Monday, February 27, 2006

Changing the Language of the Tuition Debate

There are very few subjects in the Orthodox world that inspire more passion, more emotion, more fear, more heartache, more blame, and more sinah than Yeshiva and Day School tuition. Discussing tuition is sure to lead to a "blame game." I have heard the tuition crisis is the "fault" of kollel families, stay at home moms, people who have more kids than they can "afford" ("afford" refers to being able to pay full tuition apparently, not put food on the table for their children) and people who indulge in luxuries like Pesach vacations.

Besides the fact that the "blame game" is completely unproductive (even counterproductive), it reeks of sinat chinam. Lately I have been thinking that if we were only to change the vocabulary we use to talk about tuition and the costs of running a school, we could, at a minimum, take a bite our of the atmosphere of sinah that pervades the subject of tuition.

So, here are a few areas where I believe a bit of understanding of economics and even halacha would help to improve the direction or the debate:

1. There is no such thing as a "Cost Per Student": Oftentimes yeshivot and day schools let the community know how much it costs to educate a student in their efforts to set tuition for the schoolyear or to demonstate the high cost of education in hopes of raising money. People connect well to this number as they are able to make sense of this numbers. But, in reality the number is actually fairly meaningless figure.

On top of being a fairly meaningless figure, the figure inspires plenty of controversy and antagonism towards those who are unable to pay their "fair share." It also upsets those who believe that they are paying more than their "fair share." I have even heard a number of well respected people state that if a person cannot afford to pay the "fair share" (the per head cost for their child(ren)), that they should find a different school. (Thanks, with your attitude, I'd be more than happy to leave YOU with more costs to educate your children).

The fact of the matter is that the "Cost Per Student" is a fairly useless figure when it comes to telling us about how much it costs to run a school. What we really need to be talking about is fixed costs and variable costs.

Most of the costs of running a school are fixed costs (i.e. costs that remain despite minor changes in enrollment). A good example of fixed costs is the cost of staff. Assuming that a school cannot cut a staff member or is not forced to add a staff member, it really does not matter whether there are 10 students sitting in a class, or 30 students sitting in a class. The salaries and benefits paid to the staff remain the same.

A good example of a variable cost is the cost of materials, supplies, and textbooks. In fact, the cost of materials, supplies, and textbooks may be one of the few variable costs that can be easily identified in an entire school budget.

Naturally, many costs include a fixed element and a variable element. A significant increase in enrollment might require greater building costs beyond the current costs if more classrooms must be added. An afterschool event might add to the costs of utilities.

If schools would publicize a schedule of costs to run a school that considers the fixed and variable costs, parents and community members would realize that it is better to have seats occupied by students paying reduced tuition than unoccupied seats that generate NO revenue!

For example, a schedule could be published in this format:

Students Costs
40-120 students $730,000
121-360 students $1,452,000
361-1080 students $3,685,000

Students who fill what would be otherwise empty seats and who require no special services, do not cost more than the supplies, materials, and textbooks that they use. We should be thankful that parents who cannot carry the full burden of tuition paying beyond the cost that can be directly attributed to their children, rather than finding alternatives for their children, causing tuition, that "per student" cost, to increase for everyone else. Chances are that if enrollment in your kid's school declined by 50% tomorrow that costs would only decline by a small fraction and your tuition would nearly double.

2. The money that someone spent on a luxury isn't necessarily money that will go to the school. Another fallacious argument that is often heard is that is Mr. and Mrs. Ploni did not take a vacation to such and such a place that the school would have more money.

Now, assuming Mr. and Mrs. Ploni are Erlich people who are paying full tuition and are giving tzedakah in accordance with halacha, they are entitled to remainder of the the money that they make. I.e. That money is theirs to do with as they please. They can choose to save the money (perhaps a wiser choice) or spend the money on ridiculous extravaganzas. But, it is their money.

So, while we should certainly encourage modesty in consumption, we should never assume that schools would have more money if indulgent, yet full tuition paying, families spent less on themselves.

Perhaps, it is worthwhile to investigate a sliding tuition scale based on income, and it is certainly worthwhile to make community members understand that schools need their support and schools should be a top ma'aser priority, but it is silly to assume that the money an upstanding family pays to indulge themselves would have ended up in the school's pocket had they not indulged themselves.

Some thoughts to ponder. I'm looking foward to your comments.


Anonymous said...

You go Sephardi lady ! Knock some sense into those Ashkenazim !

Anonymous said...

P.S. I am Ashkenazi myself ;-)

Unknown said...

As soon as I started reading the post, the words "fixed vs. variable!!" popped into my head. :) Excellent post.

Anonymous said...

wonderful post. I think you hit the nail on the head with the analysis. Unfortunately, it's easier just to add up all the line items in the budget and divide by the number of students and say "here's what it costs."

You are 100% correct that up to the upper end of the variable cost spectrum, it makes sense to have students paying reduced tuition than empty seats.

