Last week, we covered the issue of many parents in Bengaluru protesting against the private schools hiking fees, which they say has doubled in last 4-5 years. But, is there another side to the story? Citizen Matters spoke to a few school managements and teachers.

What are the costs involved in running a school? "It’s not just the maintenance expenses that the school managements have to bear, but the initial establishment cost too," says Dr M Srinivasan, Founder and Chairman of GEAR International School.

For instance, he says, if a person had to buy two acres of land in a prime area in Bengaluru to establish a school in Bengaluru may be around five years ago, he would have shelled out at least Rs 50 crore. So the person who has bought the property to start a school, has to repay the bank loan along with interest (Rs 5 crore annual interest for an interest rate of 10%) in the following years.

“Investment for establishing a good quality school is huge. Apart from the initial investment, the management has to spend on annual maintenance, salary to teaching and non-teaching staff, payment of bills and taxes etc. The schools also undergo high maintainance work every 5-6 years,” he says.

Seetha Anantasivan, Founder and Executive Trustee of Prakriya Green Wisdom School echoes his opinion. She says if a school owner who also owns the land ever wanted to make money, he/she could have always done it by selling the property. “Sell the land and deposit the amount in a bank, the interest that you get in itself will be more than five or 10 times of what we are getting now,” she says.

Schools and their establishment cost

There are four types of private schools based on the kind of property they are established in. The first category of schools are established on a property that the owner has bought paying the market value. Here, the school owner has the financial burden of repaying the loan that he might have borrowed to purchase the land, typically the pattern that Dr Srinivasan has explained above.

The second category of schools are the ones in which the person who has inherited the property builds the school. In this case the investment is comparatively less as he does not have the financial burden of buying the property. However, the argument is that, as Seetha Anantasivan puts it, the landowner could have always made a better profit by selling the land instead of running a school.

The third category of schools are those for which either the government may have sanctioned the land at a concessional rate or a private individual or an organisation may have donated the land as charity to start the school. These kind of schools are very rare to find, says D Shashi Kumar, General Secretary of the Karnataka State Private School Management Association and the Founder of Blossoms School.

“The government may have sanctioned land to a few private schools long ago but not in a decade or so,” Shashi Kumar says. However, these are the schools which could make good profit with fee hike, as they don’t have the burden of huge establishment cost. More so, because the Education Department has not imposed any fee restrictions on such schools that have availed government land.

The only condition that they have to adhere to is that the government does not reimburse their fee for admitting students under RTE Act’s 25 per cent quota. Such schools should bear the complete cost of 25 pc quota students, Shashikumar told Citizen Matters.

The fourth category of schools are more in vogue now. Most franchisee schools or group of institutions are built on the leased property. Here the school owner takes the land from a developer or landowner for a lease period of minimum 30 years. “The annual cost incurred by the school is huge here as the lessee has to make periodic payment to the lessor. The school owner has to run the show in such a way that the land cost paid to the landowner is recovered,” says Sawal Das Jethani, Founder and Managing Trustee of Chrysalis High chain of schools.

Students fee v/s teachers salary

The schools claim that with the inflated economy, the managements need to hike the fee. Expenditure towards salary to the teaching and non-teaching staff, is one of the key-factors that the schools claim to be the reason behind the fee hike.

The school managements Citizen Matters spoke to said that the entry level primary school teachers are paid a minimum monthly salary of Rs 20,000, whereas the head teachers are paid nothing less than Rs 60,000. When we independently pooled the information from teachers of various private schools, it emerged that on an average a fresher who has completed B.Ed and teaches in a pre-primary school is paid Rs 15,000 with an average annual increment of 10 per cent.  

Again, the salary depends on the school categories. While the ICSE and CBSE schools pay on an average Rs 20,000, the private schools with state syllabus pay less than Rs 15,000 to a fresher.

These statistics are in complete contrast to the salary estimation made by the Department of Public Instructions in 2014. The department had then issued a draft policy on fee structure for private schools in the State. The fee structure was calculated based on the salary paid to the teaching and non-teaching staff and the maintenance cost.

According to the draft policy, the salary paid to the teachers in private schools are as follows: Rs 13,500 for pre-primary and primary school teachers, Rs 13,500 for primary school head teacher, Rs 17,650 to high school teachers and Rs 22,400 to the high school head teacher.

Government to try fix school fee structure yet again

In 2014, the Karnataka State Education Department had proposed new fee guidelines that confused schools and parents alike.

Now after a gap of one and half years, the department has revised the draft and is making moves to finalise it. According to sources, the revised draft is not much different from the previous draft, with an addition of Rs 2,000 in the school fee per student and salary paid to teachers.

The school managements had then taken exception to the government’s proposed policy. “Even an experienced pre-school teacher is paid above Rs 22,000, then how can the department expect us to pay just Rs 22,400 to a head teacher? Let alone private schools, is the government paying as less a salary as Rs 13,000 to its government school teachers?” asks Dr Srinivasan.

Further he says that the government can prescribe minimum salary to be paid to a teacher, not maximum. “If you go the other way round it’s neither democracy nor sensible (for the) economy,” he points out, while terming the government’s draft as a ‘meaningless prescription.’

Sawal Das says the teachers in his school expect at least 15-20 per cent hike every year. “To retain them, we have to pay them; to offer quality education, we need good teachers. Schools cannot function by paying a meagre salary of Rs 13,000,” he explains.

