Economics of running a school & worries of the parents

The article tells how a school is run. It describes about the various expenses involved in running a school. The article explains the worries of the parents at the time of admitting their children in a school. It tells why the tuition fees and other charges differ from school to school. It advises the parents to select a school according the infrastructure provided in a school and the fees charged by it.

Worries of the parents as soon as a new academic session starts

• As the time nears towards opening of schools for the new academic session each year, we come across many news and discussions through the print and electronic media about several schools charging exorbitant fees from the parents. The two worries mainly weigh on the minds of the parents. First is to get their children admitted in good schools and the second is the worry about the fees charged by the schools where they want to admit their children. They run from one school to the other in order to secure an admission for their children in the best school possible according to the school expenses which their pockets can support.

• Some of the parents who do not get satisfied the education in the former schools where they admitted the children in the previous year / years also try to seek admission of such children in other schools. Another category of parents seeking admission of their children to various schools are those who come on transfers from other schools. Their additional worry is that they have to search for a school and ensure whether the 1st or 2nd language studied by their children in schools where the parents resided formerly was available in their new school or not.

• Parents have also to make arrangements for buying of the books, notebooks, school stationery, uniforms, shoes, school bags, tiffin boxes, water bottles or any other item required to be carried by their children to the school. Many schools have their own shops to sell these items while some others direct the parents to some particular shops. The prices charged by the schools and shops differ from school to school or shop to shop.

Tuition Fees and other charges differ from school to school

• Almost all schools charge varying rates of fees in each academic session. The fees rates are increased every year according to the whims and fancies of the school despite announcement of fees regulatory order issued by the government. It does not make much difference in the expenses of a school whether the school follows state govt syllabus or central board syllabuses like CBSE or the ISCE. What makes differences in the expenses of the school is mainly the infrastructural facilities like the cost of land used by the school, the cost of the building, building rent in case the building is not owned by the school, furniture, office equipment, Fire safety equipment, library books, Electrical and telecom equipment, Computer hardware including peripherals, Computer software, Play equipment, Audio visual equipment like overhead projectors, LCD TVs, CCTV cameras, Intercom, Public Address system etc., Laboratory equipment and materials, Musical Instruments, Teaching aids equipment like black boards, white boards, green boards, interactive smart boards etc., computer labs including networking and internet, School websites etc besides the maintenance and repairs of all the above.

• There are other expenses like the electricity & water bills, telephones bills, salaries of the teaching and non-teaching staff and other overhead staff, management's share of contributions to Employees provident Fund and Employee state Insurance premiums, Advertisements for admissions and for teachers' posts, Examination fees paid by the school, Postal expenses, Bank charges, Prizes and incentives to teachers and students, School function expenses, Computer consumables, Refreshment, Permission and Recognition expenses, Auditors' fees, Entry fee for sports fees, bad debts and depreciation on assets. The fees charged by the schools should be based on the recurring and non-recurring expenses of the schools as detailed above. However some schools manipulate the expenses of the schools and do not show the real picture to the parents. Some of the schools even do not give the receipts of some of the donations or funds collected from the parents. It is also true that in certain cases the schools do not get the bills for certain expenses they make, especially the bribes paid to the officials of education department for recognition and permission, to the municipality officials for getting sanitary certificate etc. for which they have to unwillingly insert some bogus bills to cover up the expenses. Some schools run their own or hired school buses but I am not including those expenses here. So the schools have to charge fees and other charges from the parents to meet the above expenses which differ from school to school according to the expenses of the school.

Certain charges levelled by the parents against schools and published in media

• I quote here the information given by a reporter of an English daily of Hyderabad published recently under the heading "Extortion by schools". The amount quoted by the reporter in his column are as follows:
• International and concept schools demand donations of Rs.1.5 lakhs and tuition fees of Rs. 1 lakh a year.
• The rates for corporate schools quoted by him are Rs.30000 donation and an annual fee of Rs.25000.
• The figures given for normal schools is Rs.10,000 – Rs.15000 towards donations and Rs. 20000/- per annum towards school fees.
• He has also quoted the amount charged by unrecognised schools (running unlawfully). They also charge donations ranging from Rs.3000 to Rs.5000 and annual tuition fee of Rs.8000 – Rs.10000.
• In addition to the international schools charge an amount Rs.50000/- towards cost of stationary and uniform, corporate schools charge Rs.5000, normal schools charge Rs. 3000 and unrecognised schools charge Rs.2000/- for the same.

