Tuition Setting: A Mission-Driven Imperative

The Laugen Postulate — named after a colleague from my early days in Christian school management — holds that “if about half the families complain there is too much homework and about half complain there is not enough, you have probably set the bar about right.” My follow-up theorem: the Laugen Postulate does not apply to tuition. No matter the increase, few are ever happy.

In many ways, that is the unique tension of Christian school leadership. Homework complaints usually surface at the dinner table or in carpool lines; tuition decisions land directly in a family’s monthly budget. Homework can often be negotiated with a teacher; tuition is a line item that feels fixed and immovable. So while we may find a kind of equilibrium with homework, there is almost never a moment when everyone feels at peace with tuition. The stakes simply feel higher, and the emotions follow.

Well-meaning parents, many of them CPAs, MBAs, and finance professionals regularly offer to help trim the budget so tuition can hold flat. From a short-term perspective, that may be valid. There are always places where expenses can be delayed, programs can be stretched, or maintenance can be postponed for “just one more year.” On a spreadsheet, those adjustments can make the numbers look neat and tidy.

But school leaders cannot afford that narrow view. Our obligation is to deliver the mission today, next year, and 20 years from now. Christian education is not a one-year project; it is a generational investment. The decisions we make about tuition today directly shape the school our current kindergarteners will experience as seniors and the school their own children may someday attend. A tuition number that seems merciful in the moment can, if set too low, become a burden of scarcity for future boards, heads of school, and students.

Every October, when I present proposed tuition rates to the board, I draw on Christian School Management’s annual finance article. It cuts through the emotion and lays out the logic clearly. Board members are parents, grandparents, and church leaders; they feel the same pressures as everyone else. What they need — and what I need — is a framework that connects dollars to mission with clarity and conviction, not simply to “what feels tolerable this year.”

Consider several of the core statements from that article:

“The Christian school budget is a Kingdom document, a moral document, and a balanced budget document. Its primary purpose is to empower the school to deliver its mission with excellence.”

A Christian school’s budget is not merely a collection of numbers; it is a theological statement about what we value. Calling it a “Kingdom document” and a “moral document” reminds us that each line item reflects our priorities — in faculty compensation, student support, spiritual formation, facilities, and financial aid. Excellence in mission requires that the budget be honest about what it truly costs to do the work God has called us to do, not what we wish it cost.

“Tuition is the primary source of income the school has. It must be set with the strategic interests of the next generation of children in mind…The tuition set today has a ripple effect into the future. Set it too low and the negative ramifications for the Board and Finance Committee four years down the road can be significant.”

Because tuition is the primary revenue stream, underpricing it is not an act of generosity; it is an act of deferred pain. A tuition schedule that feels “kind” in the present can lead to program cuts, deferred maintenance, stagnant salaries, and diminished excellence down the road. Those future consequences will not usually fall on the people who made the original decision; they will land on a new board, a new finance committee, and a new generation of students and teachers.

“Tuition setting is a formula, not a conversation…If you don’t raise tuition by the OTI (Operations Tuition Increase), you degrade your school’s ability to deliver its mission.”

This statement is deceptively simple. When tuition decisions become a conversation driven by feelings, anecdotes, and the loudest voices, the result is often a number disconnected from actual needs. Treating tuition as a formula anchors the decision in reality: the cost of people, benefits, utilities, inflation, and strategic priorities. The OTI is not about ambition; it is about maintaining the current level of mission delivery. Anything less is, by definition, a step backward.

“We must add to that (OTI) our ambitions for mission excellence.”

This is where vision enters the equation. If the OTI simply preserves today’s capacity, then any desire to improve — to reduce class sizes, enhance programs, invest in discipleship, expand support services, or recruit exceptional faculty — requires additional resources. Excellence does not happen by accident; it is funded intentionally. In Christian schools, those funds largely come through tuition.

“If boards ignore these economic realities, the current Trustees may not pay the price, but make no mistake, those who inherit your decision will have to.”

This is a sober warning. A board that repeatedly suppresses tuition increases for the sake of short-term relief may feel successful in the moment. Enrollment may stay steady, and emails may quiet down temporarily. But the accumulated underfunding will show up eventually: tired facilities, burned-out teachers, aging technology, limited programming, and a growing gap between what the mission describes and what the school can actually deliver.

“Operations Tuition Increase … This retains the power of your current operations expense only. It does not add value to your budget.”

In other words, the OTI simply keeps the lights on at the same brightness. It does not buy new bulbs, expand the building, or give anyone a raise beyond basic cost-of-living realities. If a school settles for less than the OTI, it is choosing to dim the lights on its mission, even if that dimming is not immediately obvious.

