ship through very choppy waters. This same executive director or administrator has become so talented at balancing the budget, his skills match those of any corporate CFO. The fact that he stays at the yeshiva is in itself real mesiras nefesh." I imagine "creative" accounting was used for many years. But, Virginia, "cash is king" and when you don't have it, it eventually catches up to you.

The letter sent out by the Beis Yakov blames the (potential) closing on the financial crisis. But, I personally cannot and will not place the blame on a downturn in the economy. I'm afraid the money management skills haven't matched the a corporate CFO. Many have been talking about the day when the frum community would hit a wall for years now! Many have decried the duplication of services, the growth of a near impossible infrastructure to support, etc. What do you think you get when you combine a growing infrastructure of non-profits + young marriage followed by kollel followed by late entrance into the marketplace + lack of eduction/vocation + a growing fertility rate + a ridiculously expensive 'lifestyle' from clothing to camp+ reliance on debt, parents, in-laws, relatives, and grandparents + underemployment combined with planned government dependency + a recession that has finally proved that credit does have a limit?

I don't quite know what to say about the potential closing beyond OMG. It is really scary, or as the reader who sent me the article said, it will be a tsunami if it closes. I do NOT want to see the infrastructure of day schools/yeshivas/beis yaakovs threatened, changed yes!, collapse no! If I didn't care, I would never have started this blog and dedicated so much time to trying to promote healthy money management from a grass roots level. I realize Boro Park isn't exactly my audience. But, I do have a good spectrum of readers, and I harbor no illusions that similar issues might be lurking in centrist and modern Orthodox schools too. So, I think we all need to be watching what happens there and begging our own schools to employ sound business practices (even if that means that not every single child can be provided with a comprehensive day school education. . . .the majority must goal. "No matter what your financial circumstances" simply is unsustainable).

More tuition blogging to come (unfortunately). Your thoughts.

P.S. The article notes that BY Boro Park receives some state funding. The Yated recently had an article on the tuition crisises that, after a lot of talking, concluded government funding was the only answer. There already is plenty of government money in the frum community and I pipe dreams won't take care of today's problems. Throwing up your hands and declaring there is only one answer, as the Yated did, isn't going to open up a school slated for closing.

Houston, We Have a Problem!

Rabbi Tip: Ezzie

Funny, I was just hearing a news report about (irresponsible) parents who are holding post-prom parties, complete with drinking, under their supervision with the reasoning that " [isn't] it better that they should drink under supervision?"

Perhaps these parents aren't suffering from a "goyish kop," rather they are unknowingly following "da'as Torah!"

Yes, Rabbi Landesman, we do have a problem. And, no, you are not the first to witness this problem. Nor are you the first to bring it to the attention of a "higher authority" only to be told you really shouldn't be so alarmed.

Read Rabbi Landesman's observations for yourself.

Am I Reading This Right?
Or Was the Cart Placed Before the Horse?

Perhaps my reading comprehension is terrible. My commentators won't be the first to make such a comment.

My reading of this story is that a Chicago Orthodox Yeshiva/Bais Yaakov:

• bought a building in an industrial area (date unknown) and applied for a special use permit (December 2007)
• spent upwards of $2,000,000 on architectural design fees and insurance while holding the property
• was turned down by the city in their request for a zoning variance, 8-1
• is suing the city for estimated losses of two million (see above)
• argues that the city of Evanston wrongfully focused on the loss of property tax
• claims that the city failed to distinguish between a "religious institution" and a private school, claiming they are the former, rather than the latter, as attendance is " practically mandatory in the exercise of their religious faith," and like the nearby church, they too should be granted a zoning variance.
• argues that city's action was arbitrary and unreasonable and violates the constitutionally guaranteed rights to freedom of speech and religion.

If my reading is correct, the commentary is clear. The eggs were counted before they hatched and/or the cart was put in front of the horse. I don't know much about obtaining properties and converting their use, but it seems to me that this was out of order. And to think that the school has expended $2 million. Oy!

Please tell me my reading comprehension is weak. Please tell me I should go back to middle school English. I do hope they win their case because otherwise I'm afraid that the ongoing battle will just result in throwing good money after bad, a scenario which I'm afraid isn't uncommon.

The Baltimore Initiative

Time to get back to my bread and butter blogging. I hope all my readers had a great yom tov and that no one has entered the realm of slavery/subjection a la Avadim hayeinu L'Mastercard B'America.

Hat Tip: Numerous readers from Baltimore and beyond. Thank you loyal readers. I will allow you to self-identify at your own discretion.

Numerous readers from Baltimore and beyond have kindly emailed me regarding the Baltimore Communal Initiative. In late March, the Rabbinical Council of Baltimore sponsored a community wide event: “Responding to the Economic Crisis: An Evening of Tefillah, Chizuk, and Practical Initiatives.” The event featured various speakers in which an initiative known as "The Pledge" was presented along with other information about job programs (JobLink), Baltimore tzedakah organizations, the roll out of the Baltimore's own Mesila (an Israeli organization that provides financial counseling, awareness, and education, which is now expanding to chutz l'aretz), Day School education in Baltimore, etc.

