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Already we have seen budget private schools across various states in India fall – and as participants in the marketplace, they should be allowed to fail if they did not manage learning or financial resources well. But here they are failing not because they did badly. But because they had to obey pandemic regulations.

Presumably the dishonest ones would have resources stashed away and will be able to reopen in some way or the other, but the honest ones who priced themselves for the poor to access good learning would not have the reserves to sustain beyond a quarter, or at most half a year – without external support or regulatory intervention. Someone must pay to save the good, and sift out the bad ones. In any case, we will pay for the inability to tell one from another. 

Budget private schools have always been the runt of the lot, carrying neither the heft of the richer private schools that have resources, excellent learning outcomes, trained teachers and connected students; nor the scale of government schools that are protected by their ownership and patronage, and so barely subject to scrutiny and accountability. Budget private schools carry the baggage of stories of corrupt owners, or venal ownership that cares only for the cash this asset can deliver. It is a wonder that parents have been flocking to these schools with such baggage – but they have. With little trust and a great deal of faith, about a half of students in India now study in the private sector. This truly is a wonder, and this lies at the root of the current conflict between fee paying parents, and schools that are reeling from the impact of low collections in fees.

On the one hand you have schools that are struggling to collect revenues. With fee collections ranging between 5% and 35% of the normal, schools do not have enough to pay their teachers, or defray their base electricity bills, rents and other fixed expenses. Given that schools are such stable institutions in normal circumstances, very few of their expenses are variable expenses. In fact, most variable expenses have been charged out to parents already and are billed separately. Think of books, stationery, uniforms, sports equipment, costumes for events – parents pay that at cost anyway. A typical school’s variable expenses are few – chalk, tube-lights and fans, and possibly chai in the staffroom. Most teachers I know even get their own pens for marking notebooks. This means, even if a school is not running, most costs, being fixed costs, still need to be paid.

Of all the costs, the largest chunk of costs is salaries. This is true of both the government sector and the private sector. In fact, when the RTE Act mandated that teachers be paid in line with the pay commissions, it was received with a howl of pain by the affordable (and accessible) school sector. There was no way that both the class size limitation (40) and the teacher pay mandate could be met at the same time – and still leave enough of a surplus to pay rent and electricity (that too at commercial rates which are higher than the not-for-profit rates that they should be charged). Do the numbers – if school fees are affordable and are set at say, 800 per child, the school receives 40×800 = 32,000 pm per class. If the teacher needs to be paid 30,000 pm out of that, it leaves Rs. 2000 for rent, cleaning, water, electricity and so on. Of course, rumours abound on how private schools ‘adjust’ and play around with these numbers. But the fact remains that teacher pay and other costs do not leave a huge margin for fee reduction even in normal circumstances.

Hypothetically, a school that has received, say 10% of it’s revenues and has paid 50% of teacher salaries, or has had to lay off a few teachers has already dipped into their savings. Remember, these are regulated too, and will not be able to sustain more than 2-3 months of expenses. There is a possibility that in a country like India the numbers are not what they seem, and this is where the lack of trust begins to fester. Without transparency, there cannot be trust.

It makes me wonder, of course, if parents have actually thought this through. Not just the numbers. There is no aggregate of school budgets that can be said to be standard for the country (nor would such a study be safe to conduct, believe me, I have been thinking of it for a decade). Nor is there a standard type of school – each has its own cost structure and requirements. But it can be safely said that for each school, of the monthly fees collected as revenue, between half and two thirds at the very minimum goes towards staff fees. Other costs take up at least another five to ten percent. Margins and reserves are not high in normal schools.

The owner is an entrepreneur, and like every start up, they seek multiples on their investment. They do not get it. While schools may be a cash continuity business, it is not necessarily a high profit business, certainly not for the affordable schools sector, or the middle range fees sector. A school owner who has opened a school or two to do good, and share their competence is very likely to have left a corporate job that could pay them four times as much. These are the very people who will teach your children how to progress in life, how to make choices for money and for good. Your child is placed in trust with them each day. It is a matter of deep wonder for me – parents trust their children’s minds and hearts, handing them over to these schools – to be schooled any way the owner chooses. But the same owner is not trusted to be honourable in handling money. If you cannot trust them with your money, how do you trust them with your children everyday? I wonder if parents have thought this through.

Fees will keep schools viable for now and the future. Parents need to decide if they are willing to invest in keeping their schools alive, or, face a fight for ‘seats’ when the old normal returns.  If it does.

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