Strategic Tuition Setting! Comparing Catholic and Jewish Day School Practices

By Dr. Harry Bloom, President and Founder, Benchmarking for Good

Private school tuition is a mainstay topic at the dinner tables of private school families and a cause of great angst among school leaders and Board members. Why? It is very simple. There are two potentially conflicting needs that have to be satisfied. The first: being perceived as affordable to lots of families. The second: maximizing tuition income in order to fund an exceptional program.

Striking this balance is hard. And, It turns out, that Catholic and Jewish day schools go about it differently.

One might make the case that the Catholic model is stronger because it offers greater transparency: Tuition actually paid is closer to the official tuition rate. In contrast, as can be seen below, the difference between the Jewish day school’s “list price” for tuition and tuition actually paid is significantly broader. Thus, the advertised tuition is arguably higher than it needs to be, potentially dissuading some families from applying and making it harder to convey strong value relative to tuition. The counter argument is that the Jewish day school model of displaying a higher list price relative to anticipated tuition enables it to capture more tuition dollars from those more affluent families who are committed to enrolling even at a relatively high price.

On balance, the argument appears more compelling for the "Catholic model" (which is also practiced by a significant minority of Jewish day schools) for more closely aligning “gross tuition” and “net tuition” and thereby (1)attracting more potential prospective families and (2)reducing the risk that prospective families learn that significant tuition "deals" are available and become more inclined to negotiate their own deal.

Examining the Data:

Catholic and Jewish Day School Tuition-Related Metrics Compared

Our sample is drawn from approximately 100 (each) Jewish day schools and Catholic day schools reporting data in NAIS’ DASL database.

1. 2022/23 Ratio of Gross Tuition + Fees Dollars Charged Relative to Operating Expenses. On this Metric Catholic and Jewish Day Schools are aligned!

First, we assessed how 2022/23 gross tuition and fees dollars compared to total school operating expenses. As can be seen below, there is relative parity between Catholic and Jewish day schools on this metric, with both school segments setting gross tuition and fees levels at 95-97% of operating expenses. Thus, assuming every student paid the list price for tuition and fees, the schools would have collected virtually enough money from tuition and fees to fund their operating expenses with little need for other sources of income.

2. 2022/23 Ratio of Net Tuition Compared to Gross Tuition. In contrast, when we analyzed the ratio of actual net tuition and fees dollars generated versus gross tuition and fees we see a 9% difference between the results for Catholic and Jewish day schools.

For the median Jewish day school in the sample, the 9% difference relative to the Catholic school rate amounts to over $700k in 2022/23.

What might account for this difference?

● One possibility is that the Jewish day schools are serving a population with less discretionary income than the Catholic schools. Our demographic analysis of a significant number of school populations does not tend to support this hypothesis. We find that both Catholic and Jewish day schools tend to be mission driven to be demographically inclusive and have a mix of large and small families.

● Another possibility might be that parents considering Jewish day schools are considering a wider array of alternative school types than Catholic families, including independent schools, charter and public schools, and therefore may be more inclined to require discounts from "list price" tuition levels. This is more likely to be true of non-Orthodox Jewish and non Orthodox families represent a very significant percentage of the NAIS DASL school sample. But the reality is that in our experience a relatively high percentage of families enrolled in Catholic schools are not affiliated with the Catholic faith--and thus they too are likely presented with a fair number of school choice options.

Net, there is a not a simple answer that explains the causes of this factual phenomenon, but it is real. Moreover, the gap between Gross and Net Tuition appeared to increase in 2022/23 relative to the previous several years. The good news: whatever the cause of the phenomenon, there is a logical and attainable solution to at least partially and meaningfully address the problem of low tuition realization.

Key Concept: To increase their School's Tuition Realization, School Leaders Need to Document and Communicate the Valuable Outcomes their School Offers that More than Justify its Tuition!

This is a basic, commonsense three step process.

1. First, school leaders need to conduct research to identify those critical outcomes that current and prospective families desire from their child's school.

2. Second, they need to take the trouble to document their own school's relevant outcomes on those vital factors.

3. Third, they need to actively communicate those outcomes in every school communication medium, in creative and compelling ways, year round.

In our experience, schools that take this disciplined approach can predictably both grow enrollment and also increase tuition realization.

Benchmarking for Good welcomes hearing from you relative to your thoughts about this article and the subject at hand. Our Mission is to help nonprofits utilize benchmarking to identify improvement opportunities and utilize best practice to capitalize on them. We offer grants to associations of nonprofits in support of this important work. If you are interested in discussing how to capitalize on our grant opportunities, please visit our website at www. Benchmarkingforgood.org for more information and to complete a brief application.

Saluting Day Schools for Managerial Excellence Part I: Jewish Schools

by Dr. Harry Bloom. Founder and President, Benchmarking for Good, Inc.

Achieving consistently strong performance in private school management is an enormous challenge. Schools that do so deserve our approbation and emulation. In this post we will salute three Jewish day schools that have achieved consistent, excellent performance in four areas that speak to overall marketplace appeal and the loyalty they have inspired on the part of their communities.

Among roughly 100 Jewish day schools that submit data to NAIS’ estimable DASL information system David Posnack Jewish Day School in Davie, Florida; Emery Weiner School in Houston, Texas, and Paul Penna Downtown Jewish Day School in Toronto have illustrated consistently strong performance over the period 2019/20 through 2022/23 in the following key areas

1. Annual Enrollment Growth that is consistently up year after year and is an all round testament to managerial excellence.