Income and expenditure of normal school worked out

In order to find out how far the allegations made against the schools regarding their fee structure is true we must work out the various expenses incurred by the school and the fees charged by them. Let us first consider a brief description about various heads of account relating to the assets and recurring expenses of a school:

Expenses on Assets in a school

• Land and building: The management of a school has to first acquire land for the school and spend on the construction of the school building or it has to buy a ready built accommodation. Here the land costs will vary according to the area but the cost of construction may vary only very minutely. If the management hires the building, the school will have to pay the lease agreement charges and registration of the lease deed in addition to the rent as fixed by the building owner. However, these expenses will be shown under the head of recurring expenses and not asset expenses. These expenses will vary from area to area.

• Furniture: The management has to procure furniture for classrooms like desks, benches, chairs, tables, blackboards, almirahs, racks etc., furniture for Principal's office and staff, for laboratories, library, store room etc.

• Books for school library: The management has to procure adequate number of books, reference material, newspapers, magazines etc. for the school library depending on the strength of the school.

• Electrical Equipment: The school management has to provide for electrical equipment like the fans including exhaust fans, stabilisers, inverters; UPS equipment, batteries, water motors, booster pumps etc.

• Audio visual equipment: The management will have to buy CCTV cameras, intercom system, public address system, LCD TVs, overhead projectors etc. Some schools which charge very high fees even provide interactive display boards supported by the educational packages.

• Computer hardware: The computer labs in schools and their classrooms have to be provided with adequate number of computers with LCD monitors which have to be networked. They need to be attached to the overhead projectors or wall mounted LCD TVs in the classrooms. Necessary peripherals like printers, modems etc have to be provided.

• Computer software: Software containing educational content and other support software for the computers need to be provided.

• School website and internet connection: The management have to incur initial expenses in developing the school website and to have an internet connection and thereafter it will the recurring expenses which the school has to wear.

• Play equipment: The management has to arrange necessary play equipment both for external play activities and for indoor games according to the strength of the school.

• Laboratory equipment: Necessary equipment and material has to be bought for setting up the school science labs.

• School canteen: The schools which offer canteen facilities have to provide the necessary kitchen ware and stoves etc required in the canteen.

Water filters and drums for drinking water: These have to be bought for making drinking water arrangements for children.

• Musical instrument: The school which offer music classes as extra curricular activity have to buy the requisite musical instruments.

• Fire safety equipment: The school management has to buy and install fire safety equipment in school to fulfil the regulations issued by the Fire Department of a particular state.

• School playground: The school playground if possible has to be provided. This will be a very heavy expenditure depending on the locality of the school.

• School buses and other vehicles: Wherever the school transport is provided the school management has to invest on the school buses and some other vehicles like scooter, cycle required to be used by the support staff for various school activities like depositing of fees in the bank, going to various offices concerning school works.

• Endowment Fund: An amount as fixed by various state governments has to deposited in banks or post offices for a fixed period as required by the education rules of a state and has to be renewed again and again.

These are the heads of expenses which I could think of and remember. There may be one or more heads which I might have forgotten to add. This is a tentative list of the asset expenses.

Expenses of recurring nature in a school

• Salaries: The main head of expenses of recurring nature is the salaries of the teaching, non-teaching and other overhead staff. This will vary from school to school and there is no uniformity at all.

• Management contribution to Employees Provident Fund and Insurance Schemes: All schools with 20 employees or more have to contribute @ 12% of the basic pay + DA of the staff salaries in addition to the administration charges for the same. In the same way, the schools with 10 employees or more have to contribute @ 4.75% of the basic + DA towards the Employees Insurance Scheme besides administration charges for the same.

• Printing and stationery: The school have to do lot of expenses on printing of receipt books, progress reports etc and other stationery like registers, files, Xeroxing etc. In addition if there is no separate head for examination expenses the answer sheet, printing of question papers etc. can be included under this head.

• Building rent: In case the school building is hired, this will constitute one of the major expenses depending on the locality of the school.

• Telephone and internet charges: The school will have to bear this expense on a recurring basis depending on the number of phones in the school and the type of internet connection.

• Advertisements: The school will have to incur expenses for advertisements for new admissions and for giving newspaper advertisements to publish the vacancies to be filled up for teachers and other staff.

