Would $8,000 Scholarships help Sustain NJ Private Schools?

Posted on March 23, 2010



Note: This was written prior to the announcement that the scholarship amounts would be $6000 for elementary and $9000 for secondary schools. The same logic and findings apply, though to an even greater extreme in light of these numbers.

Part of the argument being made for providing $8,000 scholarships for students to attend private schools in New Jersey is that those scholarships would help financially sustain struggling New Jersey private schools. I published an extensive report on private school costs last summer, here: http://epicpolicy.org/publication/private-schooling-US

In this report, one issue I address is the fiscal problems of urban Catholic schools which have struggled to survive on shoestring budgets. The reality is that most operate with a very large differential between tuition charged and actual operating costs. In 2007-08, average tuition charged by Catholic Parochial and Catholic Diocesan schools in New Jersey was about $4,000 and $5,000 respectively at the elementary level, and about $9,000 at the secondary level (based on the very limited sample in the Schools and Staffing Survey of 2007-08, National Center for Education Statistics). Private non-religious school tuition was about $11,000 at the elementary level and $18,000 at the secondary level. the weighted average tuition across all school types for New Jersey private schools was $10,206. So, even keeping this figure in mind… if tuition held constant from 2007-08 to 2010-11, the $8,000 scholarship would fall $2,000 short of average tuition… not even average cost.  Clearly, private schools on average would be taking a loss to accept these scholarships, unless only the lowest spending private schools accepted the scholarships or unless the scholarships were to stimulate massive additional philanthropy outside of the tax credit program.

But again, these above tuition estimates are based on relatively small numbers of schools and the schools from these national surveys cannot be listed individually because of confidentiality issues.

Most importantly those tuition figures don’t represent actual total costs of operating and maintaining these schools. All rely on some form of philanthropy and/or church subsidy to cover full costs. Below is a summary graph of IRS Tax Filing data on New Jersey private schools (2007 tax year).  Schools that most consistently report their financial data (by obligation) are those which are not officially religiously affiliated (specific church), but some religious schools do. The graph below includes  Total Expenditures per enrolled pupil, where Total Expenditures are from the IRS 990 (and include all expenditures including those for capital in the given tax year and other contracted services) and enrollment data are from the National Center for Education Statistics Private School Universe Survey.

Notably absent in the graph below, but included in the tuition averages above are Catholic schools, which represent approximately 67% (seems to vary by year of data) of students in private schools in New Jersey.

Most schools represented by the averages below would need to take a substantial loss for each child accepted on the $8,000 scholarship (in 2007).  There are no doubt interesting quirks (large capital expenditures for some?) and omissions (suspiciously low expenditures for others) in these individual school reported data, but they are illustrative nonetheless. Boarding schools are excluded.

An important feature here is that the only schools that would not operate at a loss on the proposed voucher level are religious schools. That is, we should expect that at this voucher level, the vast majority if not all students using the voucher would have to use it at private religious schools unless private non-religious schools were able to find substantial additional resources to offset large per pupil losses (cost – voucher differences).

In general, an $8,000 voucher would likely do little to help sustain fiscally stressed private schools in New Jersey because the voucher does not cover operating costs.

Providing these vouchers might (would likely) increase private school enrollment, making certain private schools more accessible to low-income families. And, some students may benefit from this (while others may not). But, such a program will likely do little to cure the fiscal woes of cash strapped private schools. In fact, some have argued specifically in reference to Catholic schools that parishioner philanthropy to the schools may decline as those schools take on more non-Catholic students through vouchers, causing the school’s mission to drift.

In a related recent post, I point out that in general, when it comes to these large differences in spending by private school sector, you get what you pay for: http://schoolfinance101.wordpress.com/2010/02/20/stossel-coulson-misinformation-on-private-vs-public-school-costs/

From previous post:

  • Private independent day schools which provide small class sizes with highly academically qualified teachers spend well above nearby public schools.
  • Catholic schools, where they report their finances (not the crude survey summary data of tuition and expense compiled annually by the National Catholic Education Association) spend marginally less than nearby public schools (but charge much lower tuition than cost), perform about the same if given the same kids and have comparably qualified teachers in terms of academic preparation. Note that Catholic schools in trying to operate on a shoestring have been financially failing at an alarming rate. That is how markets work when you try to hard to price your product below the cost of maintaining quality (a more friendly spin being that the social service mission of urban Catholic schools has outpaced church philanthropy). I discuss this extensively in the report.
  • Conservative Christian schools (to the extent they can be lumped together) operate at much less per pupil than traditional public schools and have lower outcomes given the same students and have disturbingly academically weak teaching staff based on national survey data.

Note: According to: http://www.njsendems.com/release.asp?rid=3254

The proposed voucher amount is to be $6,000 (elem) to $9,000 (secondary). The link above claims:

The $6,000 to $9,000 amount is the current average cost per student at non-public schools…

This statement is completely absurd… and quite simply FLAT OUT WRONG! According to what source? Does actual data matter at all here? Wow! Even Cato, which grossly underestimates private school costs estimates the NYC metro average at $10,500 for 2009 (see first section of this post, Cato link).

Mean per Pupil Spending by Private School Type

Distribution of Private School Students in New Jersey

Distribution of per Pupil Expenditures by Private School Type

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