A Pricing Problem

A Pricing Problem
September 1, 1999



Two different pricing problems are associated with students switching schools: the lowest price incentive you must offer students at your school to persuade them to switch to another school, and the highest price you can charge students at other schools so that you do not dissuade them from transferring to your school.

Illinois State Representative Cal Skinner Jr. has raised the first kind of pricing problem. School officials in Virginia's Roanoke County face the second.

In 1995-96, when Roanoke County charged just $100 tuition for students in neighboring localities to attend its schools, some 700 students took advantage of the program--and also brought an additional $2,900 each from the state in per-capita education funds.

But when the Roanoke County School Board in 1996 approved an increase in tuition to $2,000 by 2002, enrollment dropped dramatically. This year, out-of-district enrollment is just 433 pupils, down almost 40 percent since 1995.

"You could almost predict this would happen," board member Jerry Canada told The Roanoke Times. "Few people can afford $2,000 a year tuition for a child."

Facing the loss of several hundred thousands of dollars a year in state education funding, the School Board is now considering a plan to set the maximum tuition at $750.