MOChassid

The rambling thoughts of a Modern Orthodox Chassid (whatever that means). Contact me at emansouth @ aol.com

Sunday, December 07, 2008

The Coming Crisis for Jewish Institutions, Part II

When I was chairman of the board of a local yeshiva many years ago, there was one phenomenon that you could count on almost without exception. In virtually every case of parental discord, tuition payments were the first thing to go. The school was left holding the bag in almost every case of divorce and had to fight and threaten to get paid.

Given the current financial crisis, a similar thing is already starting to happen, and will accelerate, albeit in a different context. When people start to feel financial pressure, the monthly payment that goes first is invariably tuition. This, of course, is not surprising. As among missing mortgage payments, real estate taxes, car payments and tuition, the one with the fewest consequences is tuition. Schools will not toss a kid out for failure to pay tuition, particularly under these circumstances.

But what will happen (and, I am told by reliable sources, is already happening in a number of schools) is that many schools will fall behind in paying teachers. (Keep in mind that teachers salaries are, by a very large margin, the biggest expense for virtually every school (unless they've overbuilt and overleveraged).

Behind even tuition in the hierarchy is shul membership. Most people who are in financial distress will not even consider paying shul membership. And, of course, the shuls are even less inclined (and have far less leverage) than schools to do anything about it.

This is, to put it mildly, a shlechta maisa. Most shuls and schools (with some notable exceptions) lived hand to mouth even during the best of times and do not have much in the way of reserves. They are going to suffer mightily. And, exacerbating the situation is that the g'virim and the regular givers, whom they counted on in the past to make up budget deficits, are (as I pointed out in my previous post) going to be much less able or willing to fill in the gap.

This does not bode well for other Jewish organizations. If there is less money available for the two primary institutions, what does that say for organizations that are farther down the list and rely much more on discretionary income?

Interestingly, many of these organizations may be better able to weather the storm. Many are better run than most schools and shuls and have modest reserves to call upon. Many less well run outfits also have much more fat to cut than schools or shuls. While the only way to really save money in a school is by getting rid of teachers (not a realistic option), most large charitable organizations become bureaucracies over time and tend to over hire, like any bureaucracy. They are going to have to make some hard decisions and cut out the fat. Some, of course, will have to cut into muscle and reduce some of the services they offer.

But the mosdos that are going to suffer the most are the Israeli-based chessed organizations and the kollelim. Priority-wise, they are 15th on most people's lists of ten.

Sorry for the pessimism, but I think it's going to get really ugly.

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15 Comments:

  • At 10:08 PM, Blogger nyfunnyman said…

    Clearly you know what you are talking about, both from experience, and of course, rational thought. Q: do you think this is wrong? I can say myself that I recently got laid off and paying tuition every month has become a real real burden which i really hope not to cut out b/c I know how much the schools are in need.

    what would you do in those people's situation?

     
  • At 11:36 PM, Blogger David said…

    In the current economic crisis we a forced to consider whether we need all of our charitable organizations. Do we really need a jewish version of every service that is available in the world? Does Hatzolah really need a new building? They do wonderful things, but is it prudent to building them a new training center when there is an existing EMS infrastructure that is majorly under-utilized? The same goes for numerous chesed and social service organizations. Thoughts to ponder...

     
  • At 12:27 AM, Anonymous N said…

    I'd like to see schools start to make some cuts now.

    An administrator in my daughters school called me (he knows I work in the back office at a hedge fund) and began the conversation with "So...are you affected by the downturn? I couldn't believe he had no idea that I was likely not in a position to pre-fund my dinner committment and take out a full page diamond ad in honor of this year's worthy honorees--as he was hoping.

    I'm assuming I won't get a bonus this year, but I still intend to make my annual tuition and shul payments. More than that I can not committ to. I think schools need to cut their budgets now and not wait until next year when scholarship applications increase.

    My sense is that they are turning to people they hope can give a little more rather than trying to cut costs they can control. (How about cutting dinner expense to send a message?) I don't think they will be able to successfuly squueze blood from stones. Not that it is an easy task, but I think they will have to choose between cutting back on scholarship abuse or not making payroll. Not much can be done about scholarship abuse though unless you are willing to throw someone overboard.

     
  • At 1:00 AM, Anonymous Anonymous said…

    I think this is a pretty accurate assessment of the situation Jewish institutions are or will be facing. In my (NY area) neighborhood, the local organization that helps people with some really important basics, from medical equipment, to medical bills, to food, has told the members of the community that their financial situation is dire, due to increased need within the community. They beg that anyone who is still in a position to give should give. When faced with a plea like that, you're more inclined to give to an organization like this than you are to even other instititions within your own neighborhood, such as a shul dinner ad. Nevermind the organizations outside your neighborhood.
    That being said, I'm pretty confident that yeshiva tuition and shul dues will go up big time this coming year, so at least the people who still have can take on the burden of those who don't.

