The funding of Catholic The funding of Catholic SchoolsSchools

Trying to use old wineskins just doesn’t cut it any more.

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A Quick TourA Quick Tour

• The current state of funding of Catholic Schools

• The “old wineskins” of school funding

• Problems with current methods of funding

• Taking control of tuition

• Making sense (and cents) out of tuition setting.

Then and Now:Then and Now:

• 1962: 47% Catholic students

• Parishes: 63% costs• Tuition: < 10% costs• 96% professed

religious• 4% non-Catholic• Av. ES tuition: <$100

• 2001: 16% Catholic students

• Parishes: 25% costs• Tuition: 66% costs• 5.6% religious• 17% non-Catholic• Av. ES tuition: $1787

State of fundingState of funding

• Many dioceses have crafted policies restricting the amount of parish contribution to the school.

• In the short run, tuition increases have resulted in enrollment decreases.

• Parents are tired of endless fundraising.

Sources of FundsSources of Funds

Sources of Funding

66%

25%

9%

Tuition

parish sus.

fundraising

t

Parish SubsidyParish Subsidy

Average Parish Subsidy/Parish School

$0

$50,000

$100,000

$150,000

$200,000

$250,000

1980 1985 1987 1989 1991 1993 1995

Year

Current $Constant $

Parish Subsidy(Investment)Parish Subsidy(Investment)

Parish revenue/school expense

0

100000

200000

300000

400000

500000

600000

fiscalyear

1980 1982 1984 1986 1988 1990 1992 1993

Parish rev.School expen.

Some other considerationsSome other considerations

• Dioceses have already paid out over $100 million in lawsuits, with hundreds of suits still pending. Dioceses may declare bankruptcy.

• The stock market decline has had a severe impact on church endowments and other investments

• Uneasy about the final destination of their contributions, many Catholics have withheld contributions to annual appeals.

• Public schools’ costs have skyrocketed, raising property taxes excessively.

Nontuition IncomeNontuition Income

Elementary schools raise an average of $102,000 from fundraising.

26.2% have an annual appeal, and 48% have endowments.

15% have a development director

Secondary schools derive between 1% and 5% of their income from annual appeals.

57% employ a full-time development director.

70% have an endowment of less than $1 million; 4% of more than $5million.

Sources of nontuition income:

Sales (income from candy,

magazines has declined by 5%)Raffles have increased

Annual appeal

Endowment

Bonds

OtherExit

Tuition for various schoolsTuition for various schools

Type of School Elementary Secondary

Catholic $1787 $2823Other religious $2606 $5261Private, nonsectarian $4693 $9525

Average per pupil expenditure, all private: $5908

Average per pupil expenditure, public: $7628(Figures as of 2000)

Tuition and CostsTuition and Costs

Tuition vs. Costs

0

500

1000

1500

2000

2500

3000

1990 1992 1994 1996 1998

year

tution

p/p cost

Why have costs outstripped Why have costs outstripped revenue?revenue?

• Smaller class sizes

• More “special” teachers, programs

• Updates to technology

• Upkeep on aging/ ill-built buildings

• Fewer religious

• Meeting state/diocesan mandates

Some Problems with Some Problems with Control over FinancesControl over Finances

Perils and Pitfalls in FinancePerils and Pitfalls in Finance

• Lack of system for handling cash

• No control over tax exempt form

• No petty cash system• No receipt system• Commingling monies• Reluctance to balance

bank statements• Lack of attention to

budget

• Keeping cash unsecured

• Allowing school groups their own accounts

• Misplaced trust in employees and volunteers

• Ignoring cash shortfalls, missing funds

Maintaining Control over Maintaining Control over Income:Income:

• Craft policies and controls over who may handle income, how it is handled, how it is accounted for.

• Have control over bank accounts, checks, purchase orders.

• Screen volunteers

Maintain ControlMaintain Control

• Screen all persons who handle money;

• Bond those who handle money;

• Maintain control over cash; get rid of small accounts of other groups;

• Use multiple controls over disbursements;

• Have an annual audit or review;

• Have procedures for petty cash;

• Follow up on your suspicions;

• Promise prosecution and FOLLOW THRU!

Beware the Signs of Beware the Signs of TemptationTemptation

• Caring for an aging parent

• Spouse out of work

• Children in college

• Catastrophic illness

• Addiction to drugs, alcohol, gambling, shopping

• Increased activity

Let’s look at Tuition….Let’s look at Tuition….

Some thoughts on tuitionSome thoughts on tuition

• Non-payment of tuition constitutes a real loss.

• The gap between the cost per pupil and the income per pupil must be covered somehow.

• Fundraising only covers a gap temporarily.

• There is a “tuition threshold” where people finally say, “I can’t do it any more.”

