Several of us sat in stunned disbelief. Announcements of this sort are rarely well received — but there were a lot of people justifiably hurt at this one. The meeting was for Catholic School families and we were listening to the board president explaining how the school planned on making up budget shortfalls.
Our local Catholic schools are struggling financially. A Bingo operation — which provided $200,000 plus dollars per year — stopped providing (changes in gambling laws). The president and board began searching for ways to keep the schools solvent without raising tuition to elitist levels. This is obviously no easy feat!
Last winter, we all listened attentively as the hierarchy explained that a major part of the plan was to stop all family tuition breaks. Wow! Every family must pay full tuition for every child. They justified this decision by describing the supposed money that this solution was going to make up.
There is something inherently wrong with this thinking.
Sitting in front of me and just to the left was James. He has seven kids and is doing all he can to keep them in Catholic schools. He works construction in various places throughout the country and is gone for months at a time. James comes home as often as possible, spends a few weeks with the family and then he is off to the next job.
I looked two seats down from James and saw Keith. Keith and his wife are business owners. Keith has one son who was currently in high school.
I couldn’t help but note that both James and Keith were very much alike in their earning capabilities — in fact Keith’s was a two-income family. But they had very different amounts of discretionary income due to the fact that Keith was only rearing one child, and James was rearing seven.
Currently, James was probably paying three times as much as Keith in tuition (due to family tuition breaks that were in effect). The new plan would increase Keith’s tuition by a few hundred, while Jim needed to find seven times the amount of tuition that Keith paid.
The guy with the most discretionary income had no worries, and the guy that had the least… was asked to double his contribution?
Doesn’t add up, does it!
How can we keep Catholic schools financially solvent without betraying our very mission?
The Catholic School Funding-Woes Cycle
Catholic school funding problems often focus on two realities that have no easy solutions. The first is the higher wage of lay teachers over religious teachers, and the second is the increase cost of doing education from a technological standpoint.
This article considers another factor that can be easily changed and must be considered as a source of the funding woes of Catholic schools; the tuition per student model.
Tuition-based funding is a fairly recent phenomenon for Catholic schools. Currently, most schools are primarily funded by tuition with modest contributions from the parish.
The following cycle has emerged for funding Catholic schools over the past decades.
Because of a lack of parish support, Catholic schools were forced to become more tuition dependent. Because they are more tuition dependent, poorer families and large families (tuition per student model) cannot attend. Schools become elitist. Since they have become elitist, there is less impetus for parish support…and on the cycle goes.
The following proposal is an attempt to break this funding-woes cycle.
Catholic School Tuition and Short Sited Business Models
What follows is a proposal to fund Catholic schools in the current spiritual climate that does not compromise our Catholic character. The proposal will help develop a stronger bond between the school and the parish while also exercising sound business sense. The basic concept is simple; base tuition on the number of families that participate (instead of students) and reestablish the important bond between the school and the parish.
Tuition per student is the primary way that Catholic schools are funded. This procedure has inherent injustices and was banned in some diocese in the past. This model is also short-sighted from a business perspective as we will see. Every school that advocates this form of funding is in danger of failure in one of two ways; the school will close from lack of students, or the school will morph into a private school for the elite that is Catholic in name only.
The past three decades is replete with examples of exactly these phenomena.
This proposal makes the following three recommendations:
- Replace tuition rates per student, with tuition rates per family.
- Families who pay up to 7% of their income on tuition will have fulfilled their parish obligation (although they may give more).
- Families will never be required to pay more than 7% of gross income for family tuition. The parish makes up the difference for families whose 7% does not cover family tuition needs.
A Simple Scenario
Let us consider a simplified scenario of fifty families with who love their faith, and thus endeavor to start a Catholic School. In this scenario, the families will have varying numbers of children but will be similar in every other way…income, homes, expenses, etc. We will assume 100 students for the school and that each family has $48,000 ($4000/month) to spend after taxes.
In this scenario, we will assume 25 one-child families (25 students), 11 two-child families (22 students), 6 three-child families (18 students), 5 four-child families (20 students), and 3 five-child families (15 students).
We will consider three things from a budgetary standpoint.
1. The first will be a simplified example of expenses that typical families have.
a. “Overhead expenses” are those each family has such as house, car, food, clothing and medical insurance for the parents. These do not vary between families.
b. “Child expenses” include food, clothing transportation and medical for each child. This will vary with the number of children the family has.
2. The second will be a comparison of the tuition cost for each family that results when a per student model is used and when a per family model is used.
3. The third will be a look at the contributions that each family will give back to the Church as the children grow up and become income producers.
|Total Monthly Exp||$2350||$2625||$2900||$3175||$3450|
|$$ Left-over (discretionary income.)||$1650||$1375||$1100||$825||$550|
The scenario above shows that each family does have some similar expenses. The “overhead” for each family is $2000 – which funds the house, car, food, clothing and health of the parents. But each family also has very different “child expenses” depending on the number of children (stating the obvious). These expenses vary from $350 per month for the single child family, to $1450 per month for the family with five children.
The family with more children obviously has more obligations. Families with more kids have less discretionary income to pay for items such as Catholic School tuition.
Funding the Catholic School: Tuition per Student versus Tuition per Family
Assume that these families need $250,000 to run the Catholic School. Tuition per students would take this $250,000 and divide it by the number of students (in this case 100). That’s $2500/year per child. Each family then pays for each child that attends.
