The recently proposed Federal Education Bill is creating uproar with representatives of private schools balking at some of its key proposals. The element of the Bill that is creating the main uproar is the compulsory transformation of private schools into private trusts.
The intended provision is not new. A recommendation to turn schools into trusts was already part of a major study commissioned by a high-level commission established in 2019. Is the proposal as outrageous as claimed by the representatives of private schools?
It depends who you ask.
If you are an investor and have put a considerable amount of money into a private company running a business and then the policy makers want to change its legal status, making it less conducive to profit making, then, obviously your concerns are very understandable. If you are someone more concerned about the common good that educational institutions are supposed to create and someone who is fully aware of the constitutional obligation to provide free and quality education to all, then the reasons why you want to see a drastic change in the current educational status quo, are equally clear.
The issue is becoming more contentious day by day and it is important that the advocates of these two camps think rationally and listen to each other. The real problem is in a different understanding of the role learning institutions should have.
For the former, these represent, as per current legislation that was revised back in 2001, simply a great business opportunity, the field of business that, in most cases, has been extremely profitable. Yet the latter are right to insist that education should not be viewed from the perspective of making money. The key to untangle this conundrum is to really understand the “mission” that schools and colleges have in society. Simply put, they cannot be treated as ordinary businesses. Their nature and institutional mandate is too important for society to consider them as any other profit making activity.
What’s the way forward?
Could a compromise be reached among the negotiating parties? Perhaps the best way to answer this question is through another one: Can the private educational sector do, as things stand today, a better job at fulfilling their institutional mission? Considering the recent initiative taken, for example, by the Kathmandu Metropolitan City, to implement the mandatory 10 percent scholarship provisions for disadvantaged children that private schools have to provide, the answer is a resounding “yes”. Private schools can do a much better job at meeting the expectations that both the constitution and the whole society have from them.
If profit is, as current law allows, only a central part of the equation in running a private school, this alone is no more acceptable. Private schools have to step up and find new ways to become more accessible and inclusive. This means, regardless of the fact that the proposed Bill might or might not be approved as it is, they need to do a better job at pursuing their social obligations. A consequence is that profit maximization should no longer be the central aspect of their business.
While no one wishes a private investor to lose money, at the same time, it is clear that the society as a whole is raising its expectations towards them and the 2015 constitution backs up this position. Are investors and entrepreneurs of the sector ready to accept this new reality? If they can agree on this basic principle, then I believe that a compromise, a win-win agreement is possible.
Let’s not also forget that the current Bill offers a five-year transition before the mandatory turning of private commercial entities running schools and colleges under the Company Act before their mandatory transformation in trust. As noted by several pundits already, the current Bill being discussed refers to private trusts and not public ones.
Can some provisions be included in the text of the Bill being considered to provide an iron clad guarantee that such trusts will remain private? What about considering the option of allowing private schools and colleges to register under the Public Interest (Not For Profit) Company Act?
Will the rights of the owners of these institutions be better safeguarded? Only legal and tax experts can determine possible pathways towards a good compromise, a solution that might even consider changing the current Company Act. Different technical working tables, for example, on the social purpose of private schools and one on taxation and profit generation and one on fees, could be established to hammer out an acceptable draft. On taxation, for example, special regimes could be considered to recognize the investments and contributions so far made by the private sector in the national education system.
The experts should also look abroad, studying different legislations and educational systems in both the global south as well as the global north. There is the example, let’s not forget, of Charter Schools, privately run but normally not for profit educational entities, that have been established in the US. While such types of institutions, a model that could also suit well NGOs working in the education sector and a group of stakeholders that should also be part of the discussions, have many sympathizers, they also have their