By Claiborne Dillard

Phyllis Palmiero. Photo credit: Phyllis Palmiero.

Have you ever wondered how your tuition dollars at Collegiate are spent? Have you ever heard misconceptions about where your money is going? I sat down with Phyllis Palmiero, the Chief Financial Officer and Chief Operating Officer at Collegiate, to get a better sense of Collegiate’s financial situation and how money is distributed throughout the school.

Palmiero has been at Collegiate for 14 years, beginning in 2008 during the financial crisis. That financial crisis was believed to be the worst economic downturn since the Great Depression. Previously, Palmiero worked for an investment banking company on Wall Street in New York, for three Virginia governors on education policy, the State Council of Higher Education (the coordinating body for all of Virginia’s public and private colleges), and consulted in higher education before arriving at Collegiate. She stated she has a “wide variety of backgrounds on education, education budgeting and finance, investments, and education policy.” 

Some students, in and outside of Collegiate, might make assumptions about the way the school distributes tuition money, donations, and more. For the 2021-2022 school year, the tuition costs range from $17,150 (for JK) to $28,600 (for Upper School). Palmiero explained that she hears about two specific misconceptions about Collegiate’s finances the most. The first is that tuition is Collegiate’s only source of revenue. But, in reality, tuition dollars are only about 88 percent of the school’s income. Palmiero said, “to provide the education for our students, we need more sources.” About four or five percent, depending on the year, comes from annual giving and philanthropic support, usually from parents, alumni, or anyone with a commitment to Collegiate. Driven by the endowment at the school, another four or five percent derives from investments. Collegiate has money in perpetuity which, according to investopedia.com, means they have “a security that pays a never-ending cash stream.” Then, they invest that money to generate earnings for the school’s operations. The last one to two percent emanates from Collegiate’s auxiliary services, including money from the Cougar Shop, summer programs, after-school programs, and renting out facilities. This two percent is also considered net profit. Overall, Palmiero wanted to elucidate that “tuition does not support the full cost of educating students at Collegiate,” which is sometimes what students and even parents may believe.

Where the money comes from on a normal year. Photo credit: Collegiate School.

The second misinterpretation of finances is that Collegiate constructs new buildings and facilities with tuition dollars. I have also heard many students claiming new buildings, facilities, and renovations are coming from their tuition, but Palmiero firmly stated that this is false. The actual construction of new buildings and major renovations are 100 percent philanthropically supported by raising money through a campaign for a specific effort. Within the last decade, the Academic Commons, Centennial Hall, and the renovation of McFall Hall were all generated by donation dollars.

After hearing about the common misconceptions about the finances, people may wonder where their tuition dollars are going. A large percentage of tuition money supports the actual student experience. A small piece of those dollars goes to “the overhead, or people like the Head of School, the Board of Trustees, the Admissions Office, the Development Office, and the Communications Office.” But, 85-87 percent of those dollars go directly to the student experience. Athletics, the arts, facilities supporting learning, technology, utilities, etc., are a few things that elevate the experience for Collegiate students and teachers compared to other schools. This percentage is known to be significantly higher than other private schools in the Richmond area, which is why Collegiate considers themselves to be the best option for creating superior experiences while learning.

Annual giving and donations average around two million dollars per year. There are two ways the money is distributed. First is unrestricted donations, which means a donor will give money to the school, and the school can use it in any way they want to. This usually just means the donors support Collegiate and want to help in any effort the school needs the most. Then, there are donors who want to restrict the money they are giving to the school. This money will go to a specific endeavor or project, and the school is required by law to obey the donor’s wishes. Both of these types of donations are greatly appreciated by the school and are used to enhance the school experience as a whole.

Many may wonder what the process is regarding tuition increases and the reasons for it. Palmiero said the school works to be “very transparent about all of this. For the last five years, I’ve been writing an article every February that goes with the letter from the Board of Trustees to the parents, saying ‘We set tuition, it’s going to be this amount, and let us explain how we set this tuition.’” She also sends charts to the parents of students with the reasoning and math behind the tuition cost. Collegiate sends this out to allow parents to plan accordingly for the upcoming year. She explained how Collegiate tries really hard to live within the inflation band, with a variety of indices to create a floor for tuition prices. In the last five years, Collegiate has lived within the rates of inflation to keep the cost per year at a manageable level.

