Quiet revolution in school finance
By JOSEPH CLAUDE HARRIS
Its hard to identify a recent force in American Catholicism, from the Latino ascendancy to the pastoral consequences of urban sprawl, that hasnt hit Los Angeles first. In that sense, what happens in Americas largest Catholic archdiocese is an important indicator of future trends for the rest of the church.
People interested in Catholic education would do especially well to pay attention.
On Jan. 9, 1999, over 100 parish and diocesan leaders in Los Angeles met to consider the financial future of their schools. What they found is that the system of funding for their parish elementary schools has moved 180 degrees from the original design of total community subsidy promulgated by American bishops 116 years ago.
The leaders of the American church originally intended Catholic schools as a project of the entire parish congregation to which they were attached. At the Third Plenary Council in Baltimore in 1884, the bishops directed that near every church a parish school, where one does not yet exist, is to be built and maintained in perpetuum within two years of the promulgation of this council.
This funding model of total support by the parish included the contributed services of religious and whatever was necessary from the Sunday collection to pay school bills.
In recent years, however, parish support of elementary schools in the United States has dropped off considerably from the model of complete subsidy. In 1995-96, an average parish that had a school attached paid about one-fourth of the schools bills, amounting to a subsidy of $164,398.
This trend is even more pronounced in Los Angeles, where Catholic elementary schools actually require no subsidy whatsoever from the parish to which they are attached. In fact, elementary schools in Los Angeles have paid their own way since at least 1991, when these schools needed only an average annual subsidy from the Sunday collection of $6,250.
At the January 1999 meeting, Los Angeles parish and diocesan leaders met in an atmosphere of full fiscal disclosure to discuss the implications of this rather astonishing reality. The diocesan school office provided participants with a research paper titled Paying For Parish And Elementary School Programs. The paper considered several financial questions about school and parish operations:
Answers to these questions furnished a context for discussion of the policy implications of the present situation in Los Angeles. Dr. Jerome Porath, the superintendent of the Los Angeles Catholic school system, asked his leaders to consider over a period of several subsequent meetings what the parish fiscal connection to education should be ideally.
In this article I will outline answers to the three questions posed in the paper I prepared for the Los Angeles conference. I will also suggest a model for a fiscal relationship between a parish and K-12 religious education and school programs of all sorts.
First, the facts: Los Angeles elementary schools cost about as much as any parish elementary school west of Chicago -- $658,937 for 1995-96 compared to $649,937 as an average for all Western states. Since parishes in the region subsidized schools an average of $120,747, Los Angeles school leaders obviously found ways to replace the missing sum.
It probably comes as no surprise that school managers looked to parents to make up the difference. An average parish in the Western region charged tuition totaling $416,375; Los Angeles Catholic parents paid a total of $516,071. The additional $99,696 in tuition replaced most of the missing subsidy. The remaining dollars needed to balance the school budget came from increased fundraising efforts.
If you happen to be an economist, these above average costs might cause you to worry about a possible enrollment decline. After all, normal demand-supply curves suggest that purchases of a product dwindle when prices rise. Interestingly, however, enrollment in Los Angeles elementary schools has remained relatively stable despite increasing tuition, probably for two reasons that skew normal economic analysis.
First, rising cost placed additional, but apparently not insurmountable, fiscal burdens on participating households, amounting to 12 percent above the regional average for tuition and 16 percent more than typical for fundraising. In addition, the baptized elementary population in Los Angeles is growing at a substantial pace. The number of baptized elementary students increased from 572,010 in 1990 to 615,611 for 1995; in the year 2000 there will probably be 729,275 baptized elementary-age students. Thus the increases in the school-age population in Los Angeles seem, for the moment, more than enough to offset sizeable, but still manageable, increases in cost.
A second question concerns the fiscal condition of parishes. Is it possible that parishes in Los Angeles dont subsidize their schools because they simply dont have the money? In fact, Catholic parishes in Los Angeles generated a total cash surplus of $214.7 million or 11.9 percent of revenue between 1990-91 and 1995-96.
