Private School Financial Scrutiny Important

by NYC Firm Schools on February 3, 2010

In a raw example of how an economic condition affects schools, students and communities, one Private School in Indiana is deciding whether or not it can continue to operate throughout the rest of the year due to the fact that it is just plain out of money.

NewsChannel 15′s Chris Hopper discovered the financial crisis is because parents can’t pay the nearly $5,000 a year tuition and donations have dried up.
One teacher, who asked to remain anonymous, told NewsChannel 15 that he’s known about the crisis since November, but teachers were instructed not to tell parents.

According to that teacher, there are three options on the table: close the school immediately, close it in a few days, or ride it out until the end of the year.

A parent at Monday’s meeting said Keystone is asking parents for additional funds. It needs $450,000 to make it through the year, but the school will have a $1.2 million dollar annual shortfall.

The parent said they should know what’s going to happen to Keystone by Friday. The teacher who spoke with NewsChannel 15 said there is a person who is close to making a large donation that would keep the school open through the rest of the year. But that donation has to be given this week.

There are multiple issues going on here, all of which, when combined, lead to difficult situations for everyone involved. One of the most marked issues here is that families were not aware of the situation. The financial condition of your child’s school needs to be open. Another issue is that the difficulty in paying tuition at the school contributed to the school’s problems as there was not an appropriate FA created to withstand it. Yet another issue written about in the article is that one of the major contributors to the school has not actually contributed this year, leaving much of financing gone.

In practice, the actual costs of educating each student is often more than the tuition covers. Schools offer financial aid to many of their students in order to help ensure that well-matched and deserving students can attend the school regardless of the family’s ability to pay tuition, however, all of this is usually heavily dependent on the School’s endowment.

The very difficult position of this Indiana school and the many students, teachers and families affected is a clear example of how the economics of a school should be monitored by everyone involved so that there are no surprises, and also the importance of a good endowment can make all the difference in stability.

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