Unless you've been living on the third moon of Rigel VII for the few months or so, you're no doubt aware that we are in the midst of a severe economic downturn. As can be expected, the frum community has been hit hard by this recession. The extra costs that accompany an Orthodox Jewish lifestyle have severely allow for a much smaller economic margin of error than in a typical American household.
MoChossid commented that yeshivos and other Jewish institutions are usually the first ones to feel the pinch. He writes:
When people start to feel financial pressure, the monthly payment that goes first is invariably tuition. This, of course, is not surprising. As among missing mortgage payments, real estate taxes, car payments and tuition, the one with the fewest consequences is tuition. Schools will not toss a kid out for failure to pay tuition, particularly under these circumstances.
What he says is, for the most part, true. Most schools won't toss a child except in the most egregious cases of non-payment. They usually won't hit you up for late fees (although one of my kids' yeshivos does), and they certainly won't up your finance rate to 29.99% for missing a payment. They aren't going to toss you out of your home, throw you in jail or repossess your car. They're not going to turn off your lights or have your family living in an unheated house in the dead of winter.
Is it right that the yeshivos are on the bottom of the totem pole, so to speak? No, it's not. They should be at the top or on top. On the other hand, when the financial pie of any family is only so big, it's hard to fault a family for choosing to pay the mortgage, or the electric bill or the grocery bill ahead of the school; especially when the consequences for missing any of them are so much greater than the consequences of missing a tuition payment.
On the other hand, schools aren't merely buildings and institutions. They are actually made up of people - people who deserve to get paid (and paid on time) for the work that they do. But when parents begin to default on tuition payments*, and especially when that is coupled with a downturn in donations, it's usually the teachers and other employees of the school who suffer first. Most schools, when faced with a choice between paying the electric bill or the teachers, will go for the former.
All this comes to forefront this week as the teachers of Bais Faiga in Lakewood are now in the third day of their strike. They haven't been paid in quite a while and have finally decided to take matters into their own hands. 1800 (yep, that's one thousand eight hundred) girls are now out of school until the matter is resolved.
Ezzie asks an interesting question. He notes that schools are heavily dependent upon donations to meet their annual budget. Donations, of course, rise and fall with the general state of the economy. To insulate schools from the effects of an economic downturn, the majority of thier income would have to come from more... consistent sources, such as parent's tuition. He asks (bolding his):
The real question is: Is it truly economically viable - in any Orthodox community - to support and maintain a school within its own budget? Does anyone know of a school whose revenues outside of donations exceed its expenses? If so, let's see it! If not... what must the approach be? Store away the donations in good years to make up the gap in other years, like the Yosef/Pharaoh analogy a commenter said yesterday? Is that realistic? What changes are possible within the frum community to make it possible to keep a school afloat on its own?
I don't know the answer to his question, but my first guess would be that there are no such schools. If they did manage to somehow meet their expenses based on tuitions alone, then the excess funds from donations wouldn't have been saved, but would probably have been spent on capital projects and the like. Unfortunately, that seems to be human nature -- you see this phenomenon in government all the time -- in good years, rather than save money (or give some of it back to the taxpayers), programs (worthy and not) get expanded, and when bad times come, huge deficits spring up.
Of course, all this is contingent upon parents actually *paying* the tuition. If they cannot (things happen in life -- job loss, disability, death, divorce, etc.) then the system collpases again. But I think that if a school can get to the point where the vast majority of parents pay their tution, they should be able to ride out the odd cases where things go wrong.
So, where does this leave us? Assuming that schools must collect tuitions to stay viable, how do they deal with parents who cannot pay? Unfortuantely, I don't have an answer to that. You don't want to toss a kid out of school because of factors that are beyond his/her control (or even the family's control), but the school has to pay it's bills too.
A basic rule of personal finance is that you cannot (or should not) spend more than you earn. If you do, you are going to wind up in trouble. Of course, in any large population, people are going follow this rule to varying degrees -- some will be very fiscally responsible while others will continue to spend, spend, spend as if there is no tomorrow. As much as we might wish that it were otherwise, yeshiva tuition is a form of spending, and must be accounted for in the budget. Tuition payments, as a budget item, fall into one of three categories for most people:
1. Payments that can be made comfortably (i.e. affecting no other items in the budget other than savings)
2. Payments that can only be made by cutting other non-essential items in the budget (i.e. belt-tightening).
3. Payments that can only be made by cutting essential items from the budget (like the electric bill, or the mortgage payment).
For most of us, I'm willing to bet that tuition falls into the second category. However, as the economic situation worsens, I'm willing to bet that more and more families are sliding into the third category. For families in that category, there are a few options:
a. Find ways to earn extra income, dip into savings, or go into debt, so that the extra income can go to the essentials, sliding tuition back to category #2.
b. Ask for a tuition reduction, sliding the tuition payment into category #2.
c. Not pay and hope for the best.
Of the three possible options (and, granted, I might have missed some), all but the first (the hardest to implement) put additional economic pressure on the school. While the school may be able to absorb a certain percentage of parents whose tuition payments fall into the third category, there is a breaking point, beyond which the school can no longer operate. At some point, as the tuition checks stop coming in, the school will be forced to stop paying its own expenses (including salaries). Even if there is no finanical mismanagement in the school (yes, I know that's a big if), a school will eventually be unable to meet it's expenses.
That's where Bais Faiga is today.
Many people would like to blame the situation in Bais Faiga on the kollel lifestyle, but I'm not certain that the kollel lifestyle is really the problem. It's certainly arguable that because of the kollel lifestyle, Bais Faiga is the among the first instituions to come to this, but I believe that it will eventually spread to the "working communtiy" as well. The question is, when (and if) it hits the working community, at what point does the whole system become unsustainable? At what point will yeshivos be forced to make the difficult decision to turn away kids or close? Or at what point will parents have to make the decision to send their kids to public school?
In short, is the entire concept of everyone going to yeshiva sustainable? Or have we ran it as long as we can and now that the bills are coming due, it can happen no longer?