Two nits, though. You are clearly approaching this purely from an economic standpoint. (Nothing wrong with that.) Pedagogically, smaller classes are considered better. Therefore, if maximum class size is 30, 20 may be better even if 30 optimizes revenue.

Second nit is that when you cross the boundary between variable costs (e.g., class size again), you can incur tremendous costs that are hard to account for without getting more warm bodies in the seats. For example, if max class size is 30, and you recruit that 31st student, you now have to break into two classes, with teachers, room allocation, etc. The cost of the extra teacher (assume one teacher per class) is now incurred, whereas one fewer student would be better economically.

Of course, the real problem, l'fi aniyat da'ati, is that we approach this issue economically at all. These are our children. These are the future of Judaism. How can we not be working to solve the problem without peering into each other's pockets and saying "but he took a vacation last year to Israel."

Of course, that's not rational, is it?

Orthonomics said...

Ezzie-You are thinking like an accountant!

JDub-Excellent comments. The reason I am approaching it from an economic perspective is not because I want to, but because we need to. We need to understand what drives the cost of schools and what doesn't. We also need to understand how much Jewish Education costs if the community will ever choose to support doing so (G-d willing in our lifetime).

Re nit 1: There are plenty of schools that are so small that it is frustrating to say the least. It costs a lot to run these schools they could easily double their size AND still offer small classes. I might blog about this later because it is so important.

Re nit 2: You are correct that it is possible to loose out on the savings if a class was to "overload" by one student. I guess I was addressing too small rather than too large schools.

Great comments. Keep 'em coming.

Anonymous said...

this also raises questions of why schools don't merge to maximize economies of scale. I have trouble believing that each small school is so different as to justify all of the fixed costs attendant to having separate facilities.

In my community, we have one main yeshiva, one main Ortho day school, and one main community day school. (There are several smaller elementary schools, but they are quite small.) While there isn't as much choice as in the 5 towns or Teaneck, there's plenty and the fixed costs are, well, reasonably fixed.

I can see different schools based on dramatically different hashkafot, but otherwise, think it's ultimately better to have fewer choices. I suspect that's why "out of town" communities don't have the same "tuition crisis" that NY has.

Anonymous said...

I'd also point out that, as a lawyer, I'm paid to come up with the hypothetical situation such as "well, what if they recruit one child too many . . ."

Orthonomics said...

>>I suspect that's why "out of town" communities don't have the same "tuition crisis" that NY has.

I don't have a clue what you are talking about. I live in a larger out of town community. Tuition basically begins at over $9000 plus and by high school you are looking at over $15,000. If that is not a crisis, I don't know what is.

>>this also raises questions of why schools don't merge to maximize economies of scale.

I think the real key to alleviating the tuition crisis in the future is to maximinze economies of scale. This may mean sharing administration between schools. It may mean absorbing entire schools under the roof of other schools.

As communities loose more and more large families to aliyah, I think you will see tuition continue to rise and rise, in turn driving away those on the edge.

Anonymous said...

I have to jump in. I run a school. And while I look at fixed and variable costs, there are many other factors to consider.

I agree that "per pupil" costs are a fallacy. And the policy of my school is that we will not deny any Jewish child an education based on parental inability to pay. A parent who can pay and refuses, though, we make no promise to.

You wrote about Pesach vacations. I wish that only full paying parents took such vacations, or other perks. I've had scholarship parents argue that their child really needed a $2500 a week summer sports camp. For 4 weeks. That was more than our full tuition at the time.

And when it comes to asking for tuition assistance, occasionally honesty is a bit lacking. I can't tell you how many parents claim to have only $25,000 in income and yet have expenses of $100,000. I asked one to tell me the secret because I'd love to run my school that way. I'd be able to pay my teachers the salaries they deserve.

The tuition crunch comes about because fixed costs rise every year. And will continue to rise until salaries reach parity with other professions. That's a long way off because salaries are so low.

There is also, in some instances, a feeling that scholarships are an entitlement. That schools inflate their costs, to build in a cushion for scholarships they have to give out. So that a family asking for a reduction really isn't hurting the bottom line.

In a word, false.

In many schools even if all students paid full tuition it would not cover all the costs. There is a built in fundraising component. More scholarship means more pressure to raise funds.

I had wanted to change one word on my scholarship application. We ask how much assistance a family wants. I wanted to ask how much tzedaka a family wants. Because a scholarship is tzedaka. And someone asking for assistance should understand that. We ended up not changing the word because of the fear that some people who really do need the help would be too embarrassed to ask.

While I agree with your post, I disagree with only one thing you wrote. Tuition has to be seen as an expense when having children. It is a matter of affording tuition, not only food on your table. How about the food on the teachers' tables? They too have families to support.

To have children with the expectation that the costs will be carried by someone else is unfair. Would anyone go to a supermarket and fill up a cart and say to the cashier, "Why not charge the person behind me. She can afford to pay for both of us."

There is no fault to the tuition crisis. It is simply a matter of the economic forces that impact upon all schools.

