by Dr. Harry Bloom and Daniel Perla

Is your Jewish day school contemplating middle-income programming? Based on our review of middle-income programs currently in the field, our advice is to design a plan that:

• Promotes new and retained enrollment
• Encourages nearly universal submission by middle-income families of household income data
• Benefits a specific middle-income segment
• Inspires families to become positive ambassadors for the school to new and existing families

You might do well to consider middle-income tuition programs the way consumer marketing companies think about new product launches. Consumer products companies, such as Harry Bloom’s alma mater, Procter & Gamble (he worked there in brand management before joining the day school world), implement a disciplined product development process. This process begins with precisely identifying a target audience, performing exhaustive market research, defining tailored solutions informed by the research, testing those solutions in limited-scale test markets, and then, when costs and benefits are better understood, scaling up the test markets to full-blown market expansions.

Applying this approach to middle-income affordability programming can be better understood by reviewing the middle-income programming pathway of the Maimonides School in Brookline, Massachusetts. A K-12 Modern Orthodox day school, Maimonides has approximately 535 students. The school offers financial aid to well over half its families, has excess capacity that is driving up its cost per student, and wants to implement middle-income programming that will maintain enrollment among current hard-pressed families and attract middle-income families currently attending other schools or considering doing so. While Maimonides does not represent a textbook execution of P&G’s process, the school’s middle-income program does encompass its key elements.

Target Audience Definition

A group of financially savvy Maimonides lay leaders analyzed existing parent survey information to begin drawing the income profile of all school families, not simply those requesting financial aid. While the data only included a sample of families not receiving financial aid – not everyone filled out the parent survey, and some who did failed to provide income data – the group developed a working hypothesis: that approximately 20 to 30 percent of Maimonides families fell within a middle-income range but couldn’t qualify to receive financial aid.

Market Research

Maimonides next did something bold and creative that tackled one of the biggest challenges in middle-income programming: a lack of comprehensive household income information. During the 2012/13 school year, the school announced its intention to offer a middle-income tuition subvention program for the following year, and indicated that in order for families to qualify for the program, parents had to submit the first two pages of their Federal Tax Return. Many families who had not previously applied for financial aid did so.

Pilot Program Design

Based on the additional acquired financial information, the leadership refined its market definition and developed a tailored program limited to families with children in kindergarten through second grade. The school limited tuition to a maximum percentage of family income, but established a stated minimum tuition/fees level for all families. A key element of the program: Its impact was carefully modeled in terms of “worst case” and “best case” financial exposure to the school, depending on how many incremental students it was able to generate.

Marketing that Leads to Ambassadorship

Maimonides then announced that the school’s ability to continue and even expand on this pilot program would depend on its ability to retain current families and grow enrollment. It created an explicit link in parents’ minds between enrollment and funding for tuition support. It motivated the Maimonides parent community through enlightened self-interest to help retain existing families and to refer prospective new families. The community has responded by generating a great deal of positive word-of-mouth that might not have otherwise materialized.

Maimonides indicates that the impact of the program on kindergarten enrollment is hard to isolate precisely. However, the school’s leadership has noted that kindergarten enrollment exceeded their most optimistic projections. While the short-term impact on total net tuition was modestly negative, the longer-term financial impact of the incremental students was quite positive.

Expansion

Maimonides then moved to expand the program in 2014/15 to additional grades, with requests for household income information as the price of eligibility. The jury is still out on this expanded program, but the school is cautiously optimistic about its direction. Indeed, Maimonides still emphasizes in its public pronouncements that continuation of the programs will depend on enrollment growth that fills existing capacity and thereby generates funds for educational programming and more middle-income tuition support dollars.

There is growing awareness “on the street” that while many Maimonides families are still struggling with day school affordability, and much work needs to be done to increase its affordability, Maimonides is an institution engaged in trying to find solutions. This latter view will be further enhanced in the future by Maimonides’ participation in Generations, the PEJE-managed endowment-building program, with funding from Combined Jewish Philanthropies, which has the potential to generate more non-tuition dollars.

And what does Maimonides’ story mean for your school? We would like to suggest that there are seven emerging principles to consider

1. Understand your school’s capacity utilization and the cost-per-student implications of filling that capacity by enrolling additional middle-income families.
2. Take pains to design and implement market research programs that secure comprehensive household income information from middle-income families.
3. Develop precise definitions of what middle-income means within your school’s community based on the research results.
4. Design specific programs, informed by financial modeling of a range of potential outcomes that make it possible for your school to make day school education feasible for target middle-income families while not jeopardizing its financial sustainability in the short term.
5. Adopt a gradual approach to middle-income affordability programming. Define a pilot program in a limited set of grades for a limited time duration in order to gain familiarity with program implementation and consequences.Try to isolate the incremental impact on enrollment of your middle-income pilot.
6. Engage your parent community as partners in trying to fill your school. Make it clear to them that you’ll be able to extend benefits to them only if they become active and positive ambassadors to other families and help fill seats.
7. Scale up your program in a staged fashion to reach more and more families.

So where are we in the journey to middle-income tuition affordability? To paraphrase Winston Churchill in speaking about Britain’s participation in the Second World War: “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” We still have a great deal to learn about middle-income programming, but we would be remiss to not capitalize on best practices in the consumer products world and to learn from pioneering schools in our midst.

Dr. Harry Bloom is Strategy Manager, Day School Sustainability at PEJE.

Dan Perla is AVI CHAI’s program officer for day school finance.

cross-posted at AviChai.org Blog