The Chennai Chapter of the Indian Liberal Group (ILG) has published a report on its study of Costs of Formal Schooling in Chennai (December 2003). An earlier post on ILG's study, described the fee amounts charged in the various schools surveyed in Chennai.
While the ILG has done very well by raising relevant issues, the report is verbose and confusing in use of terminology. The observations are largely superficial and include a few sweeping generalisations. A more thorough study with proper justifications presented to back up the observations would have been good. Similar (but statistically sound) surveys with thorough analysis in different cities across India would be useful. Here are some excerpts from ILG's report.
The received classification of the costs of schooling is public costs and private costs. Since the proportion of schooling in terms of the number of seats available in the 'public sector' (that is government and government-aided institutions) is shrinking and the preference of parents is also increasing away from the public sector to the private (self-financing) sector, our focus is on the private costs of schooling. The private costs of schooling in turn consist of institutional costs and individual (parental) costs. As far as self-financing schools are concerned, there are no institutional costs: institutions only generate surplus from the fees collected from the parents.It must be stated at the outset here that the range of the costs of schooling in the private sector is very wide indeed, as also the quality of schooling. Again, it must be stated that the cost and the quality are not exactly proportional. Even within the private sector - for that matter, within one and the same city like Chennai - there are schools where the costs are relatively quite low but the quality is high. When the costs are high it is often that quality is not low, but is not proportional to the costs. Much depends on the internal efficiency of the organisation and the 'surplus' generated. Our impression is that the law of diminishing returns begins to operate above a given cost threshold.
Before they rush to high profile schools which charge indiscriminately, parents who bend over backwards to secure admission for their children in them must know the findings of the famous study commissioned in the United States (The Coleman Report titled Equality of Educational Opportunity, 1975). It was a nation-wide study and covered a wide variety of schools, range of costs, facitlities and children studying in them. The finding was that the variance in academic achievement explained by school-related variables was much smaller than the variance explained by home-related variables.
In other words, the home contributes more to the education of the child than the school - however wonderful the school may be. So parents, expecially the educated ones, would do well to spend more time rather than money on educating their children - in a broad sense of the term - informally at home.
Most of these high profile schools screen the children seeking admission for the significant home-related variables - like the educational level of the parents, the mother's competence and availability for coaching her child etc., which implies that the schools' contribution to the child's achievement is just marginal. When children above a particular IQ level are assembled into a school classroom, the IQ level of the fellow pupils contributes enormously to the development of the child. Thus the children who assemble in the school paying high fees contribute to the quality of fellow children and not the school itself - except in the vicarious sense of being instrumental in bringing them together. This is an advantage hospitals do not enjoy!
The direct tangible and major inputs for quality of schooing are teacher quality and infrastructure. Of these two, again, teacher quality is the more critical one. There are in turn two components in teacher quality: teacher competence and teacher motivation. Both these teacher related componentns depend upon the compensation and ambience.
The private costs incurred by parents for schooling can be classified as 'Indirect' and 'Direct'. Those under 'Indirect' can be further classified as 'Optional' and 'Compulsory'. In 99% of the cases, the indirect expenses - particularly the compulsory ones like uniforms and books - are also incurred through the school. The 'Direct' expenses are fees paid to the school in the open for which receipts are issued and other amounts for which no receipts are issued. The heads under which fees paid to the self-financing schools, which fall under the 'Direct' category in the open, are:
.
- Admission Fees
- Special Fees
- Tuition Fees
See the earlier post which described the fee amounts charged in the schools surveyed.The categories under which money is collected without receipt are
- Building Fund
- Development Fund
- Donation
Some schools collect a reasonable amount as interest-free deposit, which is refunded in full when the child completes his/her education. Most often the parents leave the deposit behind by their sweet will and pleasure as a donation, as a gesture of goodwill towards the alma mater of their child.
In order to understand the overall economics of schooling, we must have a look at the other side of the picture namely, the costs to be incurred by the institutions to provide schooling. However, for the present we can only classify the possible heads under which they fall and cannot have access to the actual data. Being entities registered under the non-profit cateogry, these data must be readily accessible to any member of the public - certainly to the parents, the stakeholders. If the present statutory provisions do not provide for access to the same, they can and must be changed towards rendering the economics of schooling transparent to the stakeholders.
The costs to be incurred by the institution to provide schooling are:
- Non-recurring
- Building
- Infrastructure
- Recurring
- Depreciation
- Upkeep
- Operating costs
- Salaries
- Teaching Staff
- Non-Teaching Staff
- Materials/Supplies
A study of the total revenue and the total costs and the differences between them will indicate the surplus generated. Even a rough reckoning will indicate that the surplus is enormous. There are complaints that most of the schools pay veyr low salaries to the teaching and non-teaching staff. Low salary, heavy workload and severe demands to show 'results' drive teachers to drive the students in turn which has begun to result in suicide on the part of the students.
If the surplus exceeds a prescribed threshold in terms of revenue:surplus ratio, then the institution must be declared to be a for-profit organisation and treated accordingly. Such a reclassification has the advantage of bringing it under the Consumer Protection Act.