• Cleaning Material expenses:- The school has to spend on cleaning material items like phenol, acid, brooms, brushes, soaps, scrubs, mops, cleaning clothes, buckets, mugs, dust bins etc for washing rooms and toilets, medicine for ants, mosquito sprays etc.

• Gardening expenses: This will be recurring expenses on buying of plants, pots, red sand, manure both organic and chemicals, insecticides and pesticides, arrangements to save plants from excessive heat and cold, water pipes for watering plants etc.

• Building maintenance: Expenses have to incurred on repairs to building; colour and white washing of building; repairs to sanitary and water fittings, water tanks etc.

• Electricity & water bills, general repairs and maintenance: This is another heavy expenditure the schools have to incur especially where the electricity is charged on commercial basis in states like Andhra Pradesh. There will be other expenses like repairs to fans, wiring, switch boards, replacement of tube lights and bulbs etc.

• Electrical equipment repairs and maintenance: Repairs and maintenance of electrical motors, inverters, UPS etc including replacement of batteries will be charged to this head of account.

• Postage and stamps: All postings of registered letters, parcels, purchase of postal stamps including revenue stamps are covered under this account.

• Computer rentals: If some of the computers are not bought initially by the management and are hired, then the computer rentals will be paid as recurring expenses.

• Computer maintenance and repairs: The computer repairs and maintenance charges which will be very frequent ought to be paid by schools on a regular basis.

• Computer consumables: Some items like toners for laser jet printers or colours printers and refilling of the same can be put under this head if they are not covered under computer maintenance and repairs.

• School functions: The expenses incurred on school functions like the Independence Day, Teachers' Day, Children's Day, Republic Day, Annual Day, Parents Day and several other functions held in the school constitute another major head of recurring expenses.

• Audio-visual equipment repairs and maintenance: The expenses incurred on repairs to PA system accessories like amplifiers, mikes and speakers. CCTV cameras, TVs, overhead projectors etc are to be written under this head of account.

• Furniture Repairs and maintenance: All repairs to school benches, desks, chairs, tables, almirahs, racks, stools, blackboards, doors, windows, ventilators, computer tables etc has to be accounted for under this head.

• Prizes and incentives: The teachers are given gifts on Teachers' Day and awards as incentives on other occasions. The students are given prizes for academic excellence and for participation in various competitions during children's day or otherwise. This is also a major expense for the school written under this head.

• Newspapers and Magazines: The school has to buy news papers and magazines for children and staff and this also constitutes a minor expense for the school.

• Refreshments: The management has to offer snacks or cold / hot drinks to the visiting educational officials and some other officials especially during examination days if the school is an examination centre for SSC exam etc. This is a minor expense written under this head.

• Bank charges: Other minor expenses will be charges made by the bank on the current account of the school.

• Miscellaneous expenses: There will be certain expenses which are not covered under any other account; they are written under this minor head account.

• Bad Debts: When the school is not able to recover certain fees from children for some reason or the other, they are written as bad debts expenses.

• Auditors' fees: A fees paid to the chartered accountant for the auditing of accounts is written under this head.

• Management's share: Some states allow managements to take their share of managing the school as fixed by the government. The Andhra Pradesh allows 6% of the collections which can be taken by the management.

• Depreciation: Certain percentage of assets expenses is allowed to be depreciated every year and these are shown as expenses under depreciation account.

• I have tried to cover almost all the expenses in running a school. But this is only an indicative less and there may be some more depending on the school. I have not covered expenses on motor vehicles as most of the schools do not possess them. If included, there may be expenses on fuel, vehicle maintenance and repairs, vehicles taxes, vehicle insurance etc.


These expenses vary from school to school and are not uniform. So the parents have to take into consideration these expenses of the school when levying any complaints against the schools. It is true that most of the schools charge school fees disproportionate to their expenses but there are some service oriented schools who charge reasonable fees from the parents and still offer the best of the education to the parents. However, the pity is that such schools are not patronized by the well to do parents who always compare the standards of the school to the fees charged by them.


Author: Mahalakshmi T11 Jun 2011 Member Level: Gold   Points : 1

Only service minded schools charge reasonable fees and getting admission into some of those schools is a hard task. Ofcourse, people associate standards with the amount of fees collected. This attitude must change otherwise there will be no end to the demands of the school managements.

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