American Catholic school enrollment, after dropping for most of three decades, went into a steep slide -- losing 20 percent of enrollment during this decade -- that is alarming most of the Catholic education establishment.

From 1998-1999 to the 2008-2009 school year, Catholic school enrollment dropped 456,000, from 2.6 million to 2.2 million nationwide, the National Catholic Education Association reports. Catholic school enrollment is less than half of the high of 5.6 million in 1965.

The biggest issue is paying for school -- for poor, mostly non-Catholic inner city African American youngsters, but also for lower income and middle class Catholic families. In a 2005 pastoral letter, the American Catholic bishops noted that 44 percent of Catholics under 10 were Hispanic. Today, that has not translated into Catholic school enrollment. Less than 13 percent of Catholic school students are Hispanic.

In addition, the ''true cost'' is usually several thousand dollars more than the tuition, said Dan Curtin, an administrator with the National Catholic Education Association.

''For most people who would say they can't go to a Catholic school, it is because they can't afford it. That puts a challenge on the schools, parishes, dioceses,'' said Curtin, who also served as secretary of Education for the Washington archdiocese.

''The future of Catholic school education depends on the entire Catholic community embracing wholeheartedly their responsibility,'' said Washington, D.C., Archbishop Donald Wuerl in a statement for OSV. ''Passing on the faith is the task of the whole diocesan church and therefore involves every parish, not just those maintaining a school.''

''We are his arms in the world,'' says Memphis Catholic School Superintendent Mary McDonald, who has spearheaded the reopening of eight elementary schools in one of the most poverty-stricken inner cities of the country, while shoring up other schools and adding three new suburban elementary schools and a new diocesan high school. ''It's God's plan. We're just working it.''

The challenge is finding a financial model that replicates the success of the system that worked up until the mid-1960s: parish schools staffed by sisters, brothers and priests where the students came from the church congregation and families' contribution to the collection plate and a modest tuition paid the bills. While 58 percent of school staff was religious in the 1960s; today just 4 percent are religious and 96 percent are lay people.

All is not doom and gloom. The National Catholic Education Association says 35 to 40 percent of Catholic schools have waiting lists, most in the suburbs.

The biggest issue is money. In the just ended school year, the NCEA reports the mean elementary school tuition nationwide was $3,159 while the actual per pupil cost was $5,870. At the secondary level, mean freshman tuition was $8,182 while per pupil cost was $10,228.

With a few notable exceptions, Catholic schools operate with little or no government funding. In addition, parents rarely receive any tax advantage for sending their children to Catholic schools instead of tax-funded public schools and charter schools. The NCEA estimates Catholic schools saved taxpayers $20 billion during the last school year.

There are four main areas that hold promise for funding Catholic schools: stewardship; philanthropy from donors or businesses who may not be Catholic but who have an interest in promoting a quality education for poor children; work-study models; and government assistance via vouchers and education tax credits.

The parish-based schools continue to be the mainstay of American Catholic schools, but several different models show promise too. The Cristo Rey Network is an independent national network, relying on fundraising and student work-study as well as a small tuition charge to pay costs. The Nativity Miguel Network of Schools focuses on faith-based education, not always Catholic, for poor middle school children. In addition, sponsorship of schools and teaching corps programs by Catholic universities such as Notre Dame, Christian Brothers University and Boston College bring resources to inner city schools.

The Stewardship Model

No Tuition. The most effective and promising model of stewardship is the Wichita, Kansas, diocesan school system, where no family pays tuition from kindergarten through high school, says the NCEA's Dan Curtin. The practice began decades earlier, with the last schools changing their policies in 2002. ''Wichita might be home to one of the strongest Catholic school systems in the nation, with impressive test scores, rising enrollments, supportive parishes, an authentic Catholic identity, and a unique funding model,'' concluded the non-sectarian Thomas B. Fordham Foundation in its 2008 policy study, ''Who Will Save America's Urban Catholic Schools?''

''What the Diocese of Wichita has been able to accomplish in the face of declining Catholic schools across the country is worth noting,'' the Dayton, Ohio-based think tank says. ''It may offer a model for how other communities could make their Catholic school system work for Catholic and non-Catholic students alike.''

''Our main goal is to make the opportunity available to all Catholics in the diocese if they so choose to send their child to a Catholic school. Sadly a Catholic education is available only to those who are wealthy enough to afford it, around the nation, with exceptions,'' said Wichita Diocese Director of Stewardship Father John Lanzrath. There are no entrance exams for the schools. Of the almost 11,000 students in Wichita Catholic schools, over 1,300 are Spanish-speaking and over 2,300 are minority. Almost a quarter come from low-income families.