• Every empty seat represents a real loss that cannot be made up.

Problems with tuition:Problems with tuition:

• One price fits all

• Lack of follow through with delinquents

• Lack of contract, policy

• Desire to be pastoral

• Lack of accountability for collections

• Lack of priority on the part of parents

• Labor-intensive

• Maintaining presence of cash, checks, etc.

More problems...More problems...

• We try to act pastorally when we are running a business;

• We are surprised when they pretend to pay,and we pretend to believe them;

• We close our eyes to their real priorities and continue to pretend to believe;

• We fail to help them to realize our real financial situation.

Crafting Tuition PolicyCrafting Tuition Policy

• Realize that tuition is collectible, and that parents can be held accountable.

• Parents should sign a tuition contract

• Parents should always be given as much information about costs as possible

• Policy should contain consequences for late and/or unpaid tuition.

• Policy should be crafted so as to be enforceable.

Gaining Control over TuitionGaining Control over Tuition

• It truly is “life’s other certainty”

• Know your per/pupil cost

• Know fixed and unfixed costs

• Give parents a choice of subsidy

• Be accountable

• Communicate

• Follow-up

Some steps toward Some steps toward improving tuition settingimproving tuition setting

• Communicate: parents should know the actual cost of education at your school.

• Communicate: how is tuition set?• Be honest: everyone, whether he/she needs it or

not, is getting a handout.• ASK parents whether or not they want the handout.• ASK parents how much of the actual cost they can

pay.• Craft specific policies for tuition payment.• Have parents sign an enforceable tuition contract.

Questions to ask about how Questions to ask about how tuition is handled:tuition is handled:

• Who has access?• Is there a smooth, safe means of collecting?• Do you have a cutoff for not accepting checks?• Is there a foolproof system for checking income

with bank statements?• Are there fees for late payment?• Are employees bonded?• How do you handle scholarships and tuition aid?

Tuition OptionsTuition Options

• Traditional– Labor-intensive– Time consuming– Hides real cost– Problems with cash flow– Low priority– Leads to annual

increases

Options for tuitionOptions for tuition

• Cost-based, or Fair Share– Determine actual cost– Individual interview– Parents choose a tuition

level– Annual renewal and

interview– Based on honesty and

trust.– Small “window” of

negotiation

Options for TuitionOptions for Tuition

• Outsourcing/tuition management– Higher priority– Tuition amounts flexible– Non labor intensive– Security for deposits– Set payment schedule– Regular cash flow– Allows for some local

control– Projects desire for good

business practices.

Some REAL things you can Some REAL things you can do now:do now:

• Let parents choose to accept tuition aid (difference between cost and tuition)

• Make tuition aid a part of registration

• Allow Board, Home-School to communicate need for tuition collection and value of Catholic Education.

• Consider a professional management company to handle tuition collection, late reminders, etc.

Determining TuitionDetermining Tuition

Fixed Costs: School Building- Utilities- Insurance- ContractsTeacher salariesClerical salariesMaintenance salaries

Unfixed Costs:- Supplies, textbooks- Mailing, ISP, Phone-Printing, PR, Staff Development

Fixed costs remainFixed costs no matterWhat the enrollment

Tuition ought to beSet to cover at least Fixed costs.

Where does your money Where does your money come from?come from?

Parish/ Diocesan SupportFundraisingEndowment/Invest-mentsGifts/BequestsGrantsRental of facilitiesOther

TUITION

What is your tuition history?What is your tuition history?

1. Have you kept tuition below the amount needed to cover fixedcosts?2. Have you kept a record of enrollment as a result of tuition increases?3. Have you kept track of cash flow schedules?4. Do you have explicit criteria for determining financial aid?5. How have you handled delinquent or tardy tuition?6. Have you made any attempt to collect past delinquent tuition?7. What are the consequences for delinquency?8. Do you have an efficient system for tracking income?9. WHAT DO YOU NEED TO DO TO IMPROVE THE SETTINGAND COLLECTION OF TUITION IN YOUR SCHOOL?

PLEASE REMEMBER:PLEASE REMEMBER:

YOU WILL NOT BE ABLE TO CONTINUE THE MINISTRY

UNLESS YOU CAN PAY FOR IT.

HighlightsHighlights

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(in millions)1991 1992 1993 1994 1995

Net Revenues $x,xxx $x,xxx $x,xxx $x,xxx $x,xxx

Net income xxx xxx xxx xxx x,xxx

Earnings per share x.xx x.xx x.xx x.xx x.xx

Return on net revenues xx% xx% xx% xx% xx%

Cash & s/t investments $xxx $xxx $xxx $xxx $xxx

Total assets x,xxx x,xxx x,xxx x,xxx x,xxx

Stockholder’s equity xxx xxx xxx xxx xxx

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