Elementary Parish and School Financial Update

Secretariat for Education

Department for Catholic Schools

2005-2006

Background Information

Why the Policies for Financing Elementary Schools were needed.

Consolidated Operating (Deficit)/SurplusParishes with Schools

Millions of Dollars

($5.00)

($4.50)

($4.00)

($3.50)

($1.50)

-5

-4.5-4-3.5-3-2.5-2-1.5-1-0.50

90-91 92-93 Proj 93-4 Proj 94-5 Proj 95-6

Funding as % of School Expenses (91-92)Pittsburgh and U.S. Catholic Schools

Pittsburgh

Parish Subsidy

52%Tuition34%

Other14%

U.S. Catholic

Tuition51%

Parish Subsidy

34%

Other15%

Median Tuition Rates (1990-91)Pittsburgh and U.S. Catholic

$600

$970

$0 $200 $400 $600 $800 $1,000

MedianTuition

U.S. CatholicPittsburgh

Policy Summary

Basic Funding Formula – Tuition 60% – Subsidy 25% – Development/Fundraising 10%– Other 5%

All parishes give 10% minimum (35% maximum) of income

No borrowing to finance operating deficits

The following positive trends have occurred since the new policies were promulgated in May of 1995.

Elementary School FundingTuition as a % of School Expense

51%51%

34%

45%47%

50%52% 52%

0%

10%

20%

30%

40%

50%

60%

91-92 96-97 97-98 99-00 01-02 02-03 03-04 04-05

Elementary Tuition Rate History

1st Child $ 2nd Child 3rd ChildRate Change Rate Rate

91-92 600 92-93 700 100

93-94 850 150

94-95 1,000 150

99-00 1,750 100 975 375 00-01 1,850 100 1,040 475 01-02 1,950 100 1,110 570 02-03 2,100 150 1,225 650 03-04 2,200 100 1,320 680 04-05 2,350 150 1,350 735 05-06 2,550 200 1,500 900

Elementary School FundingParish Subsidy as a % of School Expense

28%27%27%27%29%30%

34%38%

52%

0%

10%

20%

30%

40%

50%

60%

91-92 96-97 97-98 99-00 00-01 01-02 02-03 03-04 04-05

Fund Raising/Donations as a % of School Expense

13.0%14.0%

13.5%13.0%

12.0%11.0%10.0%

9.0%

5.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

91-92 96-97 97-98 98-99 99-00 01-02 02-03 03-04 04-05

Diocese of Pittsburgh: Funding as % of School Expenses 1991-92 and 2004-05

1991-92

Parish Subsidy

52%Tuition34%

Other14%

2004-05

Tuition51%

Parish Subsidy

28%

Other21%

Consolidated Operating (Deficit)/SurplusParishes with Schools

Millions of Dollars

$2.40

$0.90

$1.10

$0.90

($0.02)

($0.80)

($3.50)

($1.50)

-4

-3

-2

-1

0

1

2

3

90-91 92-93 96-97 97-98 98-99 99-00 00-01 01-02

Tuition as a % of School ExpensePittsburgh and US Catholic Average

1991-92 2003-04Pittsburgh 34% 51%

US Catholic Average 51% 61%

In the last few years, however, negative financial trends have re-emerged.

Subsidy as a % of Parish Income(Parishes with Schools)

30%29%29%27%

29%31%

34%

37%

44%

10%

15%

20%

25%

30%

35%

40%

45%

50%

91-92 96-97 97-98 98-99 00-01 01-02 02-03 03-04 04-05

Consolidated Operating (Deficit)/SurplusParishes with Schools

Millions of Dollars

($5.40)

($3.10)

($2.60)

$2.40 $0.90

$1.10

$0.90

($0.02)($0.80)($3.50)

($1.50)

-6

-5

-4

-3

-2

-1

0

1

2

3

90-91

92-93

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

04-05

Parish Borrowing to Fund Operational Expense

# of AmountYear Parishes Borrowed1998 21 1,808,584 1999 24 1,834,116 2000 14 800,355 2001 13 900,345 2002 22 1,167,791 2003 32 2,052,652 2004 43 3,705,992

Health Insurance Rates

2001-02 2006-07 5 Year Increase

-Individual 3,376 5,762 2,386 71%

-Family 8,776 17,982 9,207 105%

Utility History and ProjectionParishes with Schools

(Millions)

Proj Proj04-05 05-06 06-07

Parish and School 8.2 11.0 15.0

-1 Year Change 2.8 4.0

Gas is expected to increase about 50% and electric at least 15%.