The main point of the night was that the majority of tzedakah funds must stay within the community. "The Pledge" is a public listing of all community members who have committed to keeping 51% of their tzedakah funds local (Note: Rav Schachter mentioned 75% of tzedakah dollars should remain local in his shiur). Of the amount that must be given locally, 26% is to be designated in care of local day schools/yeshivot. All media files from the event are available online, see the Pledge and FAQs regarding The Pledge. (Another Note: I believe Rav Schachter mentioned that previous commitments to tzedakah need not be honored when your own community is in a emergency situation. Unfortunately, I cannot find my notation regarding this point).

I believe that the Baltimore Rabbonim are hoping that a public commitment will both help potential donors be able to turn away institutions from outside of the community with greater ease, as well as create a positive peer pressure to keep giving local. Apparently there is a sense of urgency regarding funding, especially for schools, as is the case throughout the nation. E.g., Rabbi Frand in his talk relates that there is a principal in another community sitting on $180,000 of currently worthless checks.

I'd like to hear from more attendees regarding their views regarding both the substance and presentation of the event. One reader wrote to me that while there was nothing earth shattering in either the video or the speech, that the basics (keeping money in the community and networking within the community to help those seeking work) were fine.

However, my reader felt the comments regarding tuition and personal finance missed the boat:

• The reader pointed out that a comment on the video telling telling parents to teach their kids to be careful with money, so they will understand the value of $1, $10, $100, and eventually $10,000. My reader writes notes that "its not the little things, but the big things." The reader refers to the ingrained lifestyle choices that are considered normal writing: . . . . but will you get rid of that maid? Will you buy a smaller house? Buy a used car? Stop going to summer camp, pre-Pesach camp, between summer camp and school camp, etc?" The reader noted that no specifics regarding personal finance were addressed beyond being careful. The reader's comment really resonates with me, as I have a bit of (professional) experience in the realm of personal finance. Issues of "lifestyle" simply can't be glossed over. I know very few people who say, "I'm broke because I have made poor choices." But I know a lot of people who are broke and believe they are quite careful, even frugal. Might sound harsh, and I apologize if I am in a bad mood after a recent conversation with a client regarding cash issues, but that is my own observation. Take it or leave it.
• My reader noted that on the school front, it is what I am about to start calling "same old, same old." The schools are are basically just looking for more ways to find money---more donations, government funds. They aren't yet ready to deal with issues of sustainability and (like above) tangible "lifestyle" changes of their own. If you listen to the Aisfa video available at the website (school section starts at just past 20 minutes) you will likely note, as the reader did, that no changes are being proposed. The basic gist is a need for more funding.

I'm encouraged by the increased attention on tuition, although it would have been nice if there was more foresight, rather than trying to tackle the issues when the schools are at the "financial breaking point." Personally, I don't like to tackle an issue when there is an emergency on hand. Like my reader who kindly sent comments, I don't believe the full pictures regarding the tuition and other economics crisis vis a vis the Orthodox community is more fully understood yet by leadership. (Obviously I'm not quite convinced that the funds are sitting in wait).

Hat Tip: A Mother In Israel

One person does seem to pinpoint one or two crucial issues (highlighted) of this financial crisis, and that is the executive editor of the Baltimore Jewish Times, Phil Jacobs. In response to the community gathering he writes the following:

So here we are. It’s 2009 and we’re still working a model of education and fund-raising that connects back 25 years ago, at least. We remember the days when schools would “pay off” loans by borrowing from other sources. Jewish Community Services executive director Barbara Gradet told the BALTIMORE JEWISH TIMES that her agency is handling some 1,000 unemployed Jews. Ahavas Yisroel is going to disperse a record-setting $370,000 in financial aid just for Passover alone. CHAI is preparing itself for a workshop on avoiding foreclosure. The Orthodox community is mobilizing itself to train its constituents in job-hunting skills and family financial management. [A lot of suggestions interspersed with "Again, we don’t have money. There is no money." Which is followed by a reminder]:

The punch line –– there is no money.
There is no money coming.

I don't have much to say about Mr. Jacob's own suggestions. Many of the suggestions have been made before (but are a long way from implementation), and in the case of a "tax" of meshulachim, Baltimore already has a program for taxing meshulachim. Some of the suggestions really push towards some sort of half day public, half day Talmud Torah option, which isn't going to get too far at this juncture. I think volunteer labor is key to lessening costs in the schools, and forgoing a pricey year in Israel may just be commonsense for those lacking the resources, but the "YeshivaCorps" suggestion doesn't hold much appeal for me personally. Perhaps others feel differently. I think the delay of entrance into the workforce (amongst Orthodox young men in particular) is one of the root causes of our current doomed economic model. I see no reason to delay my own children's entrance into the workforce while painting Yeshiva walls, answering phones, or coaching a sports team alongside some sort of ad hoc learning program.