The suggestions raised by some commenters to merge schools won't fly. Each school does have its own philosophy; why else did it open? And the slight variances, especially in religious philosophy, will make any merger nearly impossible. It would create friction at every turn.

I am loathe to say don't have children if you can't afford their tuition. They are a blessing. Each and every one. And I will not turn away a family that has many children and can't afford to pay tuition. We need as many in the tribe as possible. But there has to be an understanding of the economic dynamic they cause in the community.

Education is a necessary commodity to a Jewish home, just as kosher food is, just as nice clothing for Shabbat and chagim, just as a Lexus ;)

Many people who do not feel that the higher cost of those other things are an imposition, do feel that tuition is. At whatever rate is being charged. That, if anything, is the tuition crisis.

Pragmatician said...

Excellent topic, you dissected the fallacy of vacation vs. tuition very well.
A well to do family will pay full tuition, donate to school's events yet get criticized when they indulge in unnecessary luxury.
While "we must understand” that a mother of ten who does not pay tuition , needs to get out of town every now and then, and travel to her fifteen siblings’ weddings and bar mitzvahs!
Unfair reasoning.
I wonder who really needs to learn the priorities of spending.

Esther said...

I really learn a lot from your analyses like this one.

One of the many issues in the Tuition Crisis is that not every Jewish family feels as strongly about day school. The parent who doesn't budget enough or earn enough for tuition - WE still care that her kids get a Torah education. It definitely makes the whole issue more complicated.

Charlie Hall said...

Dear NJ Rabbi,

Thank you for participating in this forum. I'd like to ask about something you said:

'The suggestions raised by some commenters to merge schools won't fly.'

I am sure you are correct in this, for the reasons you give. However, it is clear that there are substantial economies of scale from larger operations, reducing fixed costs. Why couldn't schools combine efforts for building maintenance, supplies, textbooks, and especially employee benefits?
It wouldn't solve the tuition crisis, but anything to reduce costs without affecting education ought to be pursued.


Anonymous said...


You are absolutely right, there is much to be gained by forming school consortia to save on common expenses. In fact there are organizations that do this currently. PEJE, the Partnership for Excellence in Jewish Education ( is one such group.

Where there are enough schools to form boards of Jewish Education (such as in the New York area), schools group together to use their combined buying power to gain reductions in costs.

My school has even worked together with a coalition of Catholic schools for political matters.

Wherever possible it should be the obligation of a school's administration, as guardians of communal funds, to seek out the best price possible. It should be noted, though, that best is not always the same as lowest. Quality of the product has to be taken into account, as do other, often intangible considerations such as business relationships and reliability of delivery.

Anonymous said...

charlie hall:

I teach in a school so I see it from the teacher's side, not the parent's. I would LOVE to see cooperation between school of different hashkafah in those areas. After all, we all need health insurance, and the cheaper for the school the better (without reducing the benefits.) However, the reallity is that there is a huge animosity between different day schools, even between day schools that do not compete for a limited pool of students (i.e. animosity between an elementary school and a high school.) So, the day we finally conquer our sinat chinam is the day that we can implement all this ideas.

Anonymous said...

Assuming that a school cannot cut a staff member or is not forced to add a staff member, it really does not matter whether there are 10 students sitting in a class, or 30 students sitting in a class
I think this assumption is inaccurate-Staff can be added to or eliminated, made part time, can teach one class with more students versus a junior teacher on another subject etc. In fact, Salaries are the largest component of the average Yeshiva's Budget.As a result, cost per student is a fair rough approximation of costs.

Orthonomics said...

Anon, you are completely misunderstanding a basic economic concept.

Let's imagine a one room school house with one expense, the teacher. The teacher is paid $30,000 and there are 30 students. The per student cost is $1000. If the school looses five students, the cost of the one teacher still remains and now the per student cost is higher at $1,200.

You are correct that the largest component of the average Yeshiva is staff. This is precisely why it is necessary to keep seats filled if we want to keep cost skyrocketing.

Orthonomics said...

And, yes. I do believe that there are areas where staff can be cut, but that is for another post.

Anonymous said...

To be completely accurate, you need a cost per student net of scholarship. The point is you can't look at it at a point in time but over a long period-if you raise the tuition to a high level that only a few can pay and give lots of scholarships with the rationalization that it lowers cost per student, in the long run you will have to get more teachers, administrators, classrooms etc. , causing your costs per student to rise. It makes more sense to have a lower full tuition and give less scholarships.

Anonymous said...

Sorry I'm coming into this discussion so late (I saw the link on the Financial Burden article at that you've referred to in a few posts. There is one consistent problem we have in our community that isn't addressed here - parents (many, unfortunately, foreign born), who lie about their incomes. I am in civil service. My taxform is black and white - there are no hidden, off the books numbers hiding behind my AGI. What's there is there. And what's there isn't enough to pay for my children, plus those of families who "claim" they're making 25K and yet building luxurious homes. We want their children to learn about Torah, but someone has to come up with a more equitable way to do it!