Setting Tuition

Boards routinely talk about setting tuition as being the hardest decision to make each year. The reason is not hard to discover. Board members are compassionate and loving people who know the hardships of families in their communities and desire to make it as easy for them as possible to be a part of the Christian School community. Keeping tuition “reasonable” or “affordable” seems to make sense from that compassion point of view.

There is another reason that is not quite so honorable. Most Board members are actually current parents at the school and thus have a vested interest in maintaining tuition as low as possible. They may feel that the education is good enough and that higher expenditures that would impact their own finances are unwarranted. Setting tuition is hard because it is emotional and personal.

Let’s begin then by examining two of the assumptions made about tuition.

  1. Higher Tuition Equals Lower Enrollment. This assumption sounds intuitively right. In a supply and demand economy, the store with the cheapest goods wins. If every Board member is in some kind of business – selling pizza, printing, services, manufacturing – the story is always the same that you have to compete on the basis of price. But for our schools, this does not seem to be true at all. Enrollment in our schools is not based on price but on value. A study published in February 2017 by NBOA showed that there is no connection between the level of tuition increase and the level of a school’s enrollment. We quote the conclusion in full: “Independent schools serve a market niche that does not seem to experience enrollment declines as price increases. This result is consistent with previous studies. Furthermore, tuition increases and changes in enrollment share few, if any, relationships. We believe that the distinctive missions of our individual schools and the effective execution of that mission – known as perceived quality, perceived value, or distinct value proposition – are the more important determinants for enrollment stability. The research suggests that as long as parents perceive high-quality, differentiated education, individual schools have flexibility to consider tuition increases without experiencing adverse enrollment effects. However, the inverse of that statement is also true: If families do not perceive a high-quality education with a strong value proposition, increasing tuition or even keeping it flat or reducing it will still result in dropping enrollment. Of course, as in everything, there are individual exceptions to these findings. Your school could be the anomaly, but the most important takeaway from the 2016 study is that statistically, changes in tuition do not translate into changes in enrollment demand. It’s the mission and excellent execution of that mission that are the significant enrollment stabilizers.”
  2. Parents Can’t Afford Tuition. This assumption is actually correct and therefore not very helpful. USDA.org brings out the annual cost of raising a child with a calculator at its website. Putting in a Christian family in the mid-west with three children aged 13, 11, 9 brings up a result of $21,804 including about $600 each for educational costs. This is for a family with an income of under $59,200. In that income bracket, the Tax Policy Center says the average family pays 13.3% or $7,873 in taxes. The Economic Policy Institute calculates the costs for an average five-person family to be $83,931 with no provision made for savings of any kind. Taking off the child care component brings the total down to $67,616. It doesn’t matter which way we run the figures, parents can’t afford tuition until they are in income brackets above and even well above the mean. This family with three children has to be able to clear $18,000 to $30,000 after taxes and expenses to afford the Christian School.

These two realities thus form the background for tuition setting. Tuition has no impact on enrollment (which is encouraging) and parents of average income can’t afford tuition (which is discouraging). Full tuition is paid by parents of higher than average income who are motivated by the benefit to their children.

In tuition setting, we have to start from a different place altogether. As in so many things, the appropriate starting place is the school’s own mission. The Christian school budget is not just a balance sheet or an audit statement. It is, rather, the expression of the mission and a clear statement of the priorities set by the school in order to fulfill that mission. In the budget lines can be seen the school’s priorities, its values, its statement of faith. While many pious things may be said about who and what the Christian school is, the truth of the Christian school can be examined by looking at the way in which it deploys its resources.

The budget reflects the commitments that the school’s servant leaders have made. It is a series of statements about excellence and the limits of excellence. These statements might be summarized in the following ways:

  • The Christian school commits to excellence
  • The Christian school must limit its objectives to those that are mission appropriate and that can be achieved with excellence
  • The budget must fully fund excellence

Now we have a context within which to place tuition, the most important contributor to the school’s income. Tuition is the responsibility of the care-giver who seeks education for a child in a Christian school. Usually that is a parent; other times it is the grandparent; sometimes the student herself takes a job to help pay for tuition; tuition can come from multiple sources.

The school charges tuition so that it can pay its bills. While that seems obvious, not understanding it clouds any discussion on tuition and tuition levels. There is a fiscal reason for tuition – it is not arbitrary or grasping. Most of the budget is allotted to compensation (c.70%-80%) with the remainder (c.20%-30%) being largely fixed costs such as utilities. With regards to compensation, Jesus himself commented that “the worker deserves his wages” (Luke 10:7) and the Scriptures – Old and New Testaments – are full of admonition not to defraud the laborer or hold back the laborer’s due. Charging tuition is not an embarrassment but an expression of mission and moral financial leadership.  Tuition is a statement of mission excellence.

Setting tuition means obeying the rules of mathematics driven by an easy to understand formula:

Tuition = the cost of excellent mission delivery / by the number of students in the school.

Algebraically, we might express that as:

T = {EM \over S}

The Principal, the Finance Committee, and then the Board have to think about the children of the school and not about their parents:

  • Set tuition for excellence of mission delivery
  • Be child-centered in your approach making the needs of the child come first
  • Leave the responsibility for the family’s finances to the family

It is not the Christian school’s mission, its business, or its prerogative to assume responsibility for the family finances determining what they can and cannot pay, on what they should and should not spend. At best, it is patronizing; at worst, it is overreach. And there is no alternative. Either you have excellent mission delivery or you don’t. Either you pay your employees professionally or you don’t. Either you have good supplies for the teachers to use or you don’t. Either you maintain the buildings or you don’t. Either your school is safe and the bathrooms clean or they are not.

It is the Christian school’s business to glorify, magnify, and testify to the grace and glory of God by providing excellence in all areas of the school’s operations and being willing to make the decision to fund it appropriately through tuition.

This blog first appeared at Christian School Management and has been reprinted here with permission of the author, Simon Jeynes, CSM Executive Director. 

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