Budgeting a small school

Shweta Sharan

In India, planning and managing a school’s budget becomes tricky, given that the business of running a school in the country is not legal. In other words, you cannot legally make a profit as a school-owner. The educational trust under which your school is registered cannot make a profit. No wonder then that we have seen heavy investment in education start-ups that offer ancillary or outsourced services but very little investment in schools!

In a report on Budget Private Schools, Ekta Sodha, CEO of Sodha Schools, a chain of low-cost private schools in Gujarat, talks about the particular problems she faces to keep costs low but benefits high. In the report, she says: “After exploring many possibilities, we realised the best option to move forward was to create a set-up of an educational services’ company alongside an educational trust. The services company would buy the land and build the buildings; the trust then rents these from the company. The education services company designs the assessments, creates curriculum workbooks, conducts teacher recruitment, teacher training, fees collection and so on. The trust again pays for these services. We figured that creation of this somewhat complex model was the only legal way to move forward paying due taxes on profit generated through services.”

Most of India’s biggest and plushest schools are run by land owners, but what happens to individual and progressive voices in education? For example, in the last 10 years in Bengaluru, there have been as many as eight new progressive schools that are small or medium-sized and want to experiment with fewer numbers and higher quality. But given the restrictions that school owners face in terms of running a school, the plight of the small school principal becomes especially tricky.

We spoke to a few principals of small schools in India and how they grapple with the many complexities of running a school’s budget.

Prarthana Gupta, Sandeepani Academy for Excellence
Sandeepani Academy for Excellence is a progressive school located in Bangalore, inspired by the philosophy of Rabindranath Tagore. They have classes till grade 9 and will soon be affiliated to the CBSE board.

Says the founder, Prarthana Gupta, “Since ours is a smaller school, the founders are more actively involved. In Sandeepani, the principal has a more curriculum-based role and I take care of the budgeting and planning, which is more stressful! Both of us are in sync with our vision for the school. We only plan to have a certain number and 650 children is our outer limit.”

Sandeepani has grown very slowly, just one grade every year, and has evolved over time. Says Prarthana, “In terms of finances, we are yet to break even, because of the construction work that remains to be done. As per the law passed in 2018, we are supposed to have 66 per cent of our revenues going toward salaries. This applies to schools within the city limits. This then is the biggest line item in our budget and it puts a huge burden on us. We still have some extra facilities that we are expected to provide and these come at a price. We are extremely open and transparent to our parents about how we run the school. For example, capping the annual increment at 10 per cent becomes a problem. Last year, we added a theater and a few other facilities to our infrastructure. It would be useful if we can treat this as a separate line item but because rules are so complicated, things become difficult, and small schools especially do not have flexibility to see their plans through. Blanket rules for small, mid-size and big schools can cause a problem.”

In terms of budgeting, Prarthana states that they want to maintain a certain number of children and not have large classes. “The biggest challenge is when resource people come at a high price and because of our number, the costs per child become high. In larger schools, costs get divided and they find it easier to provide infrastructure. I have also noticed that in a smaller school, there is a much better balance in resources and usage. Every child up to 5th grade gets to participate in every activity. Every child uses all the facilities equally. For example, we have a small ten-meter swimming pool and we tell our parents that we are teaching a life skill first. Despite this, many of our children have been winning medals in 25-meter swimming contests. We owe this to the individual attention we give each child.”

Sandhya Viswan, Director of Mud Pie International Preschool
Sandhya Viswan is the Director of Mud Pie International Pre-School in Bengaluru. The school offers a specially designed learning program focusing on children in the 1.5 to 6 years age category. Sandhya started her work with the school fairly recently and she has learned many things in the first few months of running Mud Pie. “We try to cut costs as much as possible. At first, we would buy material because we thought it was great and the school can use it, but now we are more conscientious about our resources. Around 55 per cent of our monthly budget goes towards teacher salaries and the rest is used for the rent, the facilities and school resources. My specific challenge is figuring out how much I’d require in the beginning, but going forth, my budget would be based on the number of children and the resources I’d require per child. I have not allocated a budget now because we don’t have a steady number. The teachers can come to me with requirements on resources anytime. We meet on a weekly basis to discuss budget for resources. I encourage them to use resources as best as they can and not waste them.”

Sandhya adds that the school is on track to breaking even and has even estimated the exact number of children she would need to make that happen, keeping in mind salaries, expenses and other parameters. She says that this is a good rule of thumb that small school principals can follow to break even. “I still spend money on marketing and this is part of the budget,” she says. “We spend around Rs. 15,000 a month on the website. When we started, we used around Rs. 1 lakh for marketing purposes alone.”

The biggest budgeting lesson she learned was that the budget includes marketing and other small expenses too. “As teachers, we are tempted to buy the best but it is better to manage resources prudently. We now only buy what is absolutely necessary. I’d say that it’s important to plan and manage your budget. It is also important to maintain your resources properly. Another huge learning for me is that time management is crucial for teachers. Time wasted works as an extra expense.”

Sandhya thinks that small schools should typically be run by people who understand both education and business keenly and not one over the other. “I am learning as I go and it’s been a valuable learning curve. I know that there are many courses on preschool budgeting, but trust me the application is only case to case. I feel that many people only copy other budgeting ideas. That is why a small school’s principal should be an educator and also understand business. I have seen mid-sized schools try and follow big schools and spend a lot on marketing or operations, and it doesn’t work.”

Sandhya also encourages principals of small schools to use their space for other activities. For example, she gives access to Mud Pie to homeschoolers in her area for a specific fee per hour.

Lakshmi Shine, Principal of Ilahia Public School, Muvattupuzha, Eranakulam District
My school is run by a trust. We have around 60 members in the trust and we have other institutions also. We have two engineering colleges and a school for children from the economically disadvantaged background. We have a centralized accounting system in the form of the trust that takes care of money matters. Every particular institution is under a group of committee members called the school management committee, and this committee, in consultation with the school head or the respective institution head, prepares the budget and decides how much to spend and plan for the next year. This proposal is then sent to the trust for approval and allocation of funds.”

According to Lakshmi, whatever they collect by way of tuition fees is given to teachers as salaries and with a deserving increment every year.

The allocation of resources is pretty straightforward in this case but Lakshmi says that she wishes she could do more with the budget. “I wish that every private institution has a private fund set aside for financially backward students that are already admitted to the school,” she says. “Also, the government doesn’t have clear rules about fee collection and how to structure fees in proportion to the facilities that the school offers. In many schools in the rural areas, they cannot collect the amount that is needed to maintain the very infrastructure that the government says is mandatory. We should have better clarity in this case.”

What is interesting though is that even the big schools do not offer subject flexibility because of what they call budgeting constraints. For example, the NCERT allows many subject choices but even a big school finds it more economically viable to go with the popular choices. In conclusion, a budget can be used with flexibility and intelligently by the school but the government restrictions do make this difficult. Maybe small and mid-size schools will be able to strike the right balance.

The author is a journalist and writer. She runs a community of parents, teachers, principals and educators named ‘Bangalore Schools.’ She also works as a Development Strategist at I Love Mondays, an organization that helps teens identify careers they love. She can be reached at shwe.sharan@gmail.com.

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