Negative demographic trends also have an impact on school

finances

Catholic PK to 8 Enrollment History(Thousands)

22.3

23.8

25.3

26.3

27.2

27.9

28.5

0.0

5.0

10.0

15.0

20.0

25.0

30.0

98-99 99-00 00-01 01-02 02-03 03-04 04-05

A large portion of this decline is in the City of Pittsburgh. City public schools have experienced similar or greater declines than city Catholic schools.

Public PK to 8 Enrollment History(Allegheny, Beaver, Butler, Lawrence, Washington)

233,000

253,000

272,000

279,000

210,000

220,000

230,000

240,000

250,000

260,000

270,000

280,000

99-00 03-04 08-09 13-14

Decline between 1999-2000 and 2003-04 was 6,300 students or 2.3%. Projected decline to 2013-204 is over 39,000 or 14.5%.

Public PK to 8 Enrollment History(Allegheny County)

143,000

156,000

169,000

175,000

100,000

110,000

120,000

130,000

140,000

150,000

160,000

170,000

180,000

99-00 03-04 08-09 13-14

Decline between 1999-2000 and 2003-04 was 5,300 students or 3.0%. Projected decline to 2013-204 is over 26,000 or 16%.

K-8 Market Share(Allegheny, Beaver, Butler, Lawrence and Washington Counties)

1999-2000 2001-2002 2003-2004Total K-8 Population 224,468 220,451 211,737

# in Catholic Schools (K-8) 24,280 22,755 20,465

% in Catholic Schools * 10.8% 10.3% 9.7%

* About 5.6% of available students nationwide are in Catholic schools.

There have been some recent positive trends that need to be

enhanced and continued

Diocesan Tuition Assistance

$2,600,000

$2,500,000

$2,470,000

$2,450,000

$565,000

$500,000

$260,000

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

95-96 99-00 01-02 02-03 03-04 04-05 05-06

Outside Funding Sources Catholic Schools

$7,987,000

$7,202,000

$6,916,000

$3,858,000

$1,709,000

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

95-96 01-02 02-03 03-04 04-05

Critical Parish/School Task Force Appointed

February 2005

Critical Parishes/Schools

About 30 parishes with schools are in critical financial condition.

About 10 parishes without schools are in critical financial condition

Critical Parishes/Schools: Next Steps

1. Individual meetings will be held with diocesan staff to thoroughly review operations and budget assumptions

2. School and parish budgets must be balanced and include a reasonable amount of debt service for re-paying accumulated debt

3. Parish subsidy may need to be significantly reduced or even temporarily eliminated in order to balance the parish budget

Critical Parishes/Schools: Next Steps

4. No borrowing of funds for operations will be permitted

5. All bills need to be paid including employee benefits/insurance. Any residual debt will be included as an expense in the following year’s operating budget with tuition increased accordingly.

Critical Parishes/Schools: Next Steps

6. Expense reductions, including staff and programs, need to implemented

7. Tuition will be set at the rates needed and may require significant increases.

Critical Parishes/Schools: Next Steps

8. Viable enrollment goals with registration deadlines will be set

9. Elementary school grant funds will decrease necessitating a reduction in grants

Checklist for All SchoolsTo Remain Financially Viable

1. Establish a balanced school budget: a. Project a reasonable enrollment

b. Include only the amount of subsidy the parish can afford

c. Determine a reasonable amount of fund raising based on history

d. Include your (reduced) elementary grant

Checklist for All SchoolsTo Remain Financially Viable

e. Add any liabilities from previous school year (e.g. unpaid bills, advanced tuition used)

f. Include accurate expense amounts for utilities, benefits and insurance.

g. Critically examine staffing levels each year in relation to enrollment and adjust.

Checklist for All SchoolsTo Remain Financially Viable

h. Reduce expense, including staff, where possible.

i. Increase tuition in order to balance.

2. Pay all insurance bills (primarily employee benefits) on time and in full.

3. Encourage parents to apply for aid.

Checklist for All SchoolsTo Remain Financially Viable

4. Do not re-enroll families with unpaid tuition balances unless funding is secured to pay the balance in full.

5. Share financial information with parents via letters and meetings.

6. Call diocesan staff for assistance and support.

Goals for Quality Education

Faith Formation/Catholic Identity

Academic Excellence

Support from Parents and Community

Financial Stability

Questions