The funding of Catholic
Schools
Trying to use old wineskins just
doesn’t cut it any more.
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continue
A 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:
• 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 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 Funds
Sources of Funding
9%
25%
Tuition
t
parish s us.
fundrais ing
66%
Parish Subsidy
Parish Subsidy(Investment)
Parish revenue/school expense
600000
500000
400000
Parish rev.
School expen.
300000
200000
100000
0
fiscal
year
1980
1982
1984
1986
1988
1990
1992
1993
Some 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 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
Sources of
nontuition income:
Sales (income from candy,
magazines has declined by
5%)Raffles have increased
Secondary schools derive between
1% and 5% of their income from
annual appeals.
Annual appeal
57% employ a full-time
development director.
Endowment
70% have an endowment of less
than $1 million; 4% of more than
$5million.
Bonds
Other
Exit
Tuition for various schools
Type of School
Elementary
Catholic
$1787
Other religious
$2606
Private, nonsectarian $4693
Secondary
$2823
$5261
$9525
Average per pupil expenditure, all private: $5908
Average per pupil expenditure, public: $7628
(Figures as of 2000)
Tuition and Costs
Why have costs outstripped
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
Control over Finances
Perils 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
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 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
Temptation
•
•
•
•
•
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….
Some 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:
•
•
•
•
•
•
•
•
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...
• 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 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 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
improving 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
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 Options
• Traditional
–
–
–
–
–
–
Labor-intensive
Time consuming
Hides real cost
Problems with cash flow
Low priority
Leads to annual
increases
Options 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 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
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 Tuition
Fixed Costs: School Building
- Utilities
- Insurance
- Contracts
Teacher salaries
Clerical salaries
Maintenance salaries
Fixed costs remain
Fixed costs no matter
What the enrollment
Tuition ought to be
Set to cover at least
Fixed costs.
Unfixed Costs:
- Supplies, textbooks
- Mailing, ISP, Phone
-Printing, PR, Staff Development
Where does your money
come from?
Parish/ Diocesan
Support
Fundraising
Endowment/Investments
Gifts/Bequests
Grants
Rental of facilities
Other
TUITION
What is your tuition history?
1. Have you kept tuition below the amount needed to cover fixed
costs?
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 SETTING
AND COLLECTION OF TUITION IN YOUR SCHOOL?
PLEASE REMEMBER:
YOU WILL NOT BE ABLE TO
CONTINUE THE MINISTRY
UNLESS YOU CAN PAY FOR IT.
Highlights
(in millions)
Net Revenues
1991
1992
1993
1994
1995
$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
xxx
xxx
xxx
xxx
xxx
Stockholder’s equity
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1991
1995
1992
1996
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