Buttressing Day School Financial Sustainability and Affordability

by Daniel Held

Nearly two years ago I began research for the Jewish Funders Network Greenbook on Jewish Day School Financial Sustainability and Affordability. The publication, sponsored by the AVI CHAI Foundation, offers a landscape study of initiatives designed to buttress the financial picture of day schools.

Conveniently, the Greenbook was published in January, concurrent with my beginning work at UJA Federation of Greater Toronto’s Koschitzky Centre for Jewish Education. Since then it has been an invaluable guide in my work with lay and professional colleagues to buttress the sustainability and affordability of our fourteen affiliated day schools.

Day schools face two interrelated but distinct challenges: affordability and financial sustainability.

Affordability is the individual parent’s perception of cost and value – knowing that what they and their children are receiving is worth their investment in tuition. Affordability factors in both the perceived value of the school and the cost of tuition in relation to a realistic assessment of household disposable income.

Sustainability is the long-term financial viability of the school – balancing its budget year after year and being able to withstand short- and long-term financial challenges including the steady demand for increased financial assistance and need to invest in a quality educational program.

A school could be affordable (with low tuition and high perceived value) but not sustainable. Similarly, it could be sustainable with high tuition (and sufficient families able and willing to pay), but not affordable to the breadth of students it hopes to reach. Day school financial sustainability requires a long-term plan to ensure that revenue covers costs. Affordability, on the other hand, necessitates a demonstration of the perceived value of day school vis-à-vis the cost of tuition. It also involves a realization that even with high perceived value, some families will require tuition assistance. The challenge of day school sustainability and affordability is best understood, then, as a delicate balancing act.

In Toronto we are blessed by one of North America’s most robust day school affordability programs. Decades ago, the leadership of UJA Federation dedicated itself to ensuring that day schools would be affordable to the widest possible swath of students. This manifests in an annual Federation allocation of ten million dollars, which is matched by school contributions, to a program that offers tuition assistance to approximately 2,300 students each year. While the program is not perfect, it goes a long way to make day school more affordable.

What keeps me up at night is the financial sustainability of this program and of our system.

Year after year, annual increases in the costs of Jewish day schools significantly outpace increases in inflation and household income. As a result, each year tuition bills take up more and more of the average family’s disposable income and our affordability program, like that at schools across North America, endures greater strain.

I believe we can address the current issues of affordability through interventions on the revenue side of a school budget. We have seen these kinds of interventions through endowment campaigns, middle income affordability programs, annual development, and other similar programs. The more I am kept awake at night thinking about sustainability, however, the more I come to the realization that a sea change can only come through a change in day schools’ cost structure.

Upwards of 70% of a school’s budget is spent on human resources – teachers, administrators, support, etc. Recognizing this weighting of expenses, a meaningful reduction of expense necessitates rethinking of human resources. At the same time, however, the perceived value of our schools is the most important predictor of enrollment and a critical ingredient in parents’ calculus of affordability.

Rethinking the cost structure of Jewish day schools requires an audacious embrace of out-of-the-box thinking balanced by a healthy dose of conservatism that is necessary in contemplating any educational change.

In collaborations with professional and lay leaders in Toronto we’ve started this thinking, but it will take many more dreamers and doubters to collaborate in developing the models that will propel day school into a sustainable future.

Daniel Held, an alum of the Wexner Graduate Program (Class 22) serves as the Executive Director of UJA Federation of Greater Toronto’s Julia and Henry Koschitzky Centre for Jewish Education. Daniel can be reached at dheld@ujafed.org.

cross-posted on the Wexner Foundation Blog