How Much Does It Really Cost To Run The School?
Features / / October 20, 2017
Lawrenceville consistently ranks as one of the most expensive private schools in the United States. The total cost of attendance currently stands at $63,625 for boarding students and $52,365 for day students—over $10,000 more than the price of many of the School’s peers in both the Mid-Atlantic Region, such as The Peddie School and The Hill School, and the Eight Schools Association, such as Phillips Exeter Academy and Choate Rosemary Hall. Lawrenceville’s high cost raises a number of questions: Exactly how much money does the School spend each year? What does it spend our money on? And why is it so expensive compared to other boarding schools of similar caliber?
The Lawrence recently sent a survey to the school community to determine what students and faculty believe to be the answers to these questions. 163 community members responded. Participants answered questions related to the School’s biggest costs and sources of revenue and to provide estimates as to how much the School spends in each of these areas as well as in total.
The most respondents, around 44.8 percent, thought the annual cost of running the School was under $50 million dollars; another 32.5 percent estimated the cost to be between $50 and $100 million. The remaining 22.7 percent believed Lawrenceville spends more than $100 million each year. In reality, Lawrenceville spent $62.2 million to run the School during the 2016-2017 school year.
Nearly half of the respondents believed the School’s largest costs are “campus operations,” including grounds keeping, building and security maintenance, and the upkeep of all other physical components of campus. Another 22.7 percent thought educational expenses, such as textbooks, classroom materials, faculty salaries, and extracurricular programs, accounted for the plurality of the School’s spending. The majority of respondents thought around 40 percent of the total cost is spent annually on the category they deemed most expensive.
In contrast to the popular opinion, educational expenses account for 30 percent of the School’s total expenses, or $18,930,443, thus receiving more money than any other category. However, campus operations come in close second, consisting of 28 percent of total costs, or $17,540,265. These numbers suggest that the School community possesses a rough understanding of how the School’s budget is spend, even if its numerical estimates are inaccurate.
Source of Revenue
The Lawrence took a similar look at the School’s sources of revenue. 41.4 percent of survey respondents thought student tuition and fees account for the majority of the School’s revenue, while 31.5 percent and 24.1 percent estimated endowment and annual gifts, respectively, as the largest source of the School’s income. 26.4 percent of respondents supposed that the largest source of revenue covered around 50 percent of the School’s costs, whereas 19.6 percent of respondents believed that the largest revenue source accounted for well over the School’s annual cost.
As a large portion of respondents expected, tuition and fees do serve as the School’s most substantial source of revenue. However, Lawrenceville’s annual cost per student is $77,800, and the tuition and fees only covers 82 percent of that value for boarders and 67 percent for day students. When financial aid is also taken into account, revenue from tuition, $34,678,871 for the 2016-2017 school year, accounts for only 55 percent of the School’s annual expenses.
After tuition runs out, the School begins to rely on other sources. The endowment covers another 29 percent, gifts finance 10 percent, and fundraisers and other sources cover the remainder.
The Lawrence interviewed Chief Financial Officer Ben Hammond to gain more information on how the School decides how to spend money from gifts. According to Hammond, much of the time, donors specify what they want to fund, such as a building project or financial aid, or they contact the Head Master to discuss where the money should be directed. In the case that the School receives a completely unspecified gift, Hammond said, “[The Head Master] will talk to people all over the School and figure out what are the investments that would benefit the school. […] I don’t think it happens incredibly often. […] A lot of the money we get goes to support financial aid, even unrestricted gifts.” Additionally, Head Master Stephen S. Murray H’55 ’65 ’16 P’16 ’21 is currently “developing a list of priorities for the School” and already has developed Lawrenceville 20/20: A Strategic Plan for the Lawrenceville School, which acts as “sort of a blueprint of all the things we need to do to make the school better and stronger […] in some ways, we’re using gifts to help move the strategic plan forward,” Hammond said.
Why We Are Expensive
Finally, respondents to The Lawrence’s all-school survey proposed reasons for Lawrenceville’s high tuition and fees. Many suggested that the high quality education and resources offered to students, as well as the benefits offered to faculty members, caused the high price of tuition. Others attributed the cost to maintaining Lawrenceville’s large campus or to financing the many construction projects occurring on campus. A few respondents provided more detailed propositions—one stated, “I think that the School experienced a hit in financial support in the 80s when we went co-ed, due to the sexism and traditionalism of alumni, and we still haven't completely recovered.”
A few respondents cited Lawrenceville’s location and lower endowment as the primary reasons for the high tuition, and Hammond’s response supported this. Lawrenceville’s location near New York City and Philadelphia “is one of the most expensive parts of the United States in terms of cost of living,” he said, “so we have to pay our faculty and staff more. [...] A lot of the cost of Lawrenceville is the salaries of the people who do the work here, so if we have to pay our people more than other schools, that forces us to charge higher tuition.” Likewise, the School’s location results in higher costs for food, construction, and utilities “compared to some boarding schools that are in New England or farther out in the countryside,” Hammond added.
Moreover, some of Lawrenceville’s peer schools, particularly Phillips Exeter Academy and Phillips Andover Academy, “have much larger endowments than Lawrenceville does,” Hammond said. Whereas Lawrenceville’s endowment covers 29 percent of the School’s expenses, Exeter’s and Andover’s might cover around 50 percent. For most schools, tuition and endowment combined usually account for around 85 percent of total revenue, “so if schools have bigger endowments, they can typically afford to charge a little bit less tuition,” Hammond said. As indicated by the corresponding graphs, peer schools with endowments closer to Lawrenceville’s have similar tuitions.
While most students cannot accurately estimate the numerical value of the School’s cost and revenue, they possess a general understanding of how the School receives and spends the majority of its money.