     
  • At 8:57 AM, Blogger MoChassid said…

    nyfunnyman

    No, I do not think it is wrong; I am not at all being judgmental (there but for the Grace of G-d go I). I would do exactly what most people are doing. You have to protectyour home, it's not even a question. My point was more along the lines of these are the facts that we have to deal with.

    David

    You make important points. I think most capital projects are going to be put on hold; those who have recently completed (but not paid for) or are in the middle of capital projects are going to be hosed.

    N

    The problem with schools is that teacher salaries are by a huge margin the biggest expense. While trimming adminsitrative expenses is important, in the context of a school, those costs are margimal. Same thing with most shuls. The unnecessary admin costs are marginal in the scheme of things. You are mainly paying the rent and salaries.

    Anon 1 a.m.

    I don't disagree.

     
  • At 10:57 AM, Anonymous Anonymous said…

    It is already happening. My wive's teachers salary (paltry to begin with) has already begun to appear later and later each month. Sometimes with a letter attached to please not deposit until "X" date. I know the reason is because others have not or cannot pay tuition on time. But if I don't get my wife's check, i won't be able to pay tutition and the cycle will just continue. It is a gloomy forcast. At least gas prices are dropping to below $2.

     
  • At 11:29 AM, Anonymous Anonymous said…

    i know i posted this already, but for some reason i got no response.

    hey, what the heck! didn't you get all depressed six months ago and write that you were quiting this blog?
    i started going back to look for the post for an appropriate quote or two to remind everyone about exactly what you said, but there were too many and i just quit.

    So much for having no more energy for it...

     
  • At 12:13 PM, Anonymous Anonymous said…

    I have been, unfortunately, very severely affected by the current downturn. BH I still have a job but, like many in our community, my income is down over 50% from these last few years and as such things need to be cut out. For now we are still able to make the gargantuan monthly tuition payments, but we are dipping into our savings every month to pay our mortgage. I then get a letter from the school that, although I paid off my building obligation in full when my kids were in preschool, due to a new building they are putting up I need to cough up another $2000 to give the school. It still looks like common sense has not taken hold in some of our institutions. I have noticed an increase in harassing phone calls over the last few months from the various organizations I have supported in the past (and many I never heard of) and they can't seem to take, " I am sorry but we can't this year" or "send me an envelope and I will see what I can do" for an answer. It is going to get very ugly in our community soon.

     
  • At 2:08 PM, Blogger ThePeoplesChamp said…

    One of the most astute posts I've read on the situation.
    The problem here is there is no solution in sight. The short term economy will only get worse.
    I wish I knew a solution, but when the funds dont cover the bills, you only have one answer.
    "Hahleich All Hashen Yehavecha, V'Hu YeCalcecha".

    The pragmatists wont like it, but thats the truth.

     
  • At 4:25 PM, Anonymous Anonymous said…

    This comment has been removed by a blog administrator.

     
  • At 7:59 PM, Blogger Tzipporah said…

    things get tougher. I give more - directing it to food banks, our tzedakah v/chesed committee, etc. But certainly not to anything like paying able-bodied people NOT to work.

     
  • At 9:33 PM, Blogger cool yiddishe mama said…

    I don't know where to start with this one. I work at a yeshiva day school where the menahel and his extended family lives MUCH BETTER than many of the families they try to extract tuition payments from monthly. They made arrangements for some of their General Studies staff to become "independent contractors". (I am one of them, by the way.) There is no budget for aides in the afternoon. A local agency places personal aides with special needs students and we are "expected" to also act as teacher's aides.

    As I wrote in a former post, I have observed kollel families "multi-dipping" into the communal tzedakah well. It is true that sending them out to get "regular" jobs is not the best answer. Without marketable skills, they will be put into the reject pile. There are plenty of qualified people, also unemployed, suffering the same fate.

    It's a time to question the need for day schools. (My children's school also had the BAD TIMING to break ground on a new facility.) We need to find alternatives which will give our children what they need without breaking the bank.

     
  • At 10:42 PM, Blogger Jewboy said…

    See orthonomics.blogspot.com. It's allready started over in Lakewood.

     
  • At 10:30 AM, Anonymous Anonymous said…

    How many parents stiff their yeshivas and shuls while spending thousands on sleepaway camp for the children.

     
  • At 10:30 AM, Anonymous Anonymous said…

    How many parents stiff their yeshivas and shuls while spending thousands on sleepaway camp for the children.

     

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