


The “Freakonomics” of Catholic Schooling

One of the biggest challenges facing Catholic schools is finances—how to keep quality schools running with a tuition that is affordable. Many schools need parish or diocesan subsidies (along with other fundraising and revenue sources) to operate. Subsidies draw from parish and diocesan budgets potentially making it more difficult for these institutions to balance their expenses and revenue.

However, Catholic parishes with a school or those that support a regional school are actually less likely than those without an association with a school to run a parish operating deficit. Overall, about three in ten U.S. parishes have parish expenses that exceed their revenue. Of those parishes reporting a parish operating deficit, the average size for the shortfall is 16% of revenue (for more see CARA’s report for The Emerging Models of Pastoral Leadership on this topic). Thirty-four percent of parishes without a school run deficits compared to 28% of those with a school and 27% of those that support a regional school.
Among those parishes with a school commitment, on average, 23% of the parish budget is devoted to the school. 

Among those parishes with deficits, those with schools have an average shortfall measuring 13% of their revenue. This is slightly lower, 11%, in parishes that support a regional school. Those without a school have shortfalls averaging 20% of their revenue. 

What is this some weird Catholic freakonomics? Should struggling parishes go out and start a school to reduce their parish budget deficit? No. Although there is a correlation between having a school and a lower likelihood of running a parish budget deficit this is not causation. Both of these factors are related to parish size, as measured by the number of registered households. Small Catholic parishes are significantly less likely to have a school and more likely to struggle financially. On average, a parish with 200 or fewer registered households is running a slight deficit (-0.5% of revenue). By comparison, a parish with more than 1,200 registered households has a parish budget surplus (+7.1% of revenue), on average. The costs associated with the physical plant of a parish do not change with the number of registered households but the amount of revenue a parish brings in does. There are economies of scale that allow larger parishes to provide more to their parishioners—including schools (...there are drawbacks as well such as a challenges in building a vibrant parish community and lower levels of giving per household. For example, a parish with 200 or fewer registered households receives an average of $12 in offertory per household, per week. By comparison, a parish with more than 1,200 registered households receives $7.81 per household, per week).

Larger parishes also tend to be more likely to be growing demographically. In the average parish with 200 or fewer registered households (i.e., 15% of U.S. Catholic parishes) there are about seven infant or child baptisms and about six funerals per year. By comparison, the average parish with 1,201 or more registered households (i.e., 33% of U.S. Catholic parishes) has about twice as many infant and child baptisms (113) than it has funerals (55) per year.

By no means is it true that running a parish school is an easy thing to do. Parish and diocesan subsidies could be used elsewhere. But at what cost? Recent CARA research revealed that Catholic schools are essential in recruiting and forming the next generation of Catholic leaders from priests to sisters to lay ministers (1, 2, 3, 4). More so, CARA research has shown that Catholic schools are essential to shepherding many young Catholics through childhood sacraments. And of course don’t forget that Catholic schools provide a great education. In the long-run Catholic schools are a solid investment for the Church even when the annual balance sheets can be so challenging. 

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