Private Schools Ordinance: The truth and the untold story

The case for expensive education

According to the Private Educational Institutions Promotion and Regulation (Amendment) Ordinance 2015, the private schools would be imposed fines from Rs20,000 to Rs40 lakh. Private educational institutions have been directed to adjust the extra fees received earlier in the next month’s fee within seven days of issuance of the ordinance. The magistrate could impose Rs2 lakh toRs20 lakh fine on that institution. The owners of non-registered educational institutions would be fined Rs3 lakh to Rs40 lakh. Prime Minister Nawaz Sharif also ordered to seal schools that will not refund the extra fees received earlier. Total focus of the ordinance is based on heavy fines rather than facilitation, quality or promotion of education.

I would like to address the independent media, the government, parents, and the general public. I need to respectfully point out that the public education system is almost destroyed in the country and, if the current debate regarding private education is not channelised in a healthy direction, the private education system, which caters to nearly half the Pakistani population, particularly the middle and lower-middle classes, will suffer a similar fate. It needs to be stressed that Article 25-A of the Constitution declares that it is the state’s responsibility to provide “free and compulsory education to all children from the ages of 5-16 years”. It is not fair that this justifiable public wrath is being deflected towards private schools.

Under Article 25-A of the Constitution, it is the responsibility of the state to provide education. Though it is not their role, private schools are helping the government with the fulfillment of its moral and constitutional responsibility.Private school graduates have risen to the highest positions in Pakistan and internationally. Private schools enhance opportunities for admission into leading national and international universities, and open up unparalleled job opportunities for young, lower-middle class and middle-class Pakistanis.

Private schools conservatively educate more than 50 percent of children in Pakistan, and nearly 60 percent in Punjab. There are 173,110 private schools all over the Pakistan. In which there are 97,810 in Punjab; 32,850 in Sind; 24,660 in KPK; 5,880 in Baluchistan; 2,380 in Islamabad ICT and 9,450 private schools working in Azad Kashmir and Gilgit-Baltistan and others areas of Pakistan. About 23,839,431 students are studying in these 173,110 private schools. Approximately 15 lac teachers work at these schools. On the other hand if we see the last 10-year, only in Punjab more than 9,000 public schools decreased from 63,000 public schools to 54,000 public schools and the same situation is also there in other provinces of Pakistan.

It is important to mention here that after paying all above costs and more than 25 government taxes, out of 173,110 schools, there are 85 percent schools which charge below than Rs1,000 fee. Moreover, there are 11 percent schools which charge below than Rs2,000 fee and only four percent schools are charging above than Rs2,000. It is very much clear that 96 percent schools are not in the limit of heavy fee structure. On the other hand, according to the government data, per student cost in a public school is about Rs7,960 per month with poor quality of education.

Quality and good education is not inexpensive anywhere in the world. The only difference is that funding comes from government or other sources. This explains why some of the best non-profit institutions in the world like Harvard, Princeton, Yale, Oxford and Cambridge, along with some of the leading Pakistani educational institutions, are also among the most expensive. The time has now come to tell the truth and untold story of private schools. Everything stated is factually correct and we challenge anyone to enter into an intelligent public discourse on these matters for the benefit of the people of Pakistan.

The students, staff, and owners of almost all private schools have contributed generously whenever the country has been stricken by earthquakes or floods from 2005 to 2014. Private schools are fully aware of their social responsibility. Most critically, in more recent times, private schools have been contributing to the creation of a progressive and internationally minded youth who are playing their part in the development of a modern Pakistani state.

The government talks of the Consumer Price Index (CPI), which is not a reliable measure even for households. For private schools, it is completely irrelevant. In short, the cost of operating schools increases by an average of 15-20 percent per annum. We are prepared for an intelligent debate with anybody on this statement. Private schools do not exist in an economic vacuum: when the input costs of every sector of the economy are going up, how can private schools remain magically immune? Private schools are treated as fully commercial entities by the government, and pay 33 percent income tax, 17 percent GST, three percent Super Tax, six percent EOBI, six percent Social Security, heavy property commercialisation fees, commercial property taxes, school registration fee, among other fees and taxes.

Despite of all above untold story and facts there are also more crippling input costs for private schools. It has been alleged by some that private schools have raised their fees by percentages ranging from 30 percent to even100 in August 2015. This is factually incorrect. The average fee increase for the vast majority of private schools has varied between 10-12 percent. In many cases, “Aug/Sept 2015 fee increases” are in fact the outcome of children moving from pre-primary to primary school, primary to middle, or middle to secondary/higher secondary levels. Every private school in the world, including those managed by the government, has different “fee brackets”, since facility and faculty costs increase substantially as students progress to different/higher levels.

Most private schools in Pakistan operate out of rented premises. Rents increase by 10 percent per annum. Typically every three to five years, lease agreements are renewed, at which point landlords aggressively renegotiate lease terms. Landlords are aware that schools have limited options because their cost of relocation is very high. The compounded impact of annual rent increase (10 percent) and end-of-term lease renegotiation (any percentage) is an average of 15-20 percent or more per year. Staff and teacher salaries account for approximately 50 percent of the fee income of private schools. Teachers’ salaries are revised upwards, on average, from 10 percent to 20 percent per year but based on performance appraisal; in some cases, the increases are far higher.