I will wrap this up now before this post becomes even more lengthy. Welcome to what will probably be an extended stretch of bread and butter Orthonomic blogging. I've got materials coming out my ears with thanks to my fantastic readers.

Shabbat Shalom!

I'll Let My Husband Know He Should Park Elsewhere

This letter to the editor (emphasis mine) appeared in this week's Yated. I will let my husband know not to park our paid for, yet highly unfashionable car far away from the local Yeshiva Gedolah. I really, really, really hope this letter is a pre-Purim joke!

THE PARKING LOT
Dear Editor,
I would like to raise an issue that I know many of my fellow talmidei hayeshiva and yungeleit feel strongly about. When parking a car in a yeshiva parking lot, it is important to remember that your car is reflecting a makom Torah in chutz la’aretz. Therefore, it is highly inappropriate to park certain vehicles in a yeshiva parking lot.
If your car looks like it has been used for drag racing, it does not belong in the parking lot.
If your car is so high off the ground that you need clearance from the air traffic controller, then your car does not belong in the parking lot.
If your car has undergone so many surgical procedures that it now bears more resemblance to an antique piece of furniture than a car, you should find another place to park.
Last, but not least, if your car has doors that are a different color than the frame of your car, or if your car has been dented so many times that it should have a bumper sticker reading, “This car made it through the asteroid belt,” your car certainly should not be parked in the parking lot.
If you are a true ben Torah, then you should look like a ben Torah, act like a ben Torah, and drive like a ben Torah.
Sincerely,
Yankel Shprecher
A Bochur in Yeshiva

Number 1, I could teach some of these b'nai Torah a few things about driving. And regarding our worn down car and those like it, I will quote a famous bumper sticker: "Don't laugh, it's paid for." Perhaps someone can print a bumper sticker for the car pool line that reads: "Tuition assistance made possible this jalopy."

No wonder the frum community is up to its eyes in debt!!!

Orthonomic Poppouri

More Fundraising
YWN reports that the Chinuch Atzmai system in Eretz Yisrael is broke. Per protocol, rabbis flew from Israel to Lakewood to draw attention to the urgent situation and an asifa was held in Lakewood. The solution (drum roll please) more fundraising. The address where you can send donations is at YWN.

This article has made HonestlyFrum scream dayenu! He writes at YWN:

"Where do they expect the money to come from? We are going broke trying to send our own kids to Yeshiva. The unfortunate reality is that in these tough times after we finish paying our own bills and tuition (those who pay some or all) there is no money left."

And on his own blog:

"The schools cannot, and have not been able to for a while, sustain themselves without looking outside for funding sources. The problem is all those sources are currently, and for the foreseeable future, dried up. Both the MO and charedi system need to be revamped and overhauled, and they need to be done together without senseless bickering about hashkafah. The current model needs to be broken down and in its place something different and better needs to be built. It's time that our community left its comfort zone and began radically rethinking the model of Jewish Education. "

I find it ironic that the meeting was held in Lakewood, the city that saw their own teachers go on strike due to non-payment only 2 months ago. Perhaps they found a hoard of money somewhere and can now go on to not only support education in their own city, but education in Eretz Yisrael?

I don't want to be rude, but it seems that leadership is not in touch with the plight of the average American tuition paying parent.

Speaking of appeals, yet another (very needed) appeal.
YWN is reporting that this Shabbat all Young Israel, Orthodox Union and Agudah affiliated synagogues will be making an "Emergency Parnasa Appeal." The press release reports the growing unemployment rates in cities such as Passaic and Brooklyn and the growing pressure on Tomchei Shabbos in Lakewood. It appears that funds will be designated to the same community as the donor. Monsey, Flatbush, and Boro Park have dollar-to-dollar matching funds available.

Bizarre economics are not surprisingly alive and well amongst YWN commentors. One commentor appeals to readers to keep making lavish simchas and keep shopping (by frum vendors). Another commentor believes we need to open our pockets more and shop at frum businesses so that they can hire more frum people. Another commentor yells "We must buy everything we can from [J]ews. This will help their family stay above the line, and then they will pass it on to another [J]ew."

In my (hopefully more educated opinion) the economic problems the frum community is experiencing are related to a low (perhaps negative) savings rate, high consumption lifestyle, and too much dependency on the frum community. Yes, we should patronize Jewish businesses, certainly where the halacha requires such. But, what is very needed is OUTSIDE money coming in. Jewish business owners need to be seeking a larger client base that is not solely or even heavily dependent on the community at large. Cutting back is going to become a way of life out of necessity, like it or not. It is sink or swim time and business owners are going to need to find ways to diversify their client base so that you are not dependent on one particular type of client.

