Page 203 - EducationWorld December 2022

Special Essay

Effective financial

management in hard times

VIJAY SHUKLA

HE 82-WEEK LOCKDOWN OF SCHOOLS coun- It’s equally important to examine
trywide during the Covid-19 pandemic accentuated
the fragility and brittleness of India’s K-12 educa- financial challenges confronting India’s
Ttion system. Questions have arisen not just about private schools because 48 percent of
how education is imparted to students, but also about the
struggle of 450,000 private schools — especially 400,000 the country’s children — and all middle
budget private schools (BPS) — to survive financially after class children — are enroled in them
the pandemic.
Although it’s important to discuss Covid-induced loss
of learning, it’s equally important to examine the financial tion ratio of 50-60 percent as against a healthy 75 percent.
challenges confronting India’s private schools, because 48 By adopting cost optimisation measures, teachers can be
percent of the country’s children — and almost all children optimally distributed across classes through reduction of
of middle-class households — are enroled in them. free periods during which they usually discharge adminis-
Typically, a private school’s major heads of expenditure trative duties. By scientific planning of periods and reduc-
are teacher and staff salaries, employee benefits, purchased ing teachers’ admin work, institutional managements can
services, supplies and miscellaneous expenses. Provision cut their teachers’ payroll by 20 percent.
also must be made for maintenance and renovation of • Reviewing and renegotiating outsourced con-
school buildings and infrastructure. On the other hand, tracts. Services such as transport, housekeeping, statio-
a school’s major income heads are tuition, admission and nery supplies and school uniforms provided by schools
security fees and payment received for transport, uniforms should be reviewed/renegotiated. For instance, renegoti-
and textbooks. Though a few schools also fundraise, the ating transport contracts and route optimization can bring
majority rely entirely on students’ fees. costs down by 10 percent. Similarly, school managements
Normatively, the break-up of expenditure is: salaries (40 can slash other expenditure such as housekeeping and se-
percent); infrastructure expenses (30); transportation (12); curity to reduce the expenses bill by another 5-7 percent.
housekeeping (5); security (3) and miscellaneous, including • Inventory management. Schools incur significant
marketing, communication, technology etc (10). interest costs by stocking stationery, uniforms, lab equip-
In a standard CBSE/CISCE-affiliated private school ment, food and cleaning materials etc. Most schools don’t
with 1,250 students, average class strength of 35 students practice inventory planning and end up buying more than
and teacher-pupil ratio of 1:23 (as per CBSE norms) and required. By undertaking regular inventory audits and prac-
teacher salary of Rs.33,000 per month, merely to meet ticing kaizen or just-in-time inventory procurement, the to-
salary expenses, tuition fee per student has to be a mini- tal expenditure bill can be cut by an additional 3-5 percent.
mum Rs.3,000 per month. However, it’s important to note • Identifying new revenue opportunities. Fundrais-
that most schools in India are BPS institutions catering to ing and building endowment corpuses is an area of darkness
lower middle and working class households, charging fees in Indian education. In particular, vintage schools need to
below Rs.1,500 per month per child which obliges a family tap alumni to accumulate corpuses for infrastructure de-
to spend 20-25 percent of its monthly income per child’s velopment and renovation. Another option is to connect
education. with large corporates which are legally obliged to spend 2
According to an authoritative study, State of the Sec- percent of their profit on CSR (corporate social responsibil-
tor: Private Schools in India (2020) commissioned by the ity) projects, which includes school education.
Central Square Foundation, a Delhi-based not-for-profit, In any business and service organisation when revenue
70 percent of private schools in India levy tuition fees be- flows reduces and legally mandated and/or uncontrollable
low Rs.1,000 per month. They are wholly reliant on tuition expenditure rises, proactive managements must devise
fees paid by their students. Therefore, many of them are strategies to reduce variable expenditure and actively gen-
confronted with severe financial constraints. erate new revenue streams. For most private — especially
Private schools have little elbow room over teacher sala- budget private schools — whose finances were thrown into
ries which are benchmarked with government prescribed disarray by the Covid pandemic, these are difficult times.
salaries influenced by Pay Commissions. Therefore the only By working within the guidelines presented above, they can
option is to control and optimise expenditure under other keep their heads above water in anticipation of better times
heads. The good news is that by focusing on expenses within ahead.
their control, low-to-medium-fee schools can reduce up to
20 percent of their annual expenditure. (An alumnus of IIT-BHU, Varanasi and XLRI, Jamshedpur, Vijay Shukla is
• Teacher utilisation. Analyses of teacher optimisation managing partner of Eduvisors, Gurugram, an education sector consulting
in schools indicate that they have an average teacher utilisa- and professional services firm)

DECEMBER 2022 EDUCATIONWORLD 201