CALIFORNIA PRIVATE SCHOOLS RETHINK TUITION PRACTICES IN ECONOMIC DOWNTURN: One West Hills school is lowering tuition; others look at freezing fees or basing them on ability to pay.

By Carla Rivera From the Los Angeles Times

December 21, 2008 -- Mira Winograd attended a special parents' meeting recently at Kadima Hebrew Academy unsure what to expect but "flipped out" when she heard the news. The private Jewish day school in West Hills announced it would lower tuition by an average of 20% next year to encourage financially strapped families to keep their children enrolled.

"I was truly in shock," said Winograd, whose son, Toby, is a sixth-grader. "I wanted to stand up and say, 'Thank you.' Paying for a private education is always difficult, but this has made it easier, and there are few things in the current economy, or in life, making things easy."

Lowering tuition is almost unheard of in the private-school world, where the prevailing strategy is to increase annual fees each year but make more financial aid available. The current economic collapse, however, is causing some schools to rethink the status quo. They are concerned about middle- and even upper-income families who can no longer afford to pay full tuition but who resist applying for financial aid out of pride or because they don't think they're eligible. Still, some schools have reported increased requests for financial aid this year.

hopes to stem attrition and attract new families, with a goal of 300 total enrollment next fall, up from the current 260. Tuition for students at Kadima Heschel West Middle School will fall from $20,910 to $16,905 next year and in elementary school (grades 1-5) from $18,314 to $14,300.

"My concern has been that we're losing that middle class who don't feel comfortable asking for financial aid," said Barbara Gereboff, Kadima head of school. "For us, this is an investment in our future. These are the kids who are going to be contributing to the community, giving back."

The school will maintain programs and competitive faculty salaries with increased donations from families who can pay, along with foundation and community support. Tuition assistance will still be available for families who qualify.

Kadima administrators said they hope their action will serve as a model for other private schools.

"The reality is all of the old assumptions have to be looked at in the context of the current economy," said Kadima's Director of Finance Arnold Rudnick. "Schools have to begin thinking outside of the box."

But in Southern California's competitive private-school market, it remains to be seen whether other campuses will follow suit. St. Mary and All Angels School in Aliso Viejo recently announced that it will freeze tuition in the 2009-2010 school year at the current rate of $10,800 for pre-K-5 students and $11,050 for students in grades 5-8. Such a freeze is nearly as unprecedented as lowering tuition.

will depend on reserves to bridge the gap and is also seeking to boost fundraising to establish an endowment.

"Like a lot of other schools, we saw an increase of families asking for financial aid, which is especially crucial because a lot of families have two or three children here," said Head of School John O'Brien. "We did a thorough analysis, looked at contingency budgets needed to put this in place and made a very well-thought-out, but bold decision to hold tuition and at the same time to show that, as a Christian school, we really care. We want to be compassionate but also want to retain the families we have now."

Private schools are dependent on revenue from tuition to fund programs, staff salaries and other expenses that increase with the cost of living each year. Even then, school officials say, tuition alone rarely covers the total costs to educate a student. Los Angeles private-school tuitions are among the highest in the nation, with some annual rates topping $28,000.

The common wisdom is that experiments in lowering or freezing tuition typically backfire and necessitate hefty increases later. But that thinking may be outdated or at least overwhelmed today by the severity of the financial downturn, educators said.

James McManus, executive director of the California Assn. of Independent Schools, said he can't remember another school in recent times lowering tuition. Kadima's example probably will not have an immediate effect, as most schools by this point have completed months of number-crunching that can't easily be altered, he said.

Private schools have to be careful in discussing specific tuition rates before they are set to avoid anti-trust laws that prohibit price fixing, he noted.

"What it does do is open up discussion for the next two, three and five years, depending on how long this economic turmoil endures," McManus said. "I am hearing that the rate of tuition increase is probably going to slow to show sensitivity to families."

And the financial crisis has prompted school administrators to consider ways to head off enrollment declines and address increasingly stratified campuses made up of low-income students dependent on financial aid and high-income families who can pay full price.

Some schools are adopting individualized tuition rates based on ability to pay. At the Sequoyah School, a K-8 campus in Pasadena, a new program this year allows families to pay rates arranged along an index and based on financial means. Families with annual incomes up to $150,000 qualify for indexed tuition.

estimates that 30% to 40% of students are now paying below the top annual tuition of $15,200, said Director of School Josh Brody.

"The mechanics are similar to financial aid but the philosophy is different than having a top tuition and then giving a family an award," Brody said. "When we give talks to prospective parents, we can say the top is this and then it goes down from there. We're hearing from parents that it makes the school feel more accessible."

in San Francisco has used a similar concept of flexible tuition for nearly 20 years, based on the feedback of parents and one particular father who eschewed financial aid, said Head of School Al Adams.

"He said 'Al, I don't care how much financial aid you have, I'm never going to ask for it. To me 'financial aid' sounds like a handout and would make me feel like a second-class citizen.' "

For families that qualify, several factors are considered, including income, number of school-age children and the cost of Bay Area living. In an example on the school's website, a family with two children, a combined income of $154,000 and a net home equity value of $293,000 would be expected to pay about $17,214 for educational expenses -- or $8,607 per student. Full tuition at the school this year is $28,980 per student.

"Having a robust middle group is a literal and figurative bridge between the two extremes in building a school culture," Adams said.

"Looking at the coming year, we're adding money to the flexible tuition budget expressly for those on the margins, who are stretching really hard to have their children here."