(Setting Tuitions and Determining Teacher Pay Raises for 20126-27 – CSM; italics and bold mine.)

The cumulative impact of even small reductions is significant. At The Woodlands Christian Academy, we track tuition impacts across a student’s full PK–12th grade career (14 years.) The numbers are stark:

  • Reducing average tuition by just 0.07% this year alone results in a $3.8 million 14-year shortfall.
  • Reducing it by 0.07% every year compounds to a $29.4 million loss over that same period.

These are not abstract figures. They represent teachers we cannot hire, salaries we cannot raise, programs we cannot launch, and facilities we cannot maintain. Over 14 years, a fraction of a percent becomes the difference between a school that is merely surviving and one that is thriving in its mission. Parents may experience tuition as a yearly decision; a school must experience it as a multi-decade commitment.

Maintaining current buying power is only the floor. A healthy budget must also address:

  • Faculty and leadership excellence: attracting and retaining top talent is essential to a preeminent educational experience. Talented teachers do not simply deliver content; they shape hearts and minds, mentor students, and embody the school’s Christian mission day after day. Competitive compensation and professional growth opportunities signal that we value their work.
  • Cash reserves: a financial cushion for unexpected needs, and a CESA standard. Emergencies do not schedule themselves: storms, facility failures, enrollment shocks, or unforeseen expenses will come. Adequate reserves allow a school to weather those storms without compromising its core programs.
  • Endowment development: building a long-term funding source for the mission. An endowment creates a stream of income that can support financial aid, strategic initiatives, and mission-critical programs beyond what annual tuition alone can sustain. It is one of the most tangible ways we bless future generations.
  • Aging infrastructure: strategic reserves for maintenance, repair, and replacement. Buildings, roofs, HVAC systems, labs, and athletic facilities all have lifespans. It is far more responsible to plan and save for their renewal than to wait until something fails and scramble for funds.
  • Growth and adaptation: investment in people, technology, and facilities as student needs evolve. Educational best practices, technology, and cultural realities do not stand still. To remain faithful and effective, a Christian school must remain agile, ready to adjust programs, add staff, and expand spaces to meet new demands.

When pushback comes — and it will — a few reminders help. Roughly 70% of private Christian school costs are people-related. That means most of the budget is not going to “extras”; it is going to teachers, support staff, leadership, and the benefits that sustain them. Competitive pay and meaningful annual increases are non-negotiable for attracting and keeping great teachers. If we fall behind the broader market, our best people will understandably look elsewhere to care for their own families.

Healthcare costs continue to rise well above general inflation. Even if salaries were held flat which would itself be unhealthy the cost of providing comparable benefits to employees keeps climbing. Simply maintaining the same level of healthcare support can require substantial additional funding each year. That reality alone means that flat tuition is rarely compatible with a stable, healthy budget.

And for the analytically minded, there is Baumol’s Cost Disease. Economist William Baumol identified why service sectors like education, healthcare, and the arts face persistently rising costs even without productivity gains. It still takes one teacher for 20 students just as it did 50 years ago. Unlike manufacturing or technology, where innovation drives efficiency and wages up, teaching cannot be scaled the same way without fundamentally altering the nature of the work. We cannot “automate” relationships, discipleship, or the ministry of presence in the classroom.

Yet teachers must still be paid competitively or they leave for fields where wages are rising faster. That structural reality isn’t going away. As wages rise in other sectors, they put upward pressure on salaries in education, even though the underlying “productivity”of one teacher, one classroom, and a finite number of students has not changed. If tuition does not adjust accordingly, the gap between what we ask of teachers and what we provide them grows wider and more unsustainable.

The approach, then, is straightforward: gather the facts, apply the formula, set the tuition, explain the logic, and weather the storm alongside your fellow CESA colleagues. This does not mean being cold or dismissive of families’ financial concerns. It means listening empathetically, communicating transparently, and showing clearly how tuition connects to mission, people, and long-term health. It means helping parents see that responsible tuition increases are not a sign of greed, but of stewardship.

Emotion is understandable — but it cannot drive the decision. The mission must. Christian schools exist to form students academically, spiritually, and morally under the lordship of Christ. That calling is too important to be compromised by fear of criticism or by a desire for short-term approval. Our task as leaders is to make tuition decisions that are faithful to that calling, even when those decisions are hard knowing that the students in our classrooms today, and those yet to come, will live with the fruit of our choices.

Tom Hauser is the Associate Head of School and Chief Financial & Administrative Officer for the Woodlands Christian Academy, near Houston, Texas, and has served TWCA for 11 years. He holds a BBA with a degree in accounting from Iowa State University and was a practicing CPA before a career in mortgage banking and not-for-profit financial leadership. He is an active member of the CESA CFO cohort.