An education in finance
Recession teaches private schools to raise money and stretch dollars
- March 1, 2012
Sally Boese is like a doctor on rounds, constantly taking the temperature of her patients.
In this case, her charges are the 87 members of the Virginia Association of Independent Schools, where she has been the executive director for more than two decades.
On the whole, she has upbeat news to report on the schools’ health. Despite a recession that decimated investment portfolios and pushed some executives into unemployment, many middle- and upper-income families continue to provide their children with a private school education.
But some schools, and some regions of the state, fared better than others. “Data suggests that schools in the larger metropolitan areas, in particular the Washington (D.C.) area, and, secondly, the Richmond area have done reasonably well,” she says.
Schools in Southwest Virginia, where unemployment consistently runs higher than other parts of Virginia, aren’t doing as well, as are some schools in the Hampton Roads area that have suffered from a decline in defense spending.
One independent school in Hampton Roads — she didn’t divulge its name — saw enrollment drop from more than 1,000 to fewer than 800 in recent years.
A dip in enrollment among private schools has been a national trend as well. The National Center for Education Statistics says private school enrollment, in prekindergarten through grade 12, declined from 6.3 million in 2001–02 to 5.5 million in 2009–10, according to the latest statistics available.
About 10 percent of all elementary and secondary school students attended private schools in 2009–10.
Although there are many variations, independent schools fall largely into two broad categories — boarding or day schools, although some schools have both boarders and day students.
More international students
F. Robertson Hershey, headmaster of Episcopal High School of Virginia in Alexandria, says the number of families in the U.S. able to pay for boarding school is declining.
The recession did not cause the problem, he said, but the economic downturn has exacerbated it.
Increasingly, boarding schools have turned to international students to help fill their seats and provide a global perspective in their classes. The Association of Boarding Schools, a national trade group, says the share of total boarding students from overseas has increased from roughly 25 percent in 2007 to about 30 percent today.
Episcopal, a college preparatory school serving 435 boys and girls in grades 9-12 — all of its students are boarding students — experienced a 3 percent decline in applications in 2008 and another 3 percent decline in 2009.
Since then, however, applications have been on an uptick. They increased 8 percent in 2010 and 10 percent in 2011.
Hershey, who is president of The Association of Boarding Schools, says that to succeed in the current environment boarding schools must “define your program clearly, understand who you are and market effectively.”
The comprehensive tuition fee at Episcopal, including room and board, is $45,300.
Additional fees include a laptop computer, purchased through the school; a $250 technology fee; and approximately $700 for textbooks and other academic materials. More than $4.2 million in financial aid was awarded to roughly 32 percent of the student body in 2011-12.
With a $165 million endowment and continued success in fundraising, Hershey said Episcopal is well positioned for the future.
‘The new reality’
Nonetheless, even strong institutions have faced what one administrator called “the new reality” of limited income streams, rising requests for financial aid and uncomfortable belt-tightening.
“We’re cutting expenses wherever we can,” says Meredyth Cole, assistant head at The Madeira School in McLean.
Madeira, a boarding and day school for girls in grades 9-12, doesn’t seem like a candidate for cost cutting. It has an endowment in the $55 million range and, with 321 students, has not experienced any decline in enrollment.
Cole says, however, the school is much more fiscally conservative and cautious than it was before the recesssion, and for a good reason.
Madeira had just completed a $60 million fundraising campaign a few years ago when the stock market tanked. “We had to watch the dollars melt away,” Cole says with a long sigh.
Since then, Madeira administrators have become budget hawks. When the full force of the financial meltdown became apparent, Madeira immediately postponed plans to renovate its dorms.
It’s also renting out its gymnasium to community groups during the winter and adding extra sessions to its summer camp program.
Cole says Madeira, where the boarding school cost is $48,497 a year and the day school tuition is $36,824, is making a strong push to provide more financial aid to middle-income families.
Students of color represent 37 percent of the school’s enrollment, and administrators say they are committed to making the school financially accessible to as many students as possible.
Approximately 21 percent of Madeira’s students receive financial assistance, with the average grant being $37,826.
“Our schools are able to be diverse in large part to the extent that they are able to provide substantial amounts of financial aid,” says Boese of the Virginia Association of Independent Schools.
Freezing tuition at FUMA
The president of Fork Union Military Academy (FUMA) in Fluvanna County, where enrollment has declined to 455 students from 600 a decade ago, says the all-male, Christian boarding military school was late to offer financial aid.
Now, 58 percent of the students receive financial aid in addition to scholarships, says retired Rear Adm. J. Scott Burhoe, the school’s president.
To recover lost ground, Fork Union has a goal of boosting enrollment by 100 students during the next five years. The school, which Burhoe says is debt free, soon will open an $18 million dormitory to signal confidence in the future of the institution, which serves boys in grades 6-12 and the post-graduate level.
Mindful of the financial stress on families in a depressed economy, Burhoe says FUMA has frozen tuition over the last few years.