Left alone, this sentence might qualify as a lead to a National Enquirer exposé lambasting rumored Catholic church riches. The fact of such a surplus, however, should not shock anyone since the average cash surplus margin for American congregations -- Protestant, Catholic, Jewish -- in 1991 was 15.6 percent. Within the Catholic community, parishes in Baltimore, Cleveland and Chicago operated with respective surpluses of 12 percent, 17 percent and 1 percent between 1991 and 1994. Los Angeles leaders managed parish programs with a surplus margin typical of many other parishes in the country.
So, the fact that Los Angeles parishes take in more money than they need to pay the bills is not a surprise. But given that none of the extra money goes to the schools, it begs an obvious question: What are the parishes doing with it?
The key question to ask is how the financial condition of parishes changed between 1990 and 1996. Parish managers put their additional fiscal resources to work in a variety of directions. In the category of current assets, cash reserves grew by $17.5 million while investment balances increased by $42.8 million. In plain English, that means that parishes put some of their extra money into the bank or the stock market.
Parishes also purchased land for $13 million and equipment for a total of $15 million. In addition, parishes increased construction in process from a relatively small total of $1.1 million in 1990-91 to a total of $18.9 million for 1995-96. Since the number of parishes and schools remained unchanged, parish managers generally used surplus cash to bolster savings accounts and refurbish or add to existing buildings and equipment.
Parish managers thus seem confronted with a dilemma. Education programs need fiscal support, but at the same time buildings must be constructed and people hired to serve growing and increasingly diverse parish communities. Current levels of surplus cash arent enough to do both. The bottom line, therefore, is that parishes in Los Angeles are choosing to spend their money on direct parish needs, largely letting the schools take care of themselves. We are witnessing in Los Angeles, therefore, the exact opposite of the system envisioned by the Council of Baltimore more than a century ago.
This system works so long as economic conditions remain favorable and the market for Catholic education stays strong. At some point, however, one or both of these factors will change, and Catholic leaders need to be ready.
How? One idea is the concept of an education voucher funded by a concerted effort to increase Sunday collections. Such a voucher system would call for a public commitment on the part of the parish community to offer financial support for all parish religious education programs. The program would also be equitable since necessary funds would be offered to all students in the parish who registered for the school.
A parish religious education voucher could work as follows:
Parishes would offer fiscal support to every K through 12 student who registered for the parishs religious education program or school. In the case of a school, the support would have to be sufficient to bring tuition charges more in line with averages charged in other dioceses in the Western United States. Students in parish schools might receive a voucher for $250 to use as partial payment of tuition bills. These vouchers would cost an average parish that sponsored a school approximately $112,000.
For a parish religious education program, the voucher must provide funds adequate to hire a full-time professionally trained staff to support the thousands of lay and religious volunteers who presently teach the 224,000 students registered in parish religious education programs in Los Angeles. A voucher of $100 for every student in a parish religious education program would require an average commitment of about $81,000 for every parish in the archdiocese.
The total additional burden to a parish that sponsored both a school and a religious education program would be, on average, $193,000. Where would that money come from?
Catholic households in Los Angeles contributed an average of $101 annually in the Sunday collection in 1995-96. Household collections in Chicago totaled $267 for the same period. Los Angeles parishes presently pay their bills with a household effort that is only 38 percent of the contribution made by Catholic households in Chicago. Parish managers in Los Angeles could follow the U.S. bishops injunction to challenge their congregations to give more in the collection, especially if the added funds happen to be targeted to support a religious education voucher program for all registered Catholic students. An increase in the Sunday collection to an average annual household contribution of only $150 would provide sufficient resources to fully fund the religious education voucher program proposed in this essay.
This is of course only one idea. We have in Los Angeles a wonderful laboratory for working out the policies that will take Catholic education into the future. It will be fascinating to watch leaders in the archdiocese make the necessary decisions.
Joseph Claude Harris is chief financial officer for the St. Vincent de Paul Society in Seattle. He is the author of The Cost of Catholic Parishes and Schools (Sheed & Ward, 1996).
National Catholic Reporter, March 24, 2000