The latter commentor also tells business owners they need to hire Jews, even if you have to pay a higher rate. Perhaps this commentor isn't familiar with just how thin the profit margin is in business? I'm an accountant and will tell you that 1) hiring employees is very costly and 2) profit margins are thin and there often isn't much breathing room to start throwing more money at one employee over another, to say nothing of the potential legal liability. And, no, not *every* dollar you spend in a Jewish business will land in Jewish hands.

Sadly, we learn that a man who operated a 'free' grocery store in Brooklyn can no longer continue doing so as his rainy day has sadly come, may he have a refuah sheleima.

What is the State of the Union?
Meanwhile, Ezzie has put together a Jewish Economics survey. I'm not sure what he will do with it. But the survey is fairly comprehensive and I'm hoping Ezzie will send the date to the OU, the Agudah, Young Israel, and some day schools and yeshivot so that they understand the few are holding out, but rather trying to hold on (as I believe is the general case).

And speaking of dependency
Kiryas Joel is the most dependent locale in the United States. Yeah, not a badge of honor and certainly not good news as the American taxpayer gets increasingly tired of bloated social services budgets while their own kids are seeing classroom sizes increase, etc.

But Speaking of Badges of Honor. . . I'll Wear This One
Meanwhile, frequent commentor Ariella of Kallah Magazine kindly pointed an imamother poster to the Guest Post on a $3000 Brooklyn wedding. The poster writes that she and her husband both work, but between living costs and tuitions they have "NO" money to make a wedding. She states they have a large family and there is no way to make a small wedding (how can she not invite 1st cousins?) and is therefore looking to "find help in paying/arranging this wedding"

The ideas of the Guest Poster were dismissed out of hand by another poster who writes:

"as for the orthonomics post - half of the things she mentioned we dont even do (wedding cake, wedding favors, fancy kesubah) and half the things are not shayich (not everyone has a brogther who can videotape the wedding, a rabbi isnt an expense - anyone is siddur kidushin, you just tip them - , we dont do a bar, the badeken chair comes as part of the wedding hall package, inviting 100 people isnt shayich as our family is bigger than that), and there's a lot more to making a chasuneh other than the wedding itself - the gifts, theh furniture, the trousseau... "

I will tell you what isn't "shayich" having NO savings, especially in a down economy! The poster reports were daughter only wants the parents make a wedding, which is good, because quite frankly anything more for a large family living paycheck to paycheck that will likely be repeating this process in the not so far off future would be ridiculous.

Not that anyone is listening (the advice at this blog isn't "shayich"), but here is my advice. It is good advice for anyone lacking savings or in debt that senses the urgency of building an emergency fund and/or getting out of debt:

• Go on a complete spending freeze and place all saved funds into a separate, interest bearing account. Unless you absolutely need something, and by that I mean every pair of shoes in your closet has a hole through to the foot, don't buy it.
• Get rid of services you can do without from now until the wedding. Bake don't buy; clean don't outsource; and day camp is a clear winner over overnight camp. Should either parent be off in the summer-the kids stay home unless they are working.
• For everything else that you do need (food, utilities, etc), declare a 20% budget cut. Heat gets turned down; showers get taken in 5 minutes; laundry gets hung up to dry; coupons get cut; if someone can walk to do/get something, they walk; beans, rice, and vegetable soups become dinner staples.
• Negotiate, negotiate, negotiate. Will the caterer come down on the price? Would he come down on the price if you skip the salad course? Is a sheet cake less expensive than a plated dessert? (I know, I know, it's not "shayich).
• Decide what your top priority is vis a vis the wedding, and put every other want on the back burner until you have covered the cost for the biggest desire. E.g., if you want to feed 200, don't even think about renting dresses for all the sisters from a gemach when the dry cleaning bill will run the cost of 10 meals. Shabbat outfits will do. My readers tell me using a gemach can be expensive, so you need to be careful.

Using Credit Plays Games with Your Mind

The more I read, learn, and even work with people on budgets who have fallen victim to credit cards and other consumer debt, the more I loathe credit. I made a comment in the last post that credit doesn't slow consumption, it fuels it. And I believe such more and more every day.

Since it is at least tangentially related to my last post, I thought I would point out a back and forth I had with Ezzie on the the use of credit personal credit to make money (note: I am not addressing using credit for legitimate business purposes, which is a different discussion than this one) .

Ezzie advocates the idea of using student loans to build assets in his post Guaranteed Gains. I'm not familiar with all of the ins and outs of student loans, but I know people who do something similar with credit cards, i.e. taking a large cash advance, putting the money is a savings or CD account, and planning to pay back the money before interest on the card kicks in.

Those who recommend these ideas, of course, only recommend them to the "responsible." But something I have learned in life is that few view themselves as irresponsible. And herein lies the problem.

