Saturday, November 17, 2012

School Education: An Open Suggestion to the Government !

How much money do the private schools in India make as profits in an year ?

Do they actually make any profits ?

What happens to the profits they amass if at all they make such profits ?

First, education in India has been a no-profit social service from the very beginning. In the beginning, it remained as a no-loss- no-profit social service undertaken by religious or charitable trusts or societies.

Even now it remains more or less in the same manner as far as the ownership and management are concerned.

Only difference is that the government has allowed them to have some free hand in determining the fees collected ,  the salaries paid to the staff  and the appointment of teachers and staff members. The governments (central, state or local) also play a role in giving the necessary permits for any one to start and carry on with the education service anywhere, just as they control the business of production and sale of alcoholic beverages.

The education service business (?) can be done by any individual or association of individuals of different nature as trusts, societies or companies, but conventionally most education institutions in India are run by bodies registered as Societies.

In the statutory provisions of a Society, there is no question of the members sharing the profits.

So theoretically, educational institutions run by Societies do not give any special benefits or share of profits to the individual members, in contrast to companies where profit sharing by way of dividends is legally admissible.

But in India, theory and practice are 180 degrees apart.

That is why India is a special nation in the world !

Now let us see how much money a normal English medium public school which is privately managed by a society make in an year now.

First let us take the example of a well established school in a non-metro which has been in existence for the last about two decades or more. That essentially means that the school has some land of about 2 acres or even more and all the necessary buildings and other infrastructure.

It also has classes from Kindergarten to Class-12. Typically such a school is likely to have an average student strength of about 3000 and a staff strength of 100 ( a ratio of 1:30)

This public school typically impart education in English medium and the syllabus they follow may be something equivalent to that prescribed by the government controlled autonomous bodies. The average fee per student for this school is to the order of Rs.1000/- per student per month or more.

So, this school can have an annual income of 3000x1000x12 = Rs. 36000000 (Rs. 36 million)

Now this school gives an average salary of Rs.20000 per month to its staff. This is the major expense for the school. If the government salaries are any bench mark, the school should have given an average salary, double this figure.

So if the salaries are at an average of 20000/- then the school has to make an expenditure of Rs 24 million per annum. In such a situation they have surplus of about 12 Million. Enough for other expenses and a neat profit.

On the other hand if they have to increase the salary to say an average of 40000, then perhaps they cannot do it unless they enhance the fees.

Now in the present situation the issue has become very complex.

There are schools which make huge surpluses and there are schools which are financially sick.

But even for those schools which make huge surpluses, the costs for set up of new schools now have become exorbitant due to uncontrolled price rise in land costs. Thus even those who make surpluses are also prevented from attempting establishment of new schools. New schools cannot operate unless they get more children who can pay high fees or they exploit the staff with low salaries !

Thus a situation arises where children do not get equitable education facilities by paying similar fees. A rush to the well established schools for admissions thus becomes a reality.

This causes high demand for those schools .

A situation for corruption gets automatically created.

In my opinion, the governments have a high responsibility to prevent such things.

What can they do ?

The government should make it mandatory for all schools to publish their annual income-expenditure statements.

There should be a mandatory system of audits of the educational institutions' accounts.

A statutory body- say the  NATIONAL EDUCATION FUND OF INDIA (NEFI) - may be created where  at least 90 % of all surplus of a education society should be remittable and held in their own individual accounts. All organisations which run schools or educational institutions should be enrolled as the members of this body. This body should also provide grants and soft loans to registered members for set up of new institutions or for betterment of their education work. The management cost of this body should be borne by the Central government and the body should never become another organization for exploiting the schools.

Will the HR Ministry of India consider this ?

Of course, those religious and other societies that have been successful in making huge surpluses may not agree.

But if they are forced statutorily to part with the surplus amounts to the national fund some good things are immediately going to happen.

First they might stop exploiting the teachers and the non-teaching staff.

Second, they have to adopt good management and accounting practices.

Third, the citizens get the opportunity  know what way their fees are utilized by the schools ; they may no longer feel that the schools are exploiting them.

And last not the least, the government gets the opportunity to positively take part in a responsibility that they ought to do !


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