Most parents of Jewish day school students would be outraged and upset if it were suggested that current tuition rates are unreasonably and irresponsibly low. The truth is that the day school tuition burden threatens to overwhelm the average observant family, and the actual per-student cost allocation within the Jewish educational system is woefully inadequate.
This results in overcrowded classes, insufficient classroom resources and the inability to provide for children with varying needs, gifted and talented as well as learning disabled. Perhaps most significant is the lack of resources to fund one particular day school obligation that is silently creating a communal liability that will be unsustainable when the debt comes due in the near future.
Big businesses and industrial giants have been brought to their knees under the burdens of underfunded, or unfunded, pension liabilities. Steel companies and airlines have been forced into bankruptcy, and the United States automotive industry may be confronting a similar fate. Even our Social Security system is constantly facing threats of being severely underfunded.
Does our Jewish educational system face a similar crisis? What economic fate will threaten our Jewish educators upon their retirement? Our community’s Jewish educators are preparing our children for their future. What preparations are being made for the future of the educators whose salaries barely enable them to live in the communities where they teach? If and how we address this challenge will affect both our educators and the community at large for decades to come.
Economists will tell you that most people do not or cannot plan for retirement. This is why Social Security was established and why there are pension plans for many employees. The government and many employers provide incentives and other systems to assist those who would not or could not do this on their own. Hourly workers find it difficult to put anything away when their paycheck hardly carries them from week to week. The same is true of wage earners whose income barely covers their expenses.
In previous generations when expenses were more manageable people retired at age 65. Today, when everything is so expensive, people are working into their 80s and are living longer as well. Certain jobs have excellent retirement benefits. Unfortunately, teachers in our day schools, even with nominal pension plans, will not be able to save enough for retirement, since the contributions (not always matched) are tied to a percentage of salaries, which are low to begin with.
The ideal would be to save 10-15 percent annually for 25 years so that when a person retires, the nest egg—with interest—should come to about 10 times the annual income. It’s a nice theory if teachers were earning $100K annually. Limitations on contributions and varying practices regarding how much the school contributes, plus the fact that the percentage on $40-60K doesn’t come out to that much are contributing factors. A few communities have imposed mandatory contribution levels for schools, but as a group, Orthodox day school teachers have no central organization to advocate for them.
The only financial benefit offered to rebbeim and morot is the parsonage or domiciliary allowance, which is tax exempt. This can add considerably to their take-home pay. Retirement benefits are not eligible and are taxable as income. However, Conservative and Reform clergy have established central bodies—the Conservative Joint Retirement Board and the Reform Pension Board—that have the ability to allow parsonage in retirement. According to IRS Code 414(e), funds that are deposited by an employer into a 403(b)(9) plan (known as a “Church plan”) are parsonage-eligible. In the Orthodox world, there is no central organization of teachers to create such a plan.
Rabbi Perry Tirschwell, who has written about this, is the founder and executive director of the Torah Educators Network and this is one of his goals. We are blessed with an abundance of savvy and successful financial advisors in our community. We owe it to our teachers to utilize whatever means are available to us to address this issue. Perhaps if we develop a model here it can be duplicated nationally.
By Wallace Greene
Rabbi Dr. Wallace Greene is a day school advocate.