Below is my [slightly edited] response to Ezzie:

I really dislike the idea of building both sides of the balance sheet. It convinces the borrower that they are making money, when they are really setting themselves up for a potentially sticky situation.

Many people I know who are debtors have themselves convinced that they are quite responsible. I would bet the more responsible go by the advice of chazal to never trust oneself until their dying day. While I believe chazal was looking at the issues of the yetzer in terms of keeping hilchot yichud, I think the advice could be extended to taking on debt, experimenting with gambling, etc.

I'm not going to fly into a tirade about credit cards. I do use a credit card, although I pay it off each month in full and I enjoy my cash back. However, like I said in the other comments, if you are going to use a credit card, I would wait until you have some established spending patterns, a budget, and an emergency fund. Too many people think of their credit card as an emergency fund.

Back to the student loan scenario (and you are not the first to promote the idea, nor the last. In fact, not too long ago my husband and I were asked out opinion of a similar "money making" scenario involving a credit card cash advance a 0% APR for 1 year).

I can see the following scenario happening:

An 18 year old hears of this idea and wants to make some cash. In his mind the potential thousand or few thousand is big money. And he thinks he will have no problem putting the money away, being paid interest, and then turning around and returning the principal. And interest free loan sounds great to him.

But let's imagine for a moment:

Sometime towards the end of college, he is introduced to a girl and they are headed to an engagement. He wants to impress her and takes her out for nice dinners, buys her jewelry for the engagement, etc. He feels like he has some cash to spare. After all, it is his senior year and he has been building up his assets. Our chatan even has taken on some work and has made a good amount of pocket money. He believes his investment income is tax free, but knows little about the tax system. As a dependent, he is surprised that his passive income pushed him over the line and now he owes taxes on money he thought was 'gravy.' Setback number one. But he pays up the taxes (state and city too. . .who knew that the state and city can eat money at a lower threshold than the feds?) and is back on track.

Now the wedding comes and, like many other chatanim, he and his kallah decide a one year stint in Israel at Yeshiva would be the best way to spend their shana rishona.

Student loans are deferable, right?

He will have a [small stipend] and she can work as a therapist with special needs kids.

They defer paying back their student loans. And the [loan] money is still in tact and is still growing.

But soon his wife is pregnant. And they need a bunch of stuff. And her job isn't working out quite as planned. His stipend doesn't seem to be stretching as far as they thought it would stretch. So they dip into their "savings."

After a year, they return to America. The student loans are still outstanding, and what is left in "savings" isn't enough to pay off the loans, plus put down a security deposit, 1st months rent, put down a deposit for the daycare, etc.

What seems like a good idea, might not seem like such a a great idea in hindsight. Oh. . . and the young couple returns to a down economy. Finding a job isn't so easy and there is a sizable gap, but the loans can't be deferred any longer, and the loan debt is now growing. It seemed like it would never accrue interest. That wasn't part of the plan. The money was going to be there to pay them off.

I never though I'd have something positive to say about credit card debt. . . . but here it goes: when debt is building on a credit card, it has its own line item and as the interest charges rack up, it can create an urgent situation [for some people].

Student loans, on the other hand, can be deferred and lack a sense of urgency [everyone has student loan debt, right?]. And, yes, I've seen couples defer them after they marry to spend a year in Israel. The part about ends not meeting in Israel is also something I've seen.

[Just something to think about before trying to beat the system].

Comments welcome, as always. If you have a true story to tell. Please do. The story I imagined above, I should add, isn't completely made up.

Lakewood Teachers Walk

. . . and a part of me wants to say "it's about time."

An anonymous commentor alerted me to a Jewish news story at Matzav.com. Lakewood girls' school Bais Faiga Elementary School is closed today and will continue to be closed, no doubt leaving parents up a creek trying to find arrangements for their daughters. Teachers, fed up with non-payment, sent home a note on Friday stating that they that they haven't been paid and they won't be teaching until the situation is resolved. A commentor thought sending the letter home with the students was tacky. I'm sure that there is much more to the story than meets the eye. So I will leave it up to my readers to comment on the level of tackiness. I imagine the situation is more one of desperation.

Approximately one and a half years ago I wrote a post entitled "It's Time to Walk: Alternatively a Job is NOT a Chessed" where I discussed non-payment of wages, the idea that employment is "at will," and that at a certain point it makes sense to pack your bag and find something different. One wonders how different schools would look if 1) administrators knew teachers will not accept working without pay, and 2) parents knew that if that if they or others didn't pay up tuition obligations timely as per their contracts, that they might be left without an operating school.

I see no reason why the teachers should stick around in an intolerable situation. Non-payment and late payment has been going on for a very long time now. I'm just wondering what took so long for a group of teachers to stage a walk out?

Comment away.

