Tuition Economics 101
Re-enrollment agreements were issued on Thursday, January 25. In Head of School Gary Krahn’s letter to families, he announced the tuition increase of 3.5 percent for next year (same as last year). You may find yourself asking why a tuition increase is necessary every year and why it exceeds the rate of inflation.
Schools are labor-intensive businesses. Seventy-three percent of our operating costs are devoted to salaries and benefits. Wages increase every year in response to competitive and market pressures. The increases are necessary to attract and retain our exceptional faculty and staff. Medical insurance generally increases annually at a rate much greater than inflation or our tuition increases.
Technology, which allows most business to increase productivity and lower costs by reducing labor, does not benefit independent schools so much. On-campus technology enhances and augments the student experience, but it does not result in economic productivity improvement, cost savings or a change in the student-teacher ratio. These are common challenges for nearly all independent schools and higher education institutions.
When the school sets tuition, we also consider general economic conditions and the competitive landscape for independent schools, including industry tuition levels. For the most part, unlike most businesses, economies of scale are undesirable to our community, as classrooms with 40 students may be economical but unacceptable in an independent school setting.
The school operates under a balanced budget and seeks to achieve parity between the price of tuition and the actual cost of providing an LJCDS education while providing value for the tuition that our families pay. The tuition increase enables us to be innovative and provide our students the best experience while adding or enhancing programs each year.
The school’s annual balanced budget is reviewed and approved by tuition-paying parents in the Finance Committee and Board of Trustees. Tuition increases, as well as tuition amounts, are discussed at length each year and are reviewed six times by these governing bodies before they are approved and communicated to our community.
The Board has the ultimate fiduciary responsibility for the ongoing financial sustainability of the school. This perspective plays a central role in their thinking when reviewing and approving the annual budget and tuition increases.
I hope that you have a better understanding of the tuition-setting process as well as the associated economics and the value you receive when you pay tuition. If you would like to learn more or have further discussions, please contact me.
1 The Story of Dollar Dave
This nickname has followed me for years through several industries and employers. You might think that it is because I’m thrifty, cost-conscious, or that I simply say “no” to everything. Actually, I earned the nickname by giving money away. While working for a local credit union, I had responsibility for their ATM network. This occurred during a time of technological change and I would stand at the new ATMs and give people money to try the machines and their new capabilities.
La Jolla Country Day School
9490 Genesee Avenue
La Jolla, CA 92037
858-453-3440
© 2024 La Jolla Country Day School
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La Jolla, CA 92037
858-453-3440
© 2024 La Jolla Country Day School
Privacy Policy
COVID-19 Prevention Plan