Tuition, room and board is currently pegged at $27,700; with fees and uniforms, the annual cost tips $30,000.
FUMA has an endowment of approximately $22 million, says Burhoe.
Raising money in a recession
Few private schools have experienced as many changes or taken on as many challenges during the recession years as St. Anne’s-Belfield School in Charlottesville.
The challenge: Mounting the first capital campaign in its 100-year history, amid a recession.
The change: Instituting a campus-wide dress code, putting everyone in school colors.
The results: Raising more than $44 million by the time the capital campaign ended in 2010; creating 100,000 square feet of new teaching and learning space; establishing a $22 million endowment (in 2005, the endowment stood between $3 million and $4 million); and achieving a record enrollment of approximately 890 students.
“I think what we’ve learned is that even in difficult economic times, people are willing to invest in education,” says head of school David Lourie.
Although the school saw enrollment drop by about 20 students in the most difficult period of the recession, it quickly bounced back.
Lourie says St. Anne’s-Belfield started a uniform dress code to help students focus on learning and to make the institution more welcoming to persons of all backgrounds.
“We value our diversity,” Lourie says. Twenty-two percent of the school’s enrollment consists of students of color, 40 percent of all students receive financial aid, and 18 countries are represented in the student body, in pre-school through grade 12.
Although principally a day school, St. Anne’s-Belfield has 60 boarders in its high school program. The school is co-educational.
Tuition ranges from $9,700 for pre-school day students to $21,000 for day students in grades 9-12. Boarding students, a number of whom are international, pay additional fees.
Steady growth in Richmond
The largest institution among the members of the Virginia Association on Independent Schools is Collegiate School in Richmond, a co-educational day school with just a shade under 1,600 students.
For Collegiate, the recession has hardly been a blip on the radar screen, although there have been increased requests for financial aid, and the school decided to postpone professional development programs for a year, before reinstituting them. Otherwise, full-speed ahead.
Keith Evans, the president and head of school, says the diverse economy in the Richmond area has helped Collegiate sail through turbulent economic waters.
During the heart of the recession, Collegiate built a baseball diamond with stadium, an athletics building, 13 tennis courts and a tennis building.
Tuition at Collegiate ranges from $17,630 in kindergarten through fourth grade to $20,690 for grades 9-12. Collegiate’s endowment as of June 30 was $40 million.
Richmond-based St. Christopher’s School, Collegiate’s arch rival in sports, also reports steady going during the recession.
Charles Stillwell, headmaster at the all-boys school of 950 students, says some families needed financial aid as people lost jobs and businesses closed.
To help families bridge the gap until they were able to recover from the worst effects of the recession, Stillwell says the Class of 1959, during its 50th reunion, created a special fund. “It allowed some boys who couldn’t stay here to remain,” he says.
Traditionally, about 25 percent of St. Christopher’s students receive some form of financial aid. The school’s endowment totaled $61.6 million, as of July 1.
Tuition at St. Christopher’s is junior kindergarten, $16,355; kindergarten, $17,805; grades 1-2, $18,090; grades 3-5, $19,565; grades 6-8, $20,575; and grades 9-12, $21,835.
Good timing in Norfolk
One of the nation’s oldest independent schools, Norfolk Academy (chartered in 1728), also has emerged from the recession in good shape, according to Headmaster Dennis Manning. “I don’t think anyone has been untouched in any sector of the economy, whether it is private education or automobile dealerships or banks. But we have been extraordinarily fortunate,” Manning says.
Norfolk Academy, a co-ed institution, enrolls about 1,200 students in grades 1-12 and has an endowment of more than of $32 million. The school has had a longstanding policy of setting aside 10 percent of its operating budget for financial aid.
Manning suggests that timing can be everything, noting that Norfolk Academy completed a $40 million fundraising campaign — the largest in the school’s history — just as the economy started to turn sour. Tuition and required fees at Norfolk Academy are: $17,500 for grades 1-6; and $20,500, for grades 7-12.
Biggest gift ever
The Cinderella story for independent schools in Virginia during the recession has to belong to Chatham Hall, a tiny (140 students) all-girls boarding school in Pittsylvania County for grades 9-12.
In 2009, Chatham Hall announced that it was the recipient of a $31 million bequest from an alumna, Elizabeth Beckwith Nilsen, class of 1931. It was the largest single gift to any girls’ independent school. “I started crying,” says Rector Gary Fountain.
During the same period, Chatham Hall was in the midst of a $25 million fundraising campaign, which raised $26.3 million
Today, Chatham Hall — which once had as many as 200 students — is sitting on a $51 million endowment.
Fountain has no grand plan for expanding Chatham’s enrollment. “We think education is best done small. But we think small schools should offer a big experience,” he says.
Today, 21 percent of Chatham’s enrollment consists of international students, and students routinely travel abroad.
For Chatham Hall, the recession years — which spelled calamity elsewhere — will forevermore be remembered as a high point in the school’s history.