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Building a Better Business Model for Catholic Schools
by Valerie Lippe P’25
A new chapter began at Delone Catholic on Feb. 25, 2024, with the rollout of its tuition restructuring plan. Together with the K-8 schools of the Adams Deanery, which adopted similar plans, Delone Catholic hosted a parent meeting to present tuition restructuring to the families of the Deanery schools.
“To understand the need for tuition restructuring,” said William Lippe P’25, Principal, “you need to keep in mind the economic model upon which our schools were founded.” Like most Catholic schools in the nation, Delone Catholic was originally staffed entirely by religious. Rev. Cyril J. Allwein was the first principal, and the faculty was composed of women religious from the Sisters of Saint Joseph, the Sisters of Mercy, and later, the Sisters of Christian Charity. “With genuinely selfless service from these women religious, salaries and benefits would have been a negligible part of the total cost to educate each child,” said Mr. Lippe. Now, with an entirely lay administration and faculty, salaries and benefits make up over 73 percent of the budget at Delone Catholic, making the total cost to educate dramatically higher, in real dollars, than when the School was founded.
The conundrum for Delone Catholic, as well as for the other schools of the Adams Deanery, was how to provide the teachers just salaries and the families an affordable education. Based on a recommendation by Mr. Daniel Breen, Superintendent of Catholic Schools and Secretary for Education for the Diocese of Harrisburg, the Deanery Schools began working with RedefinED Advisors, who provided information about tax credits available through the Educational Improvement Tax Credit (EITC) Program.
“In the spring of ‘22,” recalls Mr. Breen, “when I was in the middle of strategic vision work with the 35 schools of the Diocese, I had a heightened awareness about the need to think differently about tuition.” He recognized that there were tax credits available through the EITC program and people who were willing to participate but didn’t know how to do so. He notes that the Pennsylvania tax credit program is one of the oldest and most complex in the country, and the rules must be followed stringently. The schools would need help to properly communicate the rules to those willing to participate. “RedefinED Advisors were the bridge builders,” he states. Since 2022, RedefinED Advisors has worked with 22 schools in the Diocese, helping to bring in over $2 million in EITC funds. The positive impact on schools has been noted not only with respect to finances but also enrollment.
Mr. Jeff Hughes, Customer Relations Manager with RedefinED, can confirm this experience. As a former principal of Resurrection Catholic School in Lancaster, Pa., he worked with RedefinED to access over $100,000 of EITC funds, which enabled Resurrection Catholic to raise enrollment by over 30 percent. Mr. Hughes calls the gap between stated tuition and the actual cost to educate “‘ghost’ scholarships’ that the schools or parishes have been absorbing.” He adds, “This can’t happen if you want to have vibrant and robust schools.”
When Catholic schools find ways to fund the gap between the actual cost of education and tuition, not only do the schools benefit, but so do the parishes that support them. Mr. Hughes discovered that when Resurrection Catholic began receiving EITC funds, financial pressure on the already overburdened parish budgets was reduced.
Msgr. James Lyons, retiring Pastor of St. Joseph Church in Hanover, and former dean of the Adams Deanery is hoping for a similar result. He notes that, typically, a school is the biggest ministry of a parish. He has seen positive results from the EITC program in the past and is optimistic about the new tuition restructuring plan. “We’re headed in a very good direction by bringing tuition close to the cost to educate,” he said. Under the new plan, he sees benefits for the schools, the parents, the parish, and the taxpayers. “It can be a win-win for everyone.”
At the parent meeting on Feb. 25, Mr. Hughes outlined the basic elements of the tuition restructuring plan. Since EITC funds can only be used to replace tuition, stated tuition must be raised to reflect the actual cost of education. To shield families from this steep rise in tuition, they receive a guaranteed financial aid award, giving them approximately the same tuition obligation as in the prior year if they either apply for tuition assistance or participate in the EITC program.
The schools benefit when families complete a tuition assistance application because it helps the schools to qualify for grants from BLOCS, a nonprofit organization that collects money, in part, from the EITC program. The schools also benefit when families participate in the EITC program and direct their tax dollars to the schools’ tuition assistance efforts, receiving, in return, a 90 percent tax credit. Funds received from BLOCS or tax money directed to the schools through the EITC program can then be used for tuition assistance for qualifying students, freeing up school money to offer tuition assistance for non-qualifying students.
Mr. Hughes notes that not only school families but also Pennsylvania businesses and individuals who reside in Pennsylvania or receive a W-2 with Pennsylvania income tax withheld can potentially participate in the EITC program, making it an inexpensive way for alumni, friends, grandparents, and local businesses to support the school.
Mr. Lippe is optimistic about the new tuition model, noting that collaboration and cooperation have been, and will continue to be, essential for its success. “The decision of the deanery schools to work together on tuition restructuring made the process go much more smoothly,” said Mr. Lippe. He looks forward to the same cooperative relationship with school families. “The new plan allows us to accomplish more together than we ever could separately,” he said. “There is a common commitment by our families to secure for their children an educational alternative, in this case, one anchored in the Faith.”