Seetha Anantasivan says the non-teaching staff at her school demanded 25-30 per cent hike this year. “The hike they demanded was high because they felt they would get as much salary if they work outside as domestic helps. The era of paying Rs 5,000 to non-teaching staff is gone,” she states.

When asked about the allegation that the schools underpaying the staff, she says the government can always fix a minimum salary and ensure that schools pay. Send the inspectors to schools, check the school accounts and teachers bank accounts. The department can catch hold of the schools that are underpaying the staff,” she says.

Is there an ideal fee hike?

Even as the parents are alleging the schools of hiking the fee by more 20 percent and doubling of fee in last 5 years, the schools we spoke to maintain that ideally schools can hike anywhere between 10-15 per cent.

Sawal Das says in his school - Chrysalis High - fee has been hiked just by five per cent this year. “For primary school the fee was Rs 72,000 in 2014-15, it was hiked to Rs 80,000 in 2015-16 and this year the fee has been hiked to Rs 84,000,” he says. The reason for more than 10 per cent hike last year, he justifies was because of extra expenditure that the school had to bear in terms of installing CCTV cameras, GPS in school buses etc.

“A parent should be prepared to pay a fee hike by 10 per cent every year,” says Dr Srinivasan. Everything needs maintenance, right from computers to labs to sports facilities, which will add up to the expense, he adds.

However, Shashikumar from Private Schools Management Association says it’s okay for the schools to hike the fee by 20-25 pc. “The schools pay property tax, service tax, electricity bills, water bills and all this has seen a drastic hike this year. So the schools obviously hike the fee by 20-25 per cent to meet both ends,” he tells.

Shashikumar agrees that there could be some instances of schools hiking the fee by 50-70 pc. In such a case, parents can always complain to the competent authority. The government has no right to fix the school fee, it’s the right of the schools, he affirms. Since the CBSE and ICSE schools do not come under the Karnataka State Private School Management Association, he says his comments are only limited to the state syllabus schools. He blames the “posh international schools” for charging exorbitantly and says the state board moderate private schools that cater to the middle-income group do not impose high fee on students.

However, Seetha Anantasivan maintains that as we are living in a capitalist economy, the schools can not survive without making a reasonable profit. Things would have been different if it wasn’t a capitalist economy. People pay more for their cars, restaurants, travel etc but not on teachers and schools, which is ridiculous, she observes.

This brings us to the pertinent question of schools making “reasonable profit.”

What is reasonable profit?

The private schools should be mandatorily registered as charitable institutions under the Karnataka Education Act Rules 1997. Therefore the schools which register themselves under the Societies Registration Act or the Trusts Act, are supposed to be non-profit organisations. That’s exactly why there is huge hue and cry over the schools making 'profit'.

This very issue of making profit and fee regulation has been a bone of contention. In various court cases, the apex court has passed judgements stating the educational institutions do have the freedom to make reasonable profit.

In Islamic Academy of Education v/s State of Karnataka (2003), the Supreme Court bench remarked that the government cannot fix a rigid fee structure. The court categorically said that each institute must have the freedom to fix its own fee structure taking into consideration the need to generate funds to run the institution and to provide facilities to students. It added that the education institutions should be able to generate surplus which must be used for the betterment and growth of that educational institution. “Of course there can be no profiteering and capitation fees cannot be charged,” the bench observed.

In Modern School v/s Union of India (2004) too, the apex court allowed the school to make “reasonable surplus.” It said the surplus fund should be used for the expansion of school or any other developmental activities. Fee collected for specific purpose, should be used for that purpose only, the court stated.

However, many schools, especially in the older areas of Bengaluru, do charge a capitation fee which mostly goes unaccounted for. This ranges from anywhere between Rs 50,000 to Rs 4-5 lakhs. Capitation fee prevents parents who cannot afford to pay more from approaching these schools.

Who monitors schools charging such amounts and what happens to that excess profit?

What’s the solution ahead?

Urban Expert Ashwin Mahesh sees solution to the problem in the Delhi Education Department’s proposed amendment to the Delhi School Education Act. The proposed policy gives the freedom to schools to fix the fee of their choice, but they will be subjected to auditing by the government appointed committee, he said.

According to news reports, the Delhi state government has proposed to set up a committee to look into financial accounts of the private schools. “The committee, which will be headed by a retired judge and various chartered accountants, will be roped in to monitor the accounts. As per the plan, every accountant will undertake 4-5 schools to conduct an audit. If the panel finds any irregularity, it can direct the school to either refund the money or reduce the fees the next year” a news report says.

The new policy is being framed due to the complaints that several schools in Delhi are charging exorbitant fees and siphoning it off for other purposes.  

Mahesh believes that such a system will be beneficial for parents as well as schools. “It will give a reasonable opportunity to schools to justify their fee structure. With it, the government will at least acknowledge the expenses borne by schools, rather than undercounting it,” he says.

He also bats for an independent regulator to monitor private and government schools. “In the existing system, government is the operator of government schools and regulator of private schools. While regulation is imposed on private schools, there is none to monitor government schools. Therefore, establishing an independent regulating body will enable strict monitoring of government as well private schools. It will also improve the performance of government schools,” he opines.