Why does school cost so much? How can we respond to Nashville's growing cost of living without passing the burden on too directly to tuition-paying families?
by Vince Durnan, director
This month the USN Board carries the weighty responsibility of approving a budget that will serve us through June 2020. Brexit may loom unresolved, and the federal government shutdown may show no sign of abating; but at 2000 Edgehill, we need some certainty about where the resources will be coming from and where they will be going. Turnout from constituents at meetings to talk shop about our financial algorithm has been light, as usual, so permit me to take the mountain to you in case you cannot make it to the last budget meeting at 4:30 p.m. Tuesday, Jan. 22 in the Gordon Multipurpose Room.
For starters, how about tackling the question of why school costs so much? The answer is both simple and quite complex. The recipe for what we do features only a few ingredients—more than 2/3 of the mix is people costs, then about 1/5 is facilities related, leaving less than 1/10 remaining to fund program expenses. Add just a sprinkling, statistically, for debt service (barely 2%), and that’s about it. Under the “people” heading would be payroll, health insurance, and retirement (403b) for the more than 200 people who toil so faithfully here.
The “facilities” part heats and cools and cleans and maintains our seven acres here and eighty acres on the Cumberland, and it fuels our transportation fleet for enough miles annually to circumnavigate the planet. And “program” accounts for all the other material costs of providing a K-12 education to 1,070 students. Blend those components, leaving some room for the work of the offices (mine included) here in the center of the Dem School building, and you have a decent high-level summary.
The revenue side of the ledger is even simpler. We’re still 90% tuition-funded, though that number is down a few percentage points, given recent growth in our endowment—doubling, in fact, during the Centennial Campaign. The Annual Fund, happily tracking on record pace year-to-date, accounts for a very important 6%, and the remaining dollars come from interest payments, the USN Bookstore, food service, and After-School, though those areas are really intended just to break even. So there you have it—a few basic inputs and a few longstanding cost centers.
Bearing that in mind, the two core drivers of a USN budget are tuition levels and faculty/staff compensation. Betting you knew that if you’ve made time to read this far. Let’s get into the hard stuff on these two considerations. For starters, tuition has never once gone down here (or virtually anywhere) year over year. Given our expressed preference for smart, caring, well-prepared people to teach children, costs escalate annually because living expenses for those people grow inexorably as well. There’s no substantial robot challenge to our model, at least not yet, to boost efficiency the way, say, the auto industry has.
Our sector then faces inflation rates that outpace the general price level, and that’s a big challenge. Educational inflation, as best it can be measured, tends to exceed the Consumer Price Index by 2% or so. Compound that for a few decades, and you see in large measure how we got where we are. The response in public education, absent higher taxes, has been to ask teachers to work with more students in each classroom. Did you notice that striking Los Angeles Unified School District faculty are asking for a limit of 39 students per class? Down to 39? In case you are wondering, Tennessee’s public high schools are limited to 35, with a 10% flex, so functionally 38 students. That’s more than twice USN’s average, and it’s a daunting prospect if you’d like teachers to have a chance to notice their charges as people.
We’re not solving our per-student cost challenge by doubling faculty class loads, but we do look carefully at where the sweet spot might be in terms of effectiveness, and we walk carefully down the road of adding seats in a room. Similarly, we worry about another familiar option in educational reform—staffing the school with teachers brand new to the profession, high in energy, low in salary, and lacking the wisdom that comes with experience. And past that, we want some flexibility to reward outstanding teaching, and that means preserving some discretionary capacity to celebrate something more than longevity—and that costs salary dollars.
I remember hearing on arrival in 2000 that USN was only 10% behind comparable teaching compensation in Metro, having made big strides through the 1990s. For reasons on our end and Metro’s, we’ve since reached and exceeded that local comparative milestone, and now we benchmark with leading independent schools nationwide—surely we don’t want to lose ground.
Which brings us the real question of the moment. How can we respond to the incrementally higher costs of living in the Nashville of today without passing the burden on too directly to tuition-paying families who may not be seeing correspondingly higher incomes themselves? Each household is different, but the fact remains that we inhabit one of the nation’s hottest cities, and that’s a mixed blessing.
The challenge to get the balance right is as familiar as it is Solomonic. In the near term, we’ll appreciate the help from philanthropy, cushioning USN from the full weight of growing costs—and we will work every one of the hundreds of budget lines that combine under those big headings. For the long haul, ours is the responsibility to preserve the pursuit of excellence without being carried by the smug tide of other schools venerating what’s familiar—without responsibly exploring in some way other paths to the best in education.
Always open to your sentiments,