When will Private Schools' bubble burst ?

[Anonymous]

Anonymous wrote:Ok, ranting bubble PP, what school do your children attend? What's their tuition next year? Put your money where your mouth is.

I disagree that we should all just continue to blindly write checks, and for that you are personally attacking me. Why is that ?

Does no one else out there not wonder where the money ( to the tune of 40 million in revenue a year is going?) No, I don't want an annual report in the mail that uses pie charts to show what percentage goes to "salaries" and " health care costs" . I want actual salaries on paper, with their names next to them. I want to see a copy of the contract with BCBS, along with the fine print on what the employee deductible is, what the employee payroll deduction is, and what incentives the insurer offered the school to strike that arrangement with its employees. I want to see all three bids on the maitenance contract ( I assume in was not a no-bid, to the company of a board member, right)

The fine details. You know, the kind of audit a board would do if it weren't hand picked, and if it wasn't bound and gagged because to speak up would put their DC's position at the school at risk.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Health care costs; higher teacher salaries; new FTE positions for the legions of IT specialists needed to support all the technologies; constant capital expense for IT and lassroom technology; new FTE positions for expanded college counseling and educational counseling; new FTE positions for the environmental or diversity or international programs coordinator; higher insurance premiums due to more litigation against schools; higher energy costs (costs a lot to fill up the as tank on the school bus and heat and cool those big buildings); fancy new facilities.

That's where the tuition money goes. Crazy rising costs in aggregate but any given piece seems very defensible.

The average It salary is about 40K a year. maybe the head IT guy gets 200K/year, so the whole department costs the school maybe 500K a year. OK, say its a million. Now where did the remaining 39 million dollars in annual revenue go ? teachers salaries ? I don't think so. Even if health care costs have tripled, that still does not get you to 40 million in expenses a year ?

1. You seem to be focusing on just one item out of a long list of accurate items -- and even at that, remember to multiply every FTE salary figure by about 20 to cover payroll taxes and benefits.

2. If you look at a typical private school budget, something like 65-70% of costs are related to personnel. Health care premiums is a big piece of that; moreover, talk to private school teachers who've been around for 20 years or more and they will generally be able to identify a time period where they got big pay raises (in part bc the pay was so very low).

3. Your 40 million revenue per year figure is crazy. A private school with 500 kids at 35k is $17.5 in tuition revenue BEFORE financial aid, so let's say $15 million. The best day school annual giving campaigns might raise $2 million per year, so that's high end. A very good endowment for this area is $40 million -- a prudent 4-5% draw gives you $1.6 - 2 million more. So you're talking about $18.5 to $20 million in yearly revenue, max. Capital campaigns by definition are raising for a specified capital expense like a building. Even if the capital campaign raises money for endowment, $10 million (NOT easy by any means for a day school to raise) still only gets you an additional $500,000 yearly income with a 5% draw. On the expense side, assume at least 100 full time employees (teachers, IT, admin, front office, buildings and grounds, some coaches, nurse, counselor, college counselor, learning specialist, librarians) for a school of that size.

The economics get a little better at 1000 students, but schools are not great places for economies of scale -- small class sizes mean lots of teachers. One area independent with an enrollment of about 1000 has at least 225 full-time faculty/staff.

No, enrollment is more like 900-1,100 with tuition at 37K-40K. Capital fund raising is never ending ( when one ends another begins) to the tune of 10-20 million a year raised. On top of that, these schools strong arm parents into donating their $1,000 to $2,000 tuition deposit when their kid leaves the school ( you have to specifically ask for it back in writing within 30 days of DC's graduation or they keep it) so heck, that's an easy way to get an extra 160K for month of June alone at the end of every school year.. Where's the party this July ?

[Anonymous]

23:53, I'm not going to try to argue with you point by point. I gave you a long list of expense categories and you appear to reject it in total. I wouldn't say I'm naive -- I happen to think the area independents have too many FTE positions that are not crucial to their core missions -- but I do listen, ask questions, and pay attention to the answers.

Your contention that schools in this area have $40 million in gross revenue or routinely raise $10-$20 million a year is just silly, honestly, as is your insistence that the average independent school has something like 900-1000 students. The bigger K-12s may be in that range (Sidwell, GDS), but many schools are closer to 500 (St. Albans, NCS, Georgetown Prep, Georgetown Visitation, St. Andrews) and quite a few others (such as Landon, Holton, Bullis, Maret) are between 600-650 students.

