Delhi: Private schools say they don’t have surplus funds
Several private schools in the Capital have contested the contention that some institutions hold surplus funds between ₹1 crore and ₹48 crore, arguing that they are instead short of cash reserves and running in deficit.
In an affidavit, filed in Supreme Court on June 15, the Delhi government’s Directorate of Education (DoE) named 35 private schools that it said have between ₹1 crore and ₹48 crore surplus funds. Among these are four branches of the Delhi Public School (DPS) — in Vasant Kunj, Rohini, RK Puram, and Dwarka. The document said these schools have surplus funds of ₹48 crore, ₹34 crore, ₹11 crore, and ₹23 crore, respectively.
Members of the DPS Society, which runs the institutions, contested this.
“We have no idea how they came up with these figures. The DPS Society has conducted a statutory audit with the help of a major chartered accountancy firm, and as of March 31, 2020, there was ₹38 crore in DPS Vasant Kunj’s account. When we deduct the amounts for gratuity, leave encashment, salary buffer requirement, and funds for ongoing projects, the school has a deficit of ₹34 crore,” said a member of the DPS Society who asked not to be named.
Similarly, the official said, that DPS Rohini and Dwarka branches have deficits of ₹26 crore and ₹34 crore respectively. “DPS RK Puram has three branches, including a senior school and two junior wings. The government has not allowed us to increase fees in the last five years in any of these schools. Despite that, we have to pay salaries to our employees in accordance with the 7th Pay Commission. Besides, if we need to start any infrastructure project in the school, we have to use funds from our savings,” the official added.
A senior DoE official, requesting anonymity, said, “If the schools are claiming that they do not have any surplus in their accounts, they can prove that in the court. It’s all on record. The government has gone through their accounts before submitting the data. This is up to the Supreme Court to decide now.”
The Action Committee of Unaided Private Recognised Schools, which represents over 1,000 private schools in Delhi, said if a school has surplus funds, these are allocated for a variety of expenditure, including paying employees’ gratuity funds, encashing leave, corporation taxes, for disasters, exigencies, to pay pending arrears to employees in accordance with the 7th Pay Commission, apart from maintaining a four-to-six month salary buffer, as mandated in the Delhi School Education Act of 1973.
The Delhi high court on May 31 set aside two orders issued by the Delhi government last year prohibiting private schools from collecting annual charges and development fee during the Covid-19 lockdown, and held that schools may collect these charges for the last academic year retrospectively, on a monthly basis, but only after a 15% reduction in lieu of unutilised facilities (such as water and electricity) in the lockdown period.
DoE later challenged the single-bench decision, but the court refused to stay the order, after which the Delhi government on June 15 filed a Special Leave Petition (SLP) in the Supreme Court against the ruling.
The education department in its affidavit said that tuition fees cover the standard cost of running the institution, including salary, dearness allowance provisions, bonuses, etc, and other terminal benefits concerning academic activities.
However, schools were still levying annual charges, which cover expenditure not included in tuition fees such as expenses on sports equipment, cultural and co-curricular programmes distinct from other activities of the school, despite no such expenses made during the lockdown period.
“...The learned single judge has failed to examine that in most cases, the expenditure on salary and establishment is only 40-50% of the total fees charged by the school. However, in some cases, it is 70%, which means each and every school has sufficient funds in hand after charging tuition fees to meet its expenses,” DoE said in its affidavit submitted with the SLP.
Officials at New Green Field School in Saket, which the government affidavit said has ₹2 crore surplus funds, said their institute has been in the red since 2019.
“Just tuition fees are not sufficient to cover teachers’ salaries. As per an audit, as on March 31, 2020, we had a deficit of ₹2 crore. We have no idea how the government termed it a surplus amount,” said Ashwani Kumar, manager of the school.
SK Bhattacharya, president of the action committee of private schools, said, “Schools are on the verge of shutting down due to the Covid-19 situation, with many not able to meet even the essential salary expenditure. Many schools can only meet salary demands by using the annual charges and development funds. Moreover, the DoE has not allowed any fee increase since 2016-17, which has made the situation more dismal for numerous schools.”
Advocate Kamal Gupta, who represents the private schools’ body, argued: “The Delhi School Education Act and the judgments of the Supreme Court and high court repeatedly held that capital expenditure can be incurred from fees received by the schools. However, DoE has continuously disallowed such capital expenditure, apart from disallowing the statutory funds maintained or required to pay gratuity to the staff, the contingency reserve for payment of salaries, and depreciation reserve fund mandated by the Supreme Court, and is coining a surplus.”