Prognosis For Day Schools Worrisome

Having spent almost 13 years in Jewish education, and the last four as a head of school, I am intimately familiar with the question of day school viability. I am fortunate to have been involved, in an advisory capacity, with Yeshiva University and Avi Chai, and I have heard a number of important, thought-provoking, and creative ideas to improve the quality and affordability of our day schools.

However, I think there is a more fundamental issue with which we need to grapple before considering various funding and programmatic decisions, and that is the viability of the day school “industry” overall.

The classic tool for analyzing the viability of industries is Michael Porter’s five Force model. This model is widely used to examine the strength of external forces on the incumbents in a given industry.

Porter identified five factors, each of which poses a potential threat to existing businesses; the viability (and profitability) of an industry is proportional to the strength of the various threats. The five forces are: existence of potential entrants, availability of replacement products, heavy reliance on customers, significant reliance on suppliers, and intense rivalry. The stronger the threat from each force, the worse it is for that industry. A high level of threat from all five forces makes the industry almost unsustainable.

And this brings me to the Jewish Day School world. As I have read case study after case study, I can’t help but get a pit in my stomach as I come to the realization that many of our communities have day school systems that score high on all five of these:

• It is easier today than it has ever been to start a day school. You need only identify a donor, rent a storefront, announce a mission, and you can start a school with as few as 15 to 20 students.

• The threat of replacement products is as high as it has ever been, as home schooling, charter schools, and online programs have all become an increasingly viable option.

• Schools rely heavily on our customers, particularly when parents are able to shop around for the best price.

• Increasing salaries in schools are due to the limited supply of, and high demand for, qualified teachers and administrators. This raises the cost of “doing business”. This becomes an even bigger issue when schools “poach” staff from other schools. The reliance on “suppliers” is quite significant.

• Finally, and perhaps most significantly, the rivalry between schools in many communities has created an awful culture, both fiscally and socially. The intensity of such rivalries often results in “price-wars” that may help a school increase enrollment in the short term, but hurts the community and itself in the long run.

YU, RAVSAK, PEJE, Avi Chai, and other foundations and donors have done, and continue to do a tremendous amount to improve our day schools and make them fiscally strong. But this has to be complemented by a more comprehensive look at the day school “industry” and the forces at play. In order to make the day school system viable, we must address a number of the five forces.

There are several ways this can be achieved, including: incentivized mergers to minimize rivalry, communal mechanisms to prevent poaching of teachers and “price wars” between schools, and the integration of replacement products, such as online classes, into our existing school structures.

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I don’t believe that all five forces need to be “fixed” for the Day School world to survive. I do believe we need to lower the threat level from a number of them, and that doing so is definitely within our reach. If we can address these issues, then we will be able to implement many of the impressive ideas that have been put forward to take Jewish education through the twenty-first century.

Rabbi Ari Segal is head of school at the Robert M. Beren Academy in Houston, Texas.