Capital Levy Fee Survey

Ron Halsey

No Date

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CAPITAL FEES

While I can't explain the origin of the exact percentage, I'm pleased with the system we have in place at Seoul Foreign School. A number of years ago the Board decided to raise tuition by 15% more than would normally have been the case. Each year since, 15% of tuition is allocated for capital projects. As such, we have no special capital fees. This leaves the Board with a significant amount of money each year for capital projects from a fund which is relatively invisible to the parent community. There is no question from employers whether they will pay a capital fee, no having to sell the Board and/or the community on a special levy to cover the cost of a particular project. We've been fortunate in that since then we have

never gone in debt, always handling all construction, bus purchase, land acquisition, etc., out of reserve capital funds. It works well for us. I'm deeply indebted to the Board for the farsightedness and courage it

exhibited in enacting this system several years ago.

Harlan Lyso

>As TIS begins its fifth year I hope to convince the Board and together we

hope to be able to provide our parents with a strong rationale to proceed with the

>essential step of instituting a Capital Levy Fee. We have reviewed the wide

>range of amounts charged. etc. We now need to learn how these figures were

>selected. Possibilities may include: a percent of the tuition (no

>corellation was obvious); a formula of some type; a percent of the projected

>costs of the building project; etc.? I would appreciate any such information

>concerning the process and rationales used to arrive at one time assessments

>or annual assessments; and the amount assessed. I appreciate that for some

>schools this may mean reading minutes from years (decades?) ago! I have kept

>the replies concerning bonds which David Cramer initiated last May and will

>include this information in our deliberations when we address additional

>sources of the building project.

>

>Thanks!

>

>Ron Halsey

>Tashkent International School

>adminoff@intlschool.bcc.com.uz

Your request regarding capital levy fees (we call ours a capital "assessment" fee) strikes a nerve for me. ASB instituted such a fee the year I arrived and decided to charge returning students a lower fee than

new students on the theory that returning students were less likely to see any direct benefit than the new ones. In retrospect, I would prefer that the school had set one fee for all students, as most other CEESA

schools have done. I won't take up the time of our colleagues with all of the reasons why I feel this way, but if you are asked to consider such a scheme, contact me for more detailed feedback.

I don't think, by the way, that the amount set had any rationale whatsoever, other than what the board thought the parents would tolerate.

I would be interested not only in the responses of our colleagues to your questions, but also in receiving any persuasive answer to the question I am getting constantly about why we assess a fee like this on parents who won't be here to experience the advantages of a new campus. They look at me with some skepticism as I explain that all over the world families who move around benefit from the fees paid by the parents who preceeded them. If anyone has a dynamic, inspiring, compelling piece of prose that I could put in our newsletter, I would owe you bigtime!

Sincerely, Fred Wesson, Director, American School of Bucharest

We have just raised our capital levy here in Vienna, which didn't exist before I was interviewed, was belatedly instituted at $600 before I arrived, and which I raised to $2500 for this year.

That said, we had no formula to speak of. I collected the fees from about 40 schools around the world, listed them in a table to show where we ranked, and argued for a higher fee to be competitive. We also plan to borrow funds for construction and tracked our annual turnover of students. We assured ourselves that the fee times the number of new students would provide an amount sufficient to pay off the loan over X number of years. That might be a starting point. Determine how much you need, and then calculate what you need annually or one-time to meet those costs.

Good luck. Richard L. Spradling, Ph.D.

I have been in a number of schools over the years and I suspect Rick Spradling is right when he says that schools may have some specific project in mind when they institute a capital fee, but then it takes on its own life and grows without any direct relationship to tuition. Sometimes, it is increased to cover a specific project, or to build reserves in anticipation of a project. Many times, it just grows without any real thought to a specific amount or a specific purpose. It is generally a one-time fee charged only to

new students. Sometimes, it is charged by family instead of by student. Either way, it is a lump sum payment at initial enrollment.

I also liked Harlan Lyso's concept of a percentage of tuition simply added to be used for capital. It is relatively transparent and it does have the advantage of being collected every year from all students, not just the new ones. The only downside might be that if you have families who have multiple children, and who are not sponsored by corporations or governments, this additional fee every year could be a hardship. However, since the families would not be paying a lump sum up front, this might even be easier to handle.

A question of how many new students come into the school each year might determine whether it is best to charge the lump sum fee, or to make it part of the annual tuition.

Good luck in your decision in this matter.

Regards, Ray Marshall

VIS is looking at restructuring its current development fee of $1500 charged to only new parents. Originally conceived as a fund that would support the purchase of land and/or the construction of a new school, the revenues generated are far from sufficient for this purpose. $1,500 per new child and averaging 35-40 children per year does not accumulate the funds necessary for large expenditures.

The reality of the fund is that it supports on-going renovations and equipment expenditures (which also come from depreciation).

I am of the opinion that VIS should use rename the currently label capital fund and then use the money to continue purchasing equipment and to maintain buildings. This fund, then, could be reduced in amount and the new sum applied equally to all parents.

IF VIS every decides to purchase a rice field and engage in new school construction, some other financial methods are necessary. In the meantime, we look to buildup our assets which might give us some leverage with banks.

Good luck, Joe

Joe Stucker

Graded has an Entrance Fee of $7,500 per student, and with around 200 new students per year this brings in significant sums which are used to support Capital Projects and Professional Development for faculty and staff.

David Tully

Dear Ron,

Our school has a capital levy of $2,500 per year per child. The fee evolved over the years and was first set at $400 in 1988. After we experienced growth it was raised to $1500 in 1991. When we realized that we would have to build a new upper school it was increased to $2,500 in 1993. The decision was more political than anything else. Hope this helps!

John Johnson

Budapest

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