Private schools are feeling the pinch

At the private New Roads School in Santa Monica, 20 families decided not to re-enroll in the fall because of financial nervousness.

At Loyola High School near downtown, 40 families have come forward since the beginning of the school year seeking financial aid to help cover tuition costs, even as the school’s endowment -- heavily invested in equities -- has taken a battering in the financial market.

Pacific Hills School in West Hollywood is creating flexible payment schedules for some families and is tightening its own belt with an eye toward more tough times ahead.

The economic meltdown that has ravaged many banks and homeowners is also affecting private schools in Los Angeles and nationwide, forcing educators to revise budgets, plan extra fundraising appeals and brace for possible lower enrollments next year. The distress comes at a time when some independent schools already have seen potential students gravitate to public charter schools, which are free and offer some of the same advantages of private campuses.

In previous downturns, private schools have tended to fare well, with minimal drag on enrollment or tuition trends. Some affluent families are recession-proof, and many others will sacrifice in other areas to avoid disrupting their children’s schooling.

A sampling of 59 Los Angeles area independent schools found a slight increase in enrollment in 2008 from the previous year: 29,024 from 28,944, according to the National Assn. of Independent Schools. But much of this year’s enrollment picture was determined last winter and spring, and it may be that schools have yet to feel the full brunt of the economic downturn.

Educators at private schools say the severity of economic forces this time have put them in uncharted territory.

“People are more worried about their financial future and carefully looking at expenditures,” said Patrick Bassett, president of the independent schools group. “So far, we’re seeing a lot of activity in admissions fairs, but schools are very conscious of the need to be receptive to parental concerns about financing.”

That is evident at Loyola, the venerable, 143-year-old all-boys Catholic prep school, where the number of families on financial aid climbed from 18% to 22% this year. But officials were surprised when, after classes began this fall, 40 additional families sought help to pay the school’s $12,500 annual tuition. It is expected that even more families will seek extra support throughout the school year, said John Baker, vice president for advancement.

Meanwhile, the value of Loyola’s endowment, worth $36 million last year, dropped to about $26 million, with the losses straining the school’s operating budget and ability to boost financial aid for strapped families.

For one family, that has meant taking out loans to keep their son, a senior, in school. The family had been receiving financial assistance for the last three years but were told this year that funds would not be available.

“I assume because there were parents worse off and funding went to those more in need,” said the father, a San Gabriel Valley resident who did not want his name used because of the sensitive nature of financial aid issues. With two other college-aged children, the family is stretched thin.

“With the cost of tuition going up faster than your income, as well as the costs of normal day-to-day living expenses, you start getting squeezed at every end,” the father said. “Our choice was to take on more debt. We didn’t want to pull our son out of private school, especially in his last year.”

Like many other schools, Loyola is looking to cut expenses and increase fundraising early next year, Baker said.

“Once we get a fairly good idea of how things are tapering out and what our real needs are going to be, we’ll begin a special appeal to our donors who are consistent supporters to give them a clearly articulated case and message,” he said.

New Roads Head of School David Bryan said some families who previously paid full tuition -- $26,830 for upper-school students this year -- are now receiving financial aid, which can be awkward for some.

“It’s clearly far more embarrassing for those families than for families who have needed aid right from the start,” Bryan said. “There are families who’ve had disposable income for years and find themselves in a position where coming up with cash is impossible.”

Of the 20 families who left because of financial uncertainties, Bryan said, “These were not families that were having to make a decision between a rent check or a tuition check, but just didn’t know what the next year was going to look like. We were able to replace those families and meet our enrollment goals, but we had to work hard at it.”

Market stresses also appear to be creating problems for some private schools either in the midst of capital campaigns or those that have recently completed facility upgrades, said James McManus, executive director of the California Assn. of Independent Schools.

Some schools may be reappraising their goals, he said, and “the other impact is if they had taken out a bond to help pay for facilities upgrades and had a variable interest rate that had been historically low, they may have just been greeted with a whole new set of problems.”

One sensitive issue for schools is how aggressively to solicit financial contributions from hard-hit families. Danese Bardot, director of development at Pacific Hills, said parents are being encouraged to make monthly gifts instead of one lump-sum donation. So far, she said, this year’s fundraising is outpacing last year’s.

“We’re continuing to ask them to make decisions to support us and reminding them that this is an investment in their school,” she said. “What they’re spending [monthly] for the cost of a cup of Starbucks, they should consider pledging that $25 to the school.”

Besides direct mail and telephone appeals, Pacific Hills will coordinate its annual gala with an online auction, using a service that promotes these events to anyone who wants to support educational causes. More schools are using such technology to reach a broader market in the hope of increasing fundraising.

Cambridge, Mass.-based cMarket, one of several online auction firms, reports that K-12 school online auctions have raised more than $16 million on its site since 2005. California ranks first in the nation in money raised, with more than $6.7 million -- more than $4 million of that for schools in Southern California.

St. John Bosco High School, a Catholic campus in Bellflower, opened its first online auction last month and hopes to raise $10,000 before it closes Nov. 24 with items such as two VIP tickets for “Dancing With the Stars” (valued as “priceless”) and an autographed Home Run Derby gold baseball from all-star rookie Evan Longoria of the Tampa Bay Rays.

At a time when the school is challenged not only by the economy but also by competition from other nearby Catholic campuses as well as public schools, Bosco has to exhaust all resources, said Erin Wilson, director of annual events.

“This has opened us up to so many more people than just families of Bosco,” Wilson said. “We’ve been around for 70 years, but times are changing.”

--

carla.rivera@latimes.com

--

latimes.com/thehomeroom

Read news items and blogs about schools online.