A Lot of Orthonomic Reading


Marvin Schick (Hat Tip: Joe Schick) is writing more about the tuition crisis in the most recent RJJ Journal. Mr. Schick starts off by writing "The starting point – the beginning of wisdom – is to recognize that there is a crisis, that what happens on Wall Street and at other key economic sectors has a direct bearing on yeshivas and day schools. Having blinders on is never a formula for intelligent planning and action. These days, having blinders on is reckless and worse." It seems to me that the train wreck schools are facing has been many years in the making. I'm not sure that the community has woken up quite yet, and neither is Mr. Schick.

One of the frugality blogs that I read recently had a post about being careful with not only your own money, but that of your employer as well. This advice of course is not new ethical advice, but the same mussar that we learn from chazal who implore us to be as careful with someone else's belongings as with our own. Like Mr. Schick, I am starting to find conferences regarding Jewish education that take place in 5-star venues (this year's Torah U'Mesorah 'Inaugural Presidents Conference, will be at the PGA resort in Palm Springs Garden, Flordia) to be in bad taste. Can someone book the conference, should it be a necessity, a Holiday Inn for 2009?

Mr. Schick makes some suggestions are cutting the 'small' expenses (he is a consistent advocate for staff):

-Energy saving [This one would be nice. My husband davened at a local school on the high holidays and my son kept asking him why the last one out of the empty classroom didn't turn off the lights, as is protocol in his school. My question was why the air conditioning was set at 65 degrees].
-Reduction in mailing costs [Amen! And I would add to that that not everything needs to be photocopied. Cutting down on printing cost would be no small savings. Our niece's school, I am told, has a full time employee who does nothing but run photocopies. In the public school I attended, teachers were limited to a certain number of photocopies per year. . . and they had to make them themselves. One of my teachers got into a bit of trouble with the photocopy machine and we learned of this rule].
-"Recognizing that successful fundraising is dependent on trust and direct contacts and not on a school sending a costly gift to thousands of names purchased from some outside source." [See my review of an article in Accounting Today about what fundraising in a down economy. Cultivating committed relationships is key].
-"Cut back on the costs associated with the annual dinner. The invitations can be more modest, the gifts given to the honorees and others who attend can be less costly and I believe that other savings can be instituted." [Rings true here. Should I tell you about a banquet that had a 12 piece band, a super-sized smorg followed by a 3 course meals and a dessert bar, and, oh yes, ice sculptures?].
-Seek new contributors (Mr. Schick adds, "fundraising that depends on expensive initial outlays is not the way to go)."

Mr. Schick really doles out the much needed mussar when he writes: "In the aggregate, our schools spend a million dollars or more on the annual Torah Umesorah convention that takes place after Pesach. Since many of them are behind in payroll, I wonder whether there is a halachic justification for such an expenditure when underpaid teachers are not being paid on time." I would add that one of the worst thing a school could do at this point is appear to be living it up, while staff is not receiving payment as due, on time, and in full. Staff retention will be important during tough economic times.

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The Five Towns Jewish Times published an article on the 'Fundraising Crisis.' The downturn in the economy has resulted in a long overdue discussion about where to place priorities in fundraising. While bochurim in Israel pray for the parnasah of their supporters as kollel families sink deeper, a discussion about how to keep yeshivot up and running here in America is ensuing. Scholarship requests are up, fundraising is down, and debts are mounting. The author interviews a yeshiva executive and fundraiser who predicts that things will get worse and makes some suggestions including:

-larger class sizes
-no pay raises for staff for the upcoming years and perhaps for years to come
-moratorium on outside-the-community fundraising until the economic situation stabilizes

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This is sad news: Major Fundraiser Can't write the Check. The funder of the Queens Gymnasia and other free Jewish schools is no longer able to foot the bill. I've noticed a lot of class warfare recently due to the elections, even amongst the frum community. Many seem to wish ill on the wealthy. Those who want to punish the "rich" should take a moment to think about what might be lost should markets worsen and taxes increase. 'Nuff said.

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Have they no shame?: I'm sure no one would offer their Rabbi a ham and cheese sandwitch? But "The Rebbitzen's Husband" was offered help cheating on his taxes via money laundering techniques. Oy!

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Jonathan Rosenblum has an article "Keep it Simple" (Hat Tip: Esther) where he recommends that to prepare children for the realities of life we should "Teach them to live simply without feeling deprived." Perhaps one of the the biggest obstacle being happy with your lot is getting over the need to conform which Mr. Rosenblum touches upon. Mr. Rosenblum mentions out-of-control weddings expenditures that eat Orthodox families alive. Mentioning aufrufs and sheva berachot that resemble mini-weddings and other indulgences are all fine suggestions of where cuts can be made. But, if you don't tackle the conformity issue (I happen to believe becomes more powerful the more 'right' you go), head on, you will run into a brick wall even where Torah sages such as Rav Aharon Leib Steinman "[stress] the necessity of getting away from [the] “everybody does it,” mentality [which is] no excuse to go into debt" because few are willing to break rank.