I don't disagree with the bottom line point that tuition costs are too high and have to be corralled, and that schools need to make hard choices to do that, but your "40 million a year in revenue" language will make it impossible for anyone to ever take YOU, specifically, seriously.

[Anonymous]

Our HHI is 140k and we had to remove our two children from private school precisely because of rising tuition costs. When we started it probably cost us 12k-15k yr per child -- fast forward 6-7 years and we were paying double that. In that same time frame our HHI only went up about 25%. You do the math. Any way you slice it, and whatever sacrifices we made, it just wasn't sustainable, so public school is our new fate. It's a shame really. We were the sort of family the private school should want to keep.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Ok, ranting bubble PP, what school do your children attend? What's their tuition next year? Put your money where your mouth is.

I disagree that we should all just continue to blindly write checks, and for that you are personally attacking me. Why is that ?

Does no one else out there not wonder where the money ( to the tune of 40 million in revenue a year is going?) No, I don't want an annual report in the mail that uses pie charts to show what percentage goes to "salaries" and " health care costs" . I want actual salaries on paper, with their names next to them. I want to see a copy of the contract with BCBS, along with the fine print on what the employee deductible is, what the employee payroll deduction is, and what incentives the insurer offered the school to strike that arrangement with its employees. I want to see all three bids on the maitenance contract ( I assume in was not a no-bid, to the company of a board member, right)

The fine details. You know, the kind of audit a board would do if it weren't hand picked, and if it wasn't bound and gagged because to speak up would put their DC's position at the school at risk.

This ! x 10000

If our $35K+ private wants to call me quarterly and constantly solicit donations as often as they do (even from grandparents) then they better prepare a more compete, very detailed guide to revenue and specific salaries!

Otherwise they can consider themselves lucky to get full tuition paid on time.
Meanwhile, our college sophomore's tuition/room/board cost less than out 8th graders day school (not even lunch is included)

[Anonymous]

Anonymous wrote:

Anonymous wrote:Ok, ranting bubble PP, what school do your children attend? What's their tuition next year? Put your money where your mouth is.

I disagree that we should all just continue to blindly write checks, and for that you are personally attacking me. Why is that ?

Does no one else out there not wonder where the money ( to the tune of 40 million in revenue a year is going?) No, I don't want an annual report in the mail that uses pie charts to show what percentage goes to "salaries" and " health care costs" . I want actual salaries on paper, with their names next to them. I want to see a copy of the contract with BCBS, along with the fine print on what the employee deductible is, what the employee payroll deduction is, and what incentives the insurer offered the school to strike that arrangement with its employees. I want to see all three bids on the maitenance contract ( I assume in was not a no-bid, to the company of a board member, right)

The fine details. You know, the kind of audit a board would do if it weren't hand picked, and if it wasn't bound and gagged because to speak up would put their DC's position at the school at risk.

I see lots of yap-yap, and no answer to the simple questions. What school? What's the tuition?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Ok, ranting bubble PP, what school do your children attend? What's their tuition next year? Put your money where your mouth is.

I disagree that we should all just continue to blindly write checks, and for that you are personally attacking me. Why is that ?

Does no one else out there not wonder where the money ( to the tune of 40 million in revenue a year is going?) No, I don't want an annual report in the mail that uses pie charts to show what percentage goes to "salaries" and " health care costs" . I want actual salaries on paper, with their names next to them. I want to see a copy of the contract with BCBS, along with the fine print on what the employee deductible is, what the employee payroll deduction is, and what incentives the insurer offered the school to strike that arrangement with its employees. I want to see all three bids on the maitenance contract ( I assume in was not a no-bid, to the company of a board member, right)

The fine details. You know, the kind of audit a board would do if it weren't hand picked, and if it wasn't bound and gagged because to speak up would put their DC's position at the school at risk.

I see lots of yap-yap, and no answer to the simple questions. What school? What's the tuition?

+1. Tuition at our school and all the schools we looked at is closer to $35K and in some instances, below that. STA is the most expensive school in the area and it is not (yet) $40K. I'm curious what school that you- someone "in the know"- pay tuition to.

[Anonymous]

http://www.npr.org/blogs/money/2012/06/21/155515613/how-much-does-the-government-spend-to-send-a-kid-to-school

Here's an interesting comparison point for everyone. Teacher ratio is typically at least 2x in private school.

[Anonymous]

There is no doubt there are still a lot of families who can afford to pay 40k, but there are less. At 20k a year the selection would have been more on "how bright the kids are"
At 40k it is more about who can afford it.