Average electricity expenses across Pakistan have increased by17 percent per annum over the last few years. Private schools pay the “Commercial tariff”, which is the highest tariff category. In addition, many private schools operate generators for back-up power. Maintaining generators is prohibitively expensive. After December 2014, private schools have exponentially increased their expenditure on the provision of security – a fundamental responsibility of the state. There are also other escalating costs of construction and capital items construction cost (steel, cement, paint, wood, etc) has increased every year by at least 15 percent per annum. An additional 16 percent GST has further affected this cost. Over the past three years, on average, computer equipment has increased by 15 percent per annum, laboratory equipment by 14 percent per annum, school furniture and fixtures by 18-20 percent per annum, vehicles by 12 percent, etc, with an additional 16 percent GST! Many private schools use diesel generators. The capital cost of generators has increased by an average of 18 percent per annum. The above investments are depreciated in the annual expense of private schools, since capital is not free – it has a cost.

Now the question is how will zero fee increase impact teachers? The 173,000 private schools in Pakistan are collectively the largest employees of professional women in the private sector in Pakistan. Approximately 1.5 million teachers work at these schools. Private schools will not be able to adequately reward these teachers or continue to offer free education to their children which are approximately three million children. Private schools will not be able to spend on the professional development of teachers.

How will zero fee increase impact students and parents? Private schools will gradually lose qualified professionals to other sectors. Private schools will not be able to maintain current levels of service. The number of children per class will increase, co-curricular, extra-curricular and value-added services may be cut down, and quality and overall standards will therefore suffer. Private schools remain committed to providing the best possible security arrangements for students. With zero percent fee increase, we now require that the government post police and Rangers outside every school. This is anyway the government’s responsibility, more so under the current security conditions. Scholarships and financial aid for millions of students across Pakistan, which private schools offer despite financial constraints, may be affected.

Quality and good education is not cheap anywhere in the world! Some of the leading non-profit schools and universities in Pakistan are also amongst the most expensive: IBA, LUMS, LSE, BNU, AKU, KGS, Aitchison College, and dozens of others. This is because they source the best faculty and resources from across Pakistan. Aitchison College, Lawrence College and Sadiq Public School, whose Boards are controlled by the government, are far more expensive than most private schools, even though their lands and buildings are free and they are recipients of government grants. Does this not mean that the government is “profiteering”? If not, why is the private sector profiteering?

Now The Lahore High Court and Islamabad High Court have stopped the government from taking action against private schools, charging fees and issued notices to Punjab government. Here, it would only be appropriate to mention that in India the superior judiciary has taken an interest to compel those in control of the government to realise their duty of improving the state run educational institution, not by eliminating the competition offered by the private sector but by having their children educated in the state run educational institution. The Allahabad High Court in its landmark judgment announced on 18.08.2015 issued the directions:

“The Chief secretary, UP Government is directed to take appropriate action in a matter in consultation with other officials, responsible in this regard, to ensure that the children/wards of government servants, semi-government servants, local bodies, representatives of people, judiciary and all such persons to receive any perk, benefit or salary etc from state exchequer or public fund, send their children/wards to are in age of receiving primary education, to primary schools run by board. He shall also ensure to make penal provisions for those to violate this conditions: for example, if a child is sent to a primary school not maintain by board, the amount of fee etc paid in such privately managed primary school, an equal amount shall be deposited in the government fund every month, so long as such education in other kind of primary school is continued. The appropriate provisions can be made by government so as to ensure that wards/children of persons, as detailed above, are compelled necessarily to receive primary education in the primary school run by board”.

We recommend that government employees and bureaucrats of all levels should be required to send their children to government schools. This is the most effective way of uplifting government schools. Were the media to focus on the uplift of government schools, the government would not be able to escape its responsibility and shift the blame and public wrath to private schools. There is also clear example of Army Public Schools (APS) of high standard quality education. It’s all due to the policy of the army, who send the kids of their officers only in their army schools to up lift the quality standard. Moreover, the government must declare exemption from all the 25 taxes imposed on private schools till the achievement of 100 percent education rate. Earlier in the period of army government, every time more focus was on the promotion of education rather than money minting like political governments. Army governments also declared a 5-year tax exemption in the past for educational institutions.

Based on capacity, leading private schools should be encouraged to enter into public-private partnerships. We, too, are ready to play a constructive role to lift the standard of government schools. Until the state schools are improved, government should issue ‘fee vouchers’ to lower-middle class and middle class families to send their children to private schools. This is common in many developing and developed countries and will help the government escape rising public wrath against its inability to meet its constitutional and moral obligations. Unless points highlighted above are given serious consideration by the government, we fear that private schools will suffer the same fate as public sector schools – with grave consequences for the future of the nation.