Another factor to consider when raising tuition prices is comparing to other schools in the area. Collegiate does not price to compete with the schools, but rather make sure they are in the correct range of pricing tuition. Palmiero believes “we deliver one of the best products for the best price in the area. Collegiate, with the exception of books and technology fees, which are separately charged, does not have a very hefty required fee like a number of other schools in Richmond.”

To compensate the faculty, Collegiate compares salaries with public schools in Richmond and nationally to make sure Collegiate’s salaries are within the market range, which allows the teachers and faculty to remain employed at Collegiate. They try hard to attract and retain teachers at school, to show that Collegiate provides the best job opportunities for them. If Collegiate has to increase the tuition to keep the faculty and staff competitively paid, they will. This will upgrade the students’ experience overall at Collegiate, if the best faculty and staff are working there, so they try their best to attract in the most advanced teaching staff.

Collegiate also wants to fund strategic initiatives from the reallocation of money and move it to priorities, so that way they are not depending on tuition to pay for new things. Through an elaborate and rigorous process, the Board of Trustees decides where the tuition price will be set. 

Collegiate does compare themselves to the local private school competition in the Richmond area. Although Collegiate may be thought to be more expensive, it actually isn’t the most expensive school in Richmond, and Palmiero believes Collegiate is delivering a great value for the price they offer. 

Along with the competitiveness of private schools in Richmond, a number of students and families of students may wonder about how financial aid is determined and the percentages behind how many Collegiate students are receiving it. Palmiero mentioned how a certain percentage, normally around ten percent, of tuition revenue is allocated towards financial aid. Last year, the cost combined of all of financial aid was around 4.3 million dollars, but some of that money is also made up of restricted donations from philanthropic donors who want their money or endowments to go toward financial aid. Therefore, about two-thirds to three-quarters of the financial aid money comes from the school’s unrestricted budget. 

To be enrolled in financial aid, there is a very strict and detailed process to fund need. The applicants “have to demonstrate need.” Most private schools in Virginia, including Collegiate, use the Selective Service System (SSS) application, which includes the family of the student’s taxes, income tax statement, W-2, how many children they have in tuition-paying schools, and other general information about their living situation. After a family has shown they have demonstrated need through the SSS application, the next step is “granting the award, as long as it is justified by the application.” Next, after the analysis is complete, Collegiate first looks at existing families at the school, and with the remaining money, evaluates new families applying for the scholarship. Palmiero claims, “normally, we can meet 100 percent of the demonstrated need that is provided to us. [This process] is very confidential, and there is no fooling around. We are conscientious about making sure that when an award is granted, it is because the family has sufficiently demonstrated they need it.”

Collegiate, like other schools around the United States and globally, has been transformed and altered dramatically by the COVID-19 pandemic. There has been notable dissatisfaction toward public schools, particularly how many did not have in-person learning last year, hindering many students. From an administrative standpoint, Palmiero said, “Collegiate worked for months on how we could have in-person school safely and still meet all of the CDC requirements.” She also explained that because public schools were now working on the process most private schools were working on last year, it set them behind a little, causing some parents to transfer their kids to private schools. Applications to Collegiate, and all private schools nationally, skyrocketed. Palmiero said she appreciates the fact that many families have realized the benefits and value of private schools, but the issue is that there are too many people for everyone to be satisfied. She does believe that “it is a temporary blip, and we will see it [in finances] for a while. I think education for people’s children is very near and dear to their hearts.” 

Collegiate spent a great deal of time, money, and effort into making sure to meet the mandates of COVID-19 during the 2020-2021 school year, including intensifying cleaning, extra technology, buying new air conditioning units and air purifiers, increasing the number of substitutes, temperature scanners, tents, etc. While things are becoming more normal during this school year, there are still many investments being made to meet certain requirements. The school also collected a noticeable amount of savings during this time because no one was going on field trips, having global programs, or other outside programs which can be costly.

Last year, Collegiate initially planned to raise tuition by 3.7 percent, but quickly pulled back once COVID-19 hit and the fact that many families may be struggling more than usual financially. The tuition costs ranged from $16,730-27,500 in the 2020-2021 school year, which were the same as the year before. The Collegiate Family’s Financial Relief Fund was a philanthropic fund that raised almost half a million dollars to help families who would not normally need financial assistance, but due to the economy during COVID-19, may need help temporarily.

Featured image credit: Vlastik Svab.