I would add that if you want your children to live simply without feeling deprived, it is best to "break rank" voluntarily, rather than be pushed into breaking rank because funds have dried up. Being in charge is a positive feeling. Being backed into a corner is a negative feeling.

Seminary on the Butcher Block

Note: Please keep asking questions on the Tuition Crisis Shiur thread. Thanks!

Many Jewish publications have been running letters decrying the seminary year. Earlier in this year, the Yated had weeks worth of letters decrying the cost. YWN recently ran a letter that generated 181 comments and it appears the consensus is that parents are none too happy about this "required" expense. ProfK recently posted her own opinion (see here and here) that seminary (and yeshiva) year is a luxury that the Orthodox community as a whole can no longer afford and it time for it to hit the butcher block.

Personally, I can't imagine getting our own children through the 6th grade (we should be so lucky), much less paying for an additional year or two of seminary/yeshiva at the cost of $20,000 in today's dollars plus extras (I'm told Shabbat meals are one of those "extras" for girls, while boys get fed). Housing and tuition already dominate the frum budget to the point where I'm surprised so many have been able to undergo the seminary cost up to this point. So I'm quite sympathetic to the arguments against undergoing this massive cost. And make no mistake, the cost is tremendous, especially as it follows 13 years of private schooling and the coming costs of college and/or vocational training are waiting in the wings.

However, I have serious reservations with the "no seminary" movement which seems to be picking up steam. And that issue is that if some superfluous cost is going to be on the butcher block (and we have what to choose from), why in the world it is a year of post-high school Torah school that has hit the firing line, with so much appeal, first?

The arguments against seminary are not just financial, but if we are only talking dollars and cents and real cash money exists (I have seen debt recommended to fund the seminary year, but I generally take exception to debt financing), I'd say spend the money for the wedding on a year of concentrated Torah learning, and then proceed to serve cake and punch for the wedding. I'd say that putting the seminary year on the cutting board before the typical Orthodox wedding hits the butcher block just isn't right.

On a related note: I think parents do a real disservice to their children when they pay for an expensive wedding and leave their children to pick up the tab for their education. There are frum men and women carrying around tremendous amounts of student loan debt who were married off "in style." I'm sure we could spend hours discussing parents' obligations to fund higher education. I am just pointing out that it makes no sense to me to spend money on a stylish wedding at the expense of introducing more financial stress into the couple's life.

My Letter to Rabbi Horowitz

Rabbi Horowitz runs a fantastic column on parenting. I’ve been planning on reviewing some of his answers on my blog, since he brings a unique perspective to the table. . . one that I wish were more common, but more on that at another time.

Since I enjoy the column and find the Rabbi to be a reasonable man, I thought I would write him a letter with some questions about the topic that has, unfortunately, reared its ugly head. (The letter appears below).

It doesn’t appear that much has been put forth on the subject from official Orthodox channels or from Yeshiva educators. But, in the age of instant communication, maybe I have come to expect too much too quickly.

I’d like to believe that I’m not afraid to address abuse with my own children. Yet, I can honestly say that I don’t really don’t know how to go about it. My parents never addressed the subject with me, which was rare since my parents did NOT leave sensitive subjects up to the school to address. And, when my (public) elementary brought in people from the abuse crisis center to address the issue, and my parents saw the information sent home, my parents remarked that these volunteers tend to exaggerate the number of people abused. So, while I feel confident as a parent and I write confidently on the subject, I have to admit I’m a bit afraid of the subject myself.

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Dear Rabbi Horowitz,

I am the proud mother of some very lovely young children who are growing up much too quickly. In general, I’d like to think of myself as a confident parent that tries to approach important issues a healthy balance. But, there are some issues out there for which the proper balance remains a mystery to me. And that is why I am seeking your advice sooner, rather than later.

Recently I have heard a number of stories about abuse in the frum community and would like to know just how prevalent abuse is in the frum community? In general, I’d like to preserve my children’s innocence while dealing with realities that need to be dealt with.

What responsibility do schools have when it comes to addressing children about this issue? And, what responsibility do parents have? At what age should parents begin to address the issue with their children, and in how much detail? And, what is the proper way to even begin the conversation?

Also, while my children are not teenagers yet, what should parents of teenage children say to their children, who are bound to either see headlines in the newspaper or hear about such terrible news through friends?

Sincerely,

A mother looking for balance and perspective

Debt, Tithing, and Bankruptcy

I recently ran into an interesting column called "The Color of Money" by Michelle Singletary. I don't know too much about her regular column or subject matter, but I plan to make it a regular read after seeing her website and her recent column.

In her recent column titled "Bankruptcy Law Says Thou Shalt Not Tithe," she writes about the new bankruptcy laws that went into effect last year, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Unfortunately, my knowledge of bankruptcy law is dated, approximately 10 years. So, I will have to rely on the article, which appears to give a good summary.