But the concept goes beyond school, to encompass the entire Church community and all its ministries, said Father Lanzrath. While each school family is asked to sign a pledge to tithe 8 percent of their income to their parish and to attend Mass weekly, each parishioner is also asked to tithe 8 percent to the parish. Each parish gives 10 percent of its income to the diocese and the diocese subsidizes poorer schools. Because of high demand for the schools, which are approaching an enrollment high set in the mid-1960s, only about 3 percent of the students are not Catholic.

Other dioceses are experimenting with no tuition at some schools, including one in Brooklyn, some schools in Chicago, Indiana and in other parts of Kansas. No other diocese has yet tried the concept diocesan wide.

Tuition, But Increased Emphasis on Stewardship, Catholic Identity. Most elementary schools remain parish-based schools and therefore rely to some degree on stewardship. But in their 2005 pastoral statement, ''Renewing Our Commitment to Catholic Elementary and Secondary Schools in the Third Millennium,'' the U.S. bishops called for a renewed commitment to Catholic schools by all Catholics.

At the same time, each school needs not only to market itself to families, but also to show parishioners without school-age children that a school is Catholic in more than name, Curtin said. ''A lot of times our schools will say they are doing Christian service. That is not enough,'' Curtin said. The U.S. Conference of Catholic Bishops has issued guidelines on required Catholic instruction. As a member of the board of a local Washington, D.C., area high school, Curtin said he has found ''If Catholic schools are very strong academically and religiously, that makes a difference'' to the students, to the parents and to donors.

In Memphis, Superintendent McDonald says the Catholic school children across the diocese say the Rosary at 10 a.m. on certain days in ''unification through prayer.''

In the Arlington Diocese, where he lives, Curtin noted that the children at his parish attend Mass on holy days regularly as a group and that this sends a message that the school values the faith. A little known tenet of Canon Law requires providing a good academic education as well as Catholic instruction.

The Catholicity of Catholic schools is one of their greatest selling points to Mass-going Catholics and that, plus a renewed emphasis on stewardship in the whole Church, on tithing, may be one of Catholic schools' best hopes, Curtin said.

Curtin's sense is borne out by the findings of the Fordham Foundation report which says, ''American Catholics love their Catholic schools: Eighty-eight percent view them favorably (versus 70 percent who view Pope Benedict XVI favorably). Yet it is the schools' religious mission that inspires most Catholics -- and may move them to support the schools financially. The attribute that 91 percent of Catholics most associate with their parochial schools is 'developing moral values and discipline.'''

In addition to promoting stewardship, a key is building recognition of ''true cost tuition,'' Curtin said. Many parishes (and in the case of poor parishes, the diocese) provide 30 percent or more of the school's costs. For the just ended academic year, mean elementary school tuition was slightly more than half the cost per pupil, based on NCEA statistics, with $3,159 the mean tuition while the actual per pupil cost was $5,870. In most cases, ''you're subsidizing everyone, but only half may be in need,'' Curtin said.

Many parish schools have a sliding scale which partly addresses that. St. Gabriel School in a middle-class neighborhood of San Francisco charges less for each additional child and the fourth child and any additional siblings are ''free.'' Parishioners who contribute a certain amount each year to the church receive lower tuition. Those who donate time, or ''parent hours,'' also pay reduced tuition.

''I think we have a done a terrible job in our church in telling our parishioners and our parents the true cost,'' Curtin said. ''We still have a lot of people who throw a dollar in the collection plate.''

Philanthropy Models

Many dioceses and schools reach out to philanthropists with an interest in good schools with good values. There are several examples of this succeeding in the Jubilee Schools at the diocesan level in Memphis and in the Cristo Rey and Nativity Miguel networks which are run by independent religious groups.

Jubilee Schools. July 15 marked the 10th anniversary of the Jubilee Schools, when the Diocese of Memphis announced the reopening of the first of eight closed Catholic schools in the city's inner city.

''When I became bishop, in 1993, I was shocked that our schools were closing,'' Memphis Bishop J. Terry Steib told the Fordham Foundation which lauds the Jubilee Schools as a success story. ''I thought -- that's not the Church's way. Catholic schools are meant to make a difference in people's lives. They are the primary vehicle for evangelization.''

Today, there are eight Jubilee schools among the 30 diocesan schools from preschool to high school and 8,696 students, according to the 2008-09 Memphis Catholic diocesan schools annual report. That compares to 6,800 students in 17 schools in the Memphis diocese in 1998 before the Jubilee initiative. Today's Memphis Catholic schools boast a 99 percent graduation rate, and 99 percent of Catholic high school students go on to two- or four-year colleges. Minority enrollment is 33 percent, and 37 percent of the students are not Catholic. This year the Memphis Catholic school system received the Best Practices Award from the National Leadership Roundtable on Church Management, which Bishop Steib and School Superintendent Mary McDonald accepted at the University of Pennsylvania's Wharton School.