[Anonymous]

Anonymous wrote:23:53, I'm not going to try to argue with you point by point. I gave you a long list of expense categories and you appear to reject it in total. I wouldn't say I'm naive -- I happen to think the area independents have too many FTE positions that are not crucial to their core missions -- but I do listen, ask questions, and pay attention to the answers.

Your contention that schools in this area have $40 million in gross revenue or routinely raise $10-$20 million a year is just silly, honestly, as is your insistence that the average independent school has something like 900-1000 students. The bigger K-12s may be in that range (Sidwell, GDS), but many schools are closer to 500 (St. Albans, NCS, Georgetown Prep, Georgetown Visitation, St. Andrews) and quite a few others (such as Landon, Holton, Bullis, Maret) are between 600-650 students.

I don't disagree with the bottom line point that tuition costs are too high and have to be corralled, and that schools need to make hard choices to do that, but your "40 million a year in revenue" language will make it impossible for anyone to ever take YOU, specifically, seriously.

LOL. you prove by your need to repost each time I do, that you , in fact, take this information being posted VERY seriously. It is accurate and you know it.

Is your only come back to falsify the facts until you are called out and to engage in ad hominem attacks. You are just bringing MORE attention to the issue.

[Anonymous]

Anonymous wrote:There is no doubt there are still a lot of families who can afford to pay 40k, but there are less. At 20k a year the selection would have been more on "how bright the kids are"
At 40k it is more about who can afford it.

And take in from someone who sees the effect on the classroom: it shows

[Anonymous]

I think this is actually a good pquestion - especially in the DMV. All 4 of my kids have done a combo of public and private.

I grew up in the metro area of a large Midwestern city that is recently coming out of some difficult economic times. Most of the private schools left there are parochial or academic specialty. There are a couple purely independent schools worth mentioning, but that is it. There is no longer a market for high priced independent schools there - especially ones that are not considered tier 1. People invest in the public schools which, and in the suburbs, are above average.

I have lived here for 24 years and I am often amazed and the number of private schools and cost of private school education here. There seems to be an "arms race" here with respect to cost. And you are seeing some independent schools struggling with enrollment at higher grades and admitting kids they would not have admiited a few years ago - especially 2nd or 3rd tier schools in areas with good public school districts.

As I have said before in this forum, the ONLY way that this whole independent school thing even works is because the DMV is economically stable compared to most other parts of the country because of the presence of the Federal government. Any type of prolongoned downturn in this area would drive students back to public schools and all but top tier of these schools out of business. That is why I tell people that they should be interested in the Federal budget and spending cut rumblings - because it is a ripple effect.

[Anonymous]

One poster is hovering on this thread repeatedly, and falsely claiming, that NW DC privates do not take in 40 million a year in revenue. Every time he/she posts he under-reports either the enrollment ( under-reports by say 500 students) or under-reports tuition ( ignores that this year every school hiked tuition 4-6 % again, just like they did the year before and the year before , and the year before. My point is: if this were any other business, would not the consumer balk at the price of the product DOUBLING in 6 years ? Just where , where, is the 40 million in annual revenue going ? where?

Keep in mind, these figures are based on LAST YEARS Tuition, and next year it will be $2,000- $3,000 more at every school.

Sidwell: Enrollment( from their website) : 1,075 X tuition $35,000 ( last years figure)= 37 million in tuition revenue alone ( before we get to capital campaign, annual fund)

GDS: Enrollment( from their website) : 1,075X tuition $35,000( last years figure)=37 million in tuition revenue alone ( hey, any GDS parents know what their cc raised this year?)

Cathedral Schools: Enrollment( from their website) : 1,150 studentsX $37,000( last year)=42 million in tuition revenue alone( ? capital campaign/? annual fund)

WIS: Enrollment( 850)X $32,000= 27 million in tuition revenue alone ( ? capital campaign)

All of these schools claim non-profit status. So, where do these amazing profits go ? teacher salaries ? Anyone talk to any teachers lately ?

seriously, why has tuition quintupled in last 20 years and doubled in the last 6 years? where the heck is all that money going ? Capital campaigns have paid for the building improvements and IT additions, so THAT is not where money is going.

[Anonymous]

profits when you subtract operating cost from tuition revenue of 37 million to 42 million are enviable compared to any business model. Does any other parent out there want to see exact expenditures ? Again, not interested in pie charts ( does the US budget just consist of a pie chart or is it a line by line budget?)

[Anonymous]

Remember to factor in financial aid--e.g., Sidwell gives about $6m in aid per year, so it collects closer to $31m in tuition by your numbers. I'm not saying the school is suffering in any way, but that is a significant adjustment.