Dubai private schools push for higher fee hikes

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Claim skyrocketing rents and inflation making it difficult for them to survive

Dubai: Private schools in Dubai have started informing parents about fee increases for the academic year 2014-15 as they push for a review of the existing cap which they claim is affecting their survival in the face of rising inflation and rents.

Schools from across curricula told XPRESS they have approached the authorities for a revision of the existing fee hike framework, which is based on the education costs index (ECI) and performance ratings, as it causes a huge funding gap that could eventually threaten closure.

Fee increases for 2014-15 have been fixed at 3.48 per cent for “outstanding” schools, 2.61 per cent for “good” schools and 1.74 per cent for the rest based on the 1.74 per cent ECI increase in 2013.

Funds crunch
Clive Pierrepont, Director, Communications of Taaleem which runs nine schools, said: “The funding gap occurs when schools, especially those with low fee structures, are told to better their ratings by investing more in technology, facilities, quality and staff training. In the past two years, these schools have had a fee freeze and a potential 1.74 per cent fee rise this year is not even enough to cover inflationary costs, never mind the improvements. Often, schools that have served Dubai well and for many decades stare closure in the face because of this funding anomaly.”

In the last couple of years, several schools, including well-known names like English College Primary School and GEMS Westminster School, have made impending closure announcements due to financial constraints. But in some cases like GEMS Westminster, the closure plans have been scrapped under pressure from parents and pupils.

Sunny Varkey, Chairman of GEMS Education, the world’s largest private school operator which has schools charging fees at both ends of the spectrum, was recently quoted by Forbes Asia as saying: “Education is recession-proof. Parents would forgo their food to send their children to the right school … We adopted the airline model of economy, business and first class to make top-notch education available based on what families could afford.”

Private schools contend that new entrants are at an advantage as they can charge higher fees against old schools which are hardpressed to restructure their fees.

Kollur Guruswamy of JSS Education Foundation, which runs two schools, said there’s a mismatch in the fee hike logic. “Schools that need to improve their ratings should be allowed higher fee increases, but it is the other way round. As such, Asian schools, whose fees already fall in the low end of the spectrum, take the biggest hit. We at JSS have been operating a loss for the last five years.”

The schools blame skyrocketing rents and inflationary pressures for their unsustainable finances. Guruswamy said: “We collect fees only for 10 months but our costs are spread over 12 months. Forty per cent of our revenue goes into paying our 150 teachers whose average monthly salary is Dh4,500. The remaining 60 per cent goes into leasing our premises. So where is the money to invest in IT and other areas? We are able to pull on only because of our parent organisation’s support.”

Even at Taaleem, which caters to the premium sector, Pierrepont said: “We hire the majority of talent on international contracts. Therefore, we are subject to global inflationary pressures that the ECI does not take into account. Our annual inflation costs range between five and 10 per cent and this does not take into account any further investment, or package increases. We have just awarded our teachers a Dh15,000 housing allowance increase to keep pace with the rent rises in Dubai’s market. This has had a major impact on our costs.”

A director of an Indian school said: “The ECI index needs to be looked into afresh keeping in mind our operational costs and rising inflation. Even hiring a retired teacher from the UK for a mock inspection costs us around £800 a day.”

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