According to the new laws, those who file for bankruptcy declare bankruptcy after a "means test." Those with lower annual incomes, as defined by their state's median income, are permitted to file for Chapter 7 bankruptcy, which excuses most non-secured debt. Those with higher incomes, based on the "means test," must file for bankruptcy under Chapter 13. Chapter 13 bankruptcy requires debtors to repay their debts over a 3-5 year period. They are allowed "reasonable" expenses, and are expected to use what is left to repay creditors. In short, under the old bankruptcy laws and the Religious Liberty and Charitable Donation Protection Act of 1998, court judges were required to permit debtors to tithe up to 15% of their annual income, thereby including charity as a "reasonable expense."

However, these new bankruptcy laws are the source of much controversy. In 2005, the law changed and judges are no longer required to allow debtors to tithe. In fact, in a NY case, U.S. Bankruptcy Judge Robert Littlefield Jr., ruled that a couple who gave $100 weekly to their church, had to use that money to pay their creditors. The judge wrote in his decision that the laws treat debtors differently , making charitable giving easier for some and not others (I believe he is alluding to the fact that those who file under Chapter 7 can still give charitably) and that "whether tithing is or is not reasonable is up to Washington to decide. However, consistency and logic would demand the same treatment of all debtors."

The change in law has been criticized by politicians on both sides of the isle (Both Orrin Hatch, R-Utah, and Barack Obama, D-Ill, are putting forth legislation that would allow those declaring bankruptcy to continue to give to their charities) for interfering with religious freedom and for discouraging charitable giving. The National Association of Consumer Bankruptcy Attorneys president, Mr. Sommer, states, "For religious Americans who find themselves deeply in debt due to job loss, catastrophic medical expenses or other circumstances [Sephardi Lady's question: might he be alluding to pure fiscal irresponsibility?], the 2005 reform legislation didn't just reward the federal bankruptcy code, it also effectively rewrote Exodus and Deuteronomy. Many who practice their faith and believe that they are bound by creed to tithe a portion of their income will find that Congress effectively decided that what credit cards want is more important than the deeply personal religious practices of Americans."

The column writer, Michelle Singletary, seems to take the position that charitable giving is reasonable for debtors, stating "Is tithing or charitable giving reasonable if you are in debt? For many it is. It's not a matter of choice. It's a matter of faith." But, she closes with a warning form the Torah, Psalms/Tehillim 37:21, "The wicked borrows and does not repay," and writes, "Just as you are called to render your tithes or charitable contributions, so too should you make every reasonable attempt to honor your debts."

As for me, I'm conflicted. I certainly wouldn't want to shut a fellow American out of religious life, and being unable to give, is like showing a religious person the exit door to religious life. On the other hand, creditors of all types should be paid, especially when their services/goods were enjoyed by the debtor. To allow high levels of giving, while the small businessman (or even big businessman), takes a back seat while a debtor puts other, seemingly optional expenses, before his, just doesn't seem reasonable either. Personally, I'd hate to be that small businessman (or woman) who extended credit on good faith, only to be left waiting in the cold, while this organization and that organization get paid before me.

And now for the Orthonomics. . . . . . .

Calling all Rabbis, Lawyers, Accountants, Community Activists, and you the reader to weigh in:

1. What does halacha have to say about the interplay between debt and ma'aser/tzedakah? I know plenty of frum people who are deeply in debt (tuition payers and not-yet-tuition payers) who continue to give generously. L'maaseh, does a person's requirements for ma'aser change if they find themselves in deep debt? How are different types of debts treated when it comes to changing giving patterns, assuming they change?

2. What does halacha have to say about the priority of bill paying? Who comes first, who follows, and who ends up in last place? For laborers, We know that halacha places "day laborers" (and I would assume other employees) as a first priority. But, what about for those that provide other services or consumer goods?

3. How have (or how will) these new bankruptcy laws affect the Orthodox community at large, or members of the Orthodox community individually? I don't know how many people in the community file for bankruptcy, but imagine that it doesn't differ significantly from the rest of American society. A friend of mine who is a financial planner believes that the debt of the younger generation combined with these new laws will have an effect.

4. And, how have (or how will) these new bankruptcy laws, affect Yeshivot and Day School? Are members allowed to pay for private, parochial schools under the new laws, or is it at the discretion of the courts. I recall reading that this expense is allowed, but only in a "token" amount, and we all know that frum schools don't cost a token amount. Are there schools out there dealing with keeping students enrolled despite bankruptcy? And what is the impact on tuition for other students?

5. What should the Orthodox community be doing, if anything, to help its members avoid falling into debt in the first place, or deeper into debt?

That is it for now. My brain is starting to wake up after our recent simcha. But, if this post is not a good one, please excuse it and ask your own questions.