2. Student Retention Rates consistently in line with top quartile private day school performance of ~95% and well above median day school performance of 91%. This speaks eloquently to the satisfaction of parents and students with the educational experience they are receiving.

3. Net Tuition Realization (as a % of Gross Tuition and Fees Charged) of 86-91% relative to a day school norm of ~80%. This demonstrates the high value parents believe they receive and their willingness to stretch to pay tuition charged.

4. Annual Campaign Growth over the period of 38-300+% relative to top quartile day school performance of +23%.

While there are numerous Jewish day schools excelling in one or more of these areas, the consistency of top level performance in all of them warrants (a) our collective approbation of these schools and their leaders and staff members, and (b) our in depth attention to identifying and implementing the best practice methods and processes–that represent the heart of Benchmarking for Good’s work and its grantmaking.

Future Posts will feature excellence in other segments of the nonprofit world where exemplary excellence abounds.

Changes in Post-Covid Tuition Realization: Welcome Development or a Cause for Concern?

By Dr. Harry Bloom, President and Founder-Benchmarking for Good, Inc.

One of the post pandemic trends I have noted during an analysis of independent school trends 2019/20-2022/23 is a decline in the ratio of Net Tuition to Gross Tuition + Fees that is particularly prevalent in several faith-based school market segments. Based on information reported to NAIS’ DASL database, the ratio of Net Tuition to Gross Tuition + Fees for all private day schools declined by about 1% over the period--from 81% to 80%. However, among Episcopalian, Jewish and Catholic day schools, the declines were 9%, 6% and 5% respectively. In contrast, the Quaker school ratio declined precipitously in 2021/22 but then recovered substantially in 2022/23 to end only 1% below its pre pandemic level. Please see Figure 1 below for details.

The Episcopalian school ratio declines were from a lofty 93% base but in contrast, the Jewish day school ratio was 71% pre Covid and sank to 65% in the post Covid environment. Granted, schools submitting data to DASL only represent a fraction of the total body of private schools– but the sample sizes are not insignificant and are diverse in terms of school enrollment and location.

What caused the declines?

Putting aside the generally temporary income reductions for current parents due to to the pandemic’s public/business closings, an optimistic view of the cause of the declining ratios would be that Covid, by showcasing the greater responsiveness of private schools to family and student learning needs, motivated large numbers of public school families to shift to private education. It is possible that a significant proportion of these families had limited means and therefore required significant scholarship funds. From a sustainability standpoint, schools made the calculus that enrolling mission appropriate families was a priority and that securing some incremental tuition was better than no tuition.

This scenario fits for those private school subsegments that gained enrollment (see figure 2 below), but not as well for the Jewish day school segment where post pandemic enrollment for the roughly 100 included schools was slightly lower. Please see Figure 2 below.

The logic also works if the increase in enrollment came from less affluent but mission appropriate families. However, if the declining tuition realization ratios represents relatively affluent families insisting on “deals” in order to maintain their children’s enrollment once the pandemic’s impact had passed– and this is somewhat supported by the fairly sharp 2021/22 to 2022/23 ratio declines among Catholic and Jewish Day School families–then this represents a significant risk factor for school sustainability. It signals a relatively low regard by the newly enrolled families for the schools’ value for tuition as well as a risk that even veteran families who become aware that tuition is negotiable, begin to request discounts.

Two Key Implications for School Leaders

There are a number of important implications from these data for school leaders whose schools have experienced declining tuition realization ratios:

First, that it is vital that they ensure not only that their schools’ value proposition (teaching quality, curriculum quality, co-curricular program quality, and social-emotional programming in relation to tuition) is as strong as possible. Additionally, it is critically important that the schools build awareness of this value by constantly marketing the positive tangible outcomes it delivers for students that justify its tuition level. These can and should include next level preparation outcomes relevant to current students, graduating students, and post graduate students.

Second, it is vitally important that standards of eligibility for tuition discounts be clarified and strictly adhered to in every relevant marketing message and medium and in every interaction with prospective and current families. Families who are convinced that a school’s value for tuition is unimpeachably high will be less likely to take a hard line negotiating “deals,” particularly if schools are willing to say “no” when the deals are not warranted by family circumstances. In the long run, tuition discipline coupled with rigorous value proposition scrutiny and marketing will prove to be a winning strategy.

In Summary

Those schools that have experienced a post-pandemic decline in tuition realization can and should view this as an urgent wake up call to assess relative value for tuition, the effectiveness of its communication and the integrity of standards for offering tuition discounts. In this manner, problems can be turned into learning experiences that will enhance long term school vitality.

Benchmarking for Good’s Mission is to provide customized comparative benchmarking information, training and consulting services to associations of non-profit organizations. Benchmarking involves purposefully and reflectively using comparative data to learn from successful peer organizations.

Our goal is to enable non-profit organizations to better fulfill their missions by using benchmarking to enhance the effectiveness and efficiency of their operational processes and thereby reduce unnecessary costs, increase the productivity of expenditures and investments, and maximize revenues.

Contact Dr. Harry Bloom, President and Founder at harrybloom@benchmarkingforgood.org to learn about our grant programs.