The economic strain the coronavirus pandemic is exerting on Hawaii families is having a ripple effect on private schools, where a cloud of uncertainty hangs over enrollment and budgets for the coming school year.

Some families are unsure if they will be able to re-enroll their kids without more robust financial aid or are asking to extend the deposit deadline to hold a student’s seat for next year.

“Here at La Pietra, we’re already getting requests for additional financial aid consideration,” not just for next school year but the remainder of this one, said Head of School Josh Watson. “Families are saying, although not certain, the outlook doesn’t look very good.”

While an estimated 1 in 10 kids attend private schools across the U.S., in Hawaii the number is much higher. Roughly 34,800 students are enrolled in about 120 private schools statewide, or 16% of the total school-age population.

Median tuition for private schools statewide is $8,700 although that inches up to $14,300 for Honolulu-based institutions, according to 2019-20 data.

While the phrase “private school” may conjure hefty, famous alumni-associated institutions like Punahou or Iolani, the majority of the state’s private schools are small nonprofits with 300 or fewer students and little to no endowment, according to Phil Bossert, the executive director of Hawaii Association of Independent Schools.

“And because they provide need-based financial aid (they) serve low-income students as well as financially well-off students,” he said in an email.

The fraught economic times have compelled some private schools to apply for a federal Paycheck Protection Program loan — part of a coronavirus stimulus package that’s so far reached about 11,500 Hawaii businesses.

The PPP loan is open to any small business with 500 or fewer employees and can be fully forgiven if at least 75% of the loan is used to cover payroll costs.

Le Jardin Academy, a pre-K-12 private school in Kailua with student enrollment just under 800 and a staff of around 190, received a $2 million PPP loan, according to Head of School Earl Kim.

That loan, he said, will help cover salaries and benefits, plus facilities and maintenance.

It’s a needed component, Kim said, given Le Jardin’s recent decision to offer more financial aid to families, including for the first time, to 3- and 4-year olds in pre-K and also at the kindergarten level, due to coronavirus-fueled need.

The school, whose tuition is $15,900 for full-day pre-K and $22,577 a year for grades K-12, is offering a 30% rebate on tuition for pre-K, junior kindergarten and kindergarten families for the past two months of instruction when the school shifted to all-distance learning.

No students have withdrawn from Le Jardin for the 2020-21 school year, but Kim expects some financially stretched families, particularly with children in younger grades, may opt to do so.

That’s why the school, which has an annual operating budget of $20 million, decided to expand its financial aid and apply for the federal loan.

“Our school leadership, our trustees, feel it’s important for the health of our student population to have diversity and to redirect funds for financial aid,” he said.

Robert Gelber, a spokesman for Punahou, the largest private school in Hawaii, said the school will not be applying for a PPP loan but anticipates a “significant increase in the demand for financial aid” that it is prepared to budget and fundraise for.

Some other large private schools, including Kamehameha Schools and Iolani, likewise said they have not applied for a PPP loan.

Lessons From the Last Recession

This wouldn’t be the first time Hawaii’s private schools have faced a potential drop in enrollment due to economic forces.

The recession 10 years ago led to school closures as well as a gradual decline in overall private school enrollment for several years.

Estimated enrollment in K-12 private schools dropped by about 9% between 2008 and 2012. Between those years, 11 small private schools closed or merged with other schools, according to HAIS’s Bossert.

One school that closed, in part due to the economic downturn, was Academy of the Pacific.

Watson, of La Pietra, served as assistant head of school at Academy of the Pacific when it closed in 2013, after five decades in existence.

“I myself am a survivor of a school closure,” he said. “What I would predict (now) is we see the same thing happen but on a shorter time scale.”

Watson says the economic downturn is happening much more swiftly than the last recession and the future outlook for schools is far more uncertain.

“I think we’re going to see a much deeper drop-off now in some schools — not overall, but the schools that see enrollment dip won’t have the lag effect of a year or two,” Watson said.

La Pietra, a private school for girls in grades 6-12, is still seeing enrollment openings for next school year that may otherwise have been filled were it not for the current situation.

“We have a handful of families who would love to commit but not sure they’re able to commit,” Watson said.

The school’s summer program will be all online and its new school year starts Aug. 5. It is considering tapping into endowment funds to meet its financial and operating costs and also applied for a PPP loan.

The school, which charges $20,400 in tuition, enrolls 160 students and employs 21 teachers, has an annual operating budget of $5 million.

Private and parochial schools, in addition to Hawaii’s public schools and higher ed institutions, are also eligible for funds through $10 million allocated to Hawaii under the Governor’s Emergency Education Relief Fund of the CARES Act, a discretionary sum for state leaders to distribute to educational institutions.

There has been no decision by Gov. David Ige on how those funds will be distributed, but the state has gone ahead and formally initiated the release of funds, Ige spokeswoman Cindy McMillan confirmed.

In an April 20 letter to Ige, Bossert of HAIS noted that the federal funding parameters require “equitable participation of nonpublic schools in the expenditure of the funds.”

“Helping these schools stay afloat also will prevent a flood of new students seeking space and resources this coming fall in Hawaii’s public schools that also have been hit hard by the demands of the COVID-19 virus,” he wrote.

“There is no question that (Hawaii Department of Education) deserves the lion’s share of the federal funds, but Hawaii’s private schools also educate thousands of low-income students across the state,” Bossert said.

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