As parents and schools fight over fees, Delhi government orders an audit

Delhi’s deputy chief minister and education minister Manish Sisodia has started to hire chartered accountants, at least 450 or 500 of them, to verify if the 2,700 private schools in Delhi are hiking their fees in line with rising expenditure.

Sisodia is clear that he does not want to regulate schools, but just ensure that fee hikes are justified. He has asked the private schools to submit their proposed fee increases and expenditure statements for 2016 to his ministry.

The audits will be made public.

"Transparency is the only key,” said Sisodia. “We will make it [audits] public, so that parents can see if a school is paying teachers well, they will charge high fees. My job is to verify if schools are paying teachers well. We will put it in the public domain.”

Fee face-off

Private schools and parents have clashed over high fees for months now, culminating in audits and court cases, as Scroll.in reported in January. The fee wars are not limited to any one city, with parents in Delhi, Gurgaon, Mumbai, Hyderabad and Bangalore banding together to fight. Schools say this is a symptom of the emerging middle class, which wants the best for its children but is not willing to pay for facilities.

Last year, the face-off between schools and parents resulted in Gurgaon divisional commissioner D Suresh ordering an audit of nine private schools in Gurgaon. The report for the audit, conducted by S M Saini & Associates, is not out officially yet. But Suresh told this reporter that it had found that seven schools were guilty of “unjustified fees hikes”.

The schools that fell foul of the auditor, according to Suresh, included the two Pathways schools in Gurgaon, Amity International School in Sector 46, Colonel’s Central Academy School, the Delhi Public Schools in Sector 45 and in Sushant Lok, and the Scottish High International School in Sector 57.

Suresh declined to give further details of the audit.

Prabhat Jain, owner of the upmarket Pathways schools, said his schools had never raised fees beyond 7-10% each year.

“The current activism around fee hikes is quite mindless and is highly motivated by petty personal interest and political gains,” said Jain. “Audits are being carried out to simply determine excess of income over expenditure without analysing and determining depreciation and interest costs and heavy cash flow outflow required around loan repayment obligations, need to continually upgrade facilities, building corpus and for carrying out expansion to name a few.”

Expanding rapidly

The education sector in India is governed by a complex set of rules that allow – some say force – private schools to operate as opaque, charitable trusts or societies rather than for-profit businesses. This lack of transparency, and perceived arbitrariness in fees has led to some parents accusing schools of hiking fees by as much as 100%-200% every year.

Activism by parents is just one of the reasons for the demand for greater probity in private schools. Another factor is that private schools have mushroomed in India – much more than in the West where school education is mostly funded publicly. This growth is helped by a widely-held perception that government schools offer low-quality education, without the acknowledgement that government schools deal with first-generation learners. And though good government-run schools exist, they are seen as exceptions.

An Ernst & Young report in 2014 said that India has more than 3.39 lakh private KG-to-Class 12 or K-12 schools, which grew at a compound annual growth rate of 4% over five years. Private schools account for 25% of all schools in India, and 40% students are enrolled in these schools. In terms of numbers, said the report, there are 99.8 million students in private schools in India, compared to 5.16 million in the US, and 0.5 million in the UK.

Private education is gaining a hold even in rural areas, show Annual Status of Education, or ASER, reports. While 18.7% students in the 6-14 age group were enrolled in private schools in rural areas in 2006, this rose to 25.6% by 2011.

As private schools grow, there is a growing debate over whether they should be profit-making or not.

Governments would like to believe that schools should not be driven by a desire to make profits.

“If you desire to be a profit-making business person, go to any other business,” Sisodia told Scroll.in. “Anyone who is pumping in money in education with the expectation that this is a profit-making business because we are living in a free market should go somewhere else because education is not a profit-making business – neither accepted by society, nor by law.”

He added: “Even if someone is pumping money, the basic premise is that you invest Rs 100 and you earn Rs 110, 120 or 130, that too after break-even. [But] in education you invest Rs 100 and you start earning Rs 500, there is no limit”.

In various rulings over the years, the Supreme Court too has also taken the line that profiteering from education is undesirable but profits are permissible as long as they are not excessive.

Most school managements do not see education as charitable work especially as they have discovered that schools survive best when they are part of a chain, and not stand-alone outfits.

“The major operating cost of all schools is staff salaries that go up on an average by 12% to 15% every year,” said Jain of Pathways. “This is necessary to attract bright people into the teaching profession and to ensure that they do not feel disadvantaged by having chosen teaching over other career options.”

Regulator needed?

More than case-by-case audits and government intervention, there perhaps needs to be a regulator for private schools in India.

Those against government regulation say that it infringes on the autonomy of schools, and will encourage corruption. India has a poor record in education regulation. Regulators for higher education such as the All India Council for Technical Education and Medical Council of India are not exactly shining examples of fairness or transparency. But those for regulation say no industry is left completely to market forces, including telecom and real estate.

Any regulator will need to take into account the wide spectrum of private schools in India. While some private schools based in middle-class neighbourhoods may charge a fee of Rs 10,000 annually, others like international schools, spread over acres, charge annual fees of Rs 10 lakh and above.

Stormy days ahead?

In the meantime, parents and schools continue to slug it out.

Following the audit, the Gurgaon divisional commissioner called parents and schools for negotiations on the issue of fees. The meetings – where the issue of what schools planned to do with funds surpluses were among the things discussed – were stormy.

Some see this as a new paradigm of greater participation by parents who continue to band together. At a meeting in Delhi, they show how they have formed groups is various cities to fight fee hikes. Mumbai has POPSOM, or Parents of Private Schools of Maharashtra; Hyderabad has HSPA, or Hyderabad School Parents Association and Gurgaon has the Haryana Abhibhavak Ekta Manch. Some parents have left jobs to focus on this activism.

At these meetings, parents also try to discuss deeper issues in education – how freedom of choice or the so-called free market works only for the middle class and rich, and how private schools are linked to the domination of English as a medium of education.

Some of them speak a language that may not help the cause of good education, or in building trust between schools and parents. “They charge us exorbitant prices,” said one parent waiting outside bureaucrat D Suresh’s office for the meeting between schools, parents and the auditor. “It is like checking into a 5-star hotel but they say, 'I will provide you lodge service'."

Added another parent: “[They say] ‘you pay me because I have to build a 5-star’. But by the time they develop a 5-star, my kid will be out. In five years, fees has doubled."