Tuition per family takes the $250,000 and divides it by the number of families (in this case 50). That is $5000/year per family. Each family pays the same.
A comparison of the annual and monthly costs using the tuition/student model and student/family model are given below:
|Tuition Models||Family A
|25 families||11 family||6 families||5 families||3families|
250,000/100 = $2500 per student
|Disc Inc. minus tuition||$1442||$958||$475||$2||-$491|
250,000/50 = $5000 per family
|Disc Inc. minus tuition||$1234||$959||$684||$409||$134|
Tuition per Student
The family with one child only pays $208 per month using the tuition per student method, while the family with five children will be paying $1041 (5 times as much). The family with the least discretionary income is thus charged the most money.
The $208/month that is charged in the per student tuition will only work if everyone is capable of paying it. When larger families can no longer pay their tuition, the budget has a short-fall. The budget short-fall was guaranteed by the unreasonable expectation that large families are capable of paying large amounts of tuition. Families with multiple children either have to be very rich, or they must exclude themselves from the school.
Any family with three or more children has a problem. Is it feasible to expect these families to pay this tuition? Thus, the families of three, four or five are forced out. As these families leave, half the population leaves. Thus the school closes or turns into a school for the very rich and/or for single child homes.
The tuition/student scenario is based on the false assumption that students are income producers, not income consumers. Our public tax system is more family friendly than our Catholic schools. Federal tax rates give tax-breaks for children in realization that families bear a larger burden in choosing to raise the next generation.
Catholic schools have it backwards…they expect larger families to pay more. This is akin to charging sewer rates and income taxes based on the number of children that are in the family. Big incentive not to have kids!
Tuition per family is actually tuition per paycheck. In the tuition/family scenario, since every family has the same number of income earners, they should be charged the same. The school is open to serving all the children of all the families that are interested in a Catholic education. With the tuition/family situation, the school is more like a co-op than a business.
In the scenario given above, each family is required to pay $416 per month. This is a much more reasonable expectation for each family. There are no unrealistic expectations for families that have the least amount of discretionary income to use. Budget shortfalls will be much more difficult – all tuition expectations are reasonable.
Dealing with Budget Shortfalls
In the tuition per student model, families with the fewest children, (who also have the most discretionary income) are paying an artificially low tuition. The potential for default from these families is small. However, a few families with larger numbers of children are expected to pay tens of thousands of dollars each year in tuition. If these few very needy families do not find tens of thousands of dollars to pay tuition — shortfalls occur.
In the tuition per family scenario, all families pay the same amount. Even if more families default on their tuition, the default is hundreds per family, instead of thousands.
It is far more reasonable to expect a large number of families (with grandparents, uncles, aunts) to generate hundreds of dollars each, than to have a small number of families with too many burdens already, to generate tens of thousands of dollars.
Children as Consumables, or Children as Investments
Our Catholic school administrators can learn from our own federal government that children are investments — investment in our future. Children are not like hamburgers or other consumables where the more you buy, the more you pay — with no future value. Children are like investments that grow over time.
Let’s assume a perfect world in which that every Catholic School child grows up, nets $48,000/year and gives 10% to the Church. Each family eventually gives back to the Church in proportion to the number of children they have…all other things being equal.
|10% of net||4800/year||9600/year||$14,400||$19,200||24,000|
|Over 50 year||$240,000||$480,000||$720,000||$960,000||$1,200,000|
Thus, the money invested in the families pay off greater dividends with the larger families as opposed to the smaller families. The return expected per family is dependant on the number of children the family has.
A Challenge to Catholic Parishes
Catholic schools are supposed to be parish ministries. In many places, they still are to some degree. There was a time when Catholic Schools were funded 100% by parishes – which is thankfully still the case in some dioceses.
Assuming that parish giving could be based on a 7% tithe of gross income, the following challenge goes forth to all Catholic parishes with Catholic Schools:
- Families who pay up to 7% of their gross income have satisfied their parish obligation (although they may give more if they wish).
- Families should never be expected to pay more than 7% of their income toward family tuition. The parish would then make up the difference. Thus, parish money only goes to families in need.
The above challenge helps keep the parish involved in the ministry called Catholic schools. Often, parishes have been asked to give blanket sums of money to Catholic schools to lower over-all tuition rates that only wealthy families can afford. With the above scenario, specific families in need are the one that use parish money.
Conclusion – Stopping the Cycle
This proposal will help break the funding-woes cycle that is keeping Catholic Schools from becoming everything that they should be. A school, whose funding model inherently eliminates a segment of the children they are supposed to serve, will be a failure before it ever opens its doors. This proposal does not discriminate against families with multiple children and give arbitrarily low tuition rates to a segment of the population.
This proposal will also re-establish the important link between the Catholic school and the parish and/or diocese. Under this proposal, the parish which (often correctly) perceives the Catholic school as serving the elite will be asked instead to participate specifically in funding families in need. There is simply more of an impetus for a parish to give money to families in need, than to give lump sums of money to lower tuition for predominantly wealthy families.
Finally, this proposal sends an important message to a culture that has become anti-family and anti-child. This proposal builds from the notion that the family is the building block of society – as the family goes, so goes society. The Church must reach out its hand to help those that choose to rear the next generation of Christ’s flock. The more we can help each family live their faith, the more truly Catholic are schools will become.