A key to the ''Memphis Miracle'' was an anonymous donor who came forward with a $10 million donation and a commitment by the Memphis business community to a fundraising foundation for the Jubilee Schools. With just 4 percent of the population Catholic and many of the inner city parishes with less than 100 members, McDonald said, ''The Catholic population did not have the resources. so I knew I had to go out into the community, because it was for the community.''

The foundation is a separate entity from the parish-based schools, and the Jubilee Schools are run differently, McDonald told OSV. Each school's principal reports directly to McDonald and the pastors provide spiritual support for the schools. Families pay a small tuition, sometimes not more than $100.

In funding the Jubilee Schools, the diocese draws on wealthy Memphis donors, but also partners with the Alliance for Catholic Education (ACE) at the University of Notre Dame and thereby receives several teachers a year who are working on their master's degree; it has a similar agreement with Christian Brothers University in Memphis through its Lasallian Association of New Catholic Educators (LANCE) program, the Fordham Foundation reports.

McDonald said the diocese also created a diocesan-wide scholarship fund for Catholic school students in the rest of the Memphis episcopate, shored up struggling schools on the city perimeter and built new schools in the suburbs. ''It is just as important for us to keep our Catholic children in Catholic school,'' McDonald said.

Today many of the Jubilee Schools have kitchens to provide lunch and employ parents as kitchen aides because, McDonald said, the children and their parents and guardians were hungry, ''they were starving.'' Five of the eight schools send home backpacks stuffed with non-perishable food on Fridays and before holidays. She recalled watching as a little boy ate half a ''mystery meat'' patty, and half the bun, and then placed the meat, gravy and all, and the remaining bun into his pockets. ''I came over and I said, 'Don't you like the lunch today? Why did you put the lunch in your pocket?' He said, 'Oh yes, that's for mama.'''

McDonald suffered a stroke three years ago and credits the prayers of the Catholic school children and their parents with her miraculous recovery -- she was back at work two weeks later although the doctors had said it would take her years to recover. ''After I went back to work, I went to every school and thanked the children so they could see what their prayers had done. I wanted them to see that they prayed and that God heard that. I've been fine ever since.''

Her favorite story is finding a crucifix in the attic of the sixth Catholic school to reopen as a Jubilee School. The 7-foot crucifix, propped against a wall, had no arms. ''It was like a postcard from God,'' McDonald says. The crucifix now hangs in the front hall of that school, with a placard next to it: ''We are His arms in the world.''

Independent Religious Network Schools

''Networks of schools run by independent religious orders demonstrate real energy and potential. The dynamism and growth of the Cristo Rey and Nativity Miguel networks suggest that the best hope for renewing urban Catholic education may rest with such endeavors,'' according to ''Who Will Save America's Urban Catholic Schools?'' a report by the Thomas B. Fordham Foundation.

Cristo Rey Network.These high schools are explicitly Catholic schools which serve only economically disadvantaged students in urban areas with a college preparatory curriculum. What makes the network different is that it requires participation by all students in a work-study program that includes longer school days, and one day a week in an office, business or corporate setting which both provides work experience and helps pay schools costs. In 2008-2009, 22 schools served more than 5,003 students,according to the Cristo Rey Network website cristorey network.org. Ninety-five percent of Cristo Rey students are racial minorities and 99 percent of the Network's 2008 graduates were accepted in a two- or four- year college. A Cristo Rey school's revenue from collected tuition and paying work-study contracts covers more than 85 percent of operating cash flow and development makes up the rest, according to the network.

Originally operated by Jesuits and Christian Brothers, the schools have drawn other religious orders. For instance the Cristo Rey school that opened in Washington, D.C., two years ago is run by the Salesians but is an archdiocesan high school, and Immaculate Conception Academy girls' school in San Francisco converts to the Cristo Rey model in the 2009-2010 school year under the guidance of the Dominican Sisters of Mission San Jose.

The Nativity Miguel Network of Schools. These schools focuse on middle-school youngsters and believes in ''breaking the cycle of poverty through education.'' The faith-based network is comprised of 64 middle schools serving more than 4,400 students in 27 states across the country, according to nativitymiguelschools.org. Although mostly run by Jesuits or Christian Brothers, a Nativity Miguel School is not required to be Catholic but must be faith-based.

''A Nativity Miguel School offers a financially accessible, not tuition-based education to students from low-income families in impoverished communities and reflects the faith, cultural and racial demographics of the local community,'' according to its mission statement. The schools have extended days, encourage family involvement and must conform to the mission and standards enforced by the Nativity Miguel Network.

Taxpayer Money Options

Voucher Programs. Vouchers provide government-funded scholarships to low-income students to attend the school of their choice and, when voucher programs are available, a significant portion of the students choose Catholic schools. In the short term, voucher programs are unlikely to find much traction because of strong opposition from the public school teachers' unions, most of the Democratic Party and President Barack Obama. The most prominent program is that in Milwaukee, founded in 1990 and expanded in 1995 to faith-based schools that now serve 14,000 students, according to a 2008 report by the Bush Administration's White House Domestic Policy Council entitled, ''Preserving a Critical National Asset: America's Disadvantaged Students and the Crisis in Faith-based Urban School.''

''Its positive impact on faith-based urban schools makes a compelling case for additional scholarship programs,'' the White House report stated, noting that the program saved one participating school, St. Anthony, from closure and now St. Anthony has tripled its enrollment from fewer than 300 students to 1,000. However, the Fordham Foundation also found that enrollment continued to decline in some inner-city Catholic schools in Milwaukee.

The second most prominent voucher experiment -- in the District of Columbia -- is slated to close down after the 2009-10 school year because Congress declined to renew the DC Opportunity Scholarship Program in March. A total of 1,700 low-income students, nearly 900 of whom attended Catholic schools, will be affected. In the case of one Catholic school, 70 percent of the students receive Opportunity Scholarships, said Washington diocesan spokeswoman Susan Gibbs. Archbishop Wuerl fought hard to save the program, and to support Catholic schools in the city overall. He noted the archdiocese and private donors invested $68 million over 11 years in 14 inner-city Catholic schools. The finances became too much. In the last two years, seven of the schools converted to independent public charters. The archdiocese also opened a Cristo Rey School and changed the school-funding model across the diocese to provide tuition assistance to students directly, rather than support a few individual schools, Gibbs said.

The Milwaukee voucher program also faces difficulties, with a raft of new state mandates included in the budget now winding its way through the Wisconsin legislature, according the June 12 edition of Education Week.

Education Tax Credits

The Education Tax Credit is an idea that is gaining ground even as vouchers struggle for acceptance. Some form of education tax credit is in eight states including Iowa, Florida, Arizona, Rhode Island and Pennsylvania.

''The bishops have said they would have to close 10 or 12 Arizona schools, easily, if the tuition tax credit were to go away,'' Ron Johnson, executive director of the Arizona Catholic Conference, told OSV. In Pennsylvania, the Catholic Conference estimates 44,000 children a year benefit from scholarships funded by the corporate tax credit for education.

Unlike vouchers, education tax credits have drawn bipartisan support -- for instance 40 percent of the Democratic caucus in Florida recently voted for an expansion of the state's education tax credit, said Adam Schaeffer, a policy analyst at the Cato Institute. Unlike a deduction which affects taxable income, an education tax credit is subtracted from the tax bill owed.

Credits have survived court challenges in almost every instance, according to Schaeffer. Because parochial and private schools generally cost less than public schools, fiscal analysis by the Cato Institute concludes that the states save money.

In Arizona, Catholic schools are eligible for money from dollar-for-dollar educational tax credits under two programs, an individual tax-credit law which took effect in 1998 and a corporate tax-credit law passed three years ago.

In Pennsylvania, a corporate tax credit, the Educational Improvement Tax Credit Program, enacted in 2001 allows corporations to claim a 75-percent tax credit and a 90-percent credit if they commit for two years. The Pennsylvania Catholic Conference notes that since 2001, the tax credit has raised $420 million for public and private schools. The conference organizes a rally at the state capital each year to encourage lawmakers to continue funding the initiative.

Florida now has a $118 million corporate tax credit, which was enacted with bipartisan support, Schaefer said. Iowa has both personal and corporate education tax credits, Schaeffer said. Georgia just enacted a $50 million corporate tax credit with no income requirement for students to qualify for tuition support, said Schaeffer. Illinois, Minnesota and Iowa provide families with tax credits to offset the cost of independent schooling for their own kids.

In many ways, Catholics have always risen to that challenge. During the past decade, with trademark American ingenuity, they have devised new educational models and new ways of financing schools. Much remains to be done, but the effort is worth it, says Archbishop Wuerl whose experience in the nation's capital puts him on the frontlines of preserving Catholic education for the poor and middle class. ''Catholic education in all its forms has as its primary task the communication of the person and message of Christ,'' said Archbishop Wuerl. ''In our Catholic schools, the threads of the encounter with Christ and his life-giving message are woven into the fabric of our human experience.'' TP

Valerie Schmalz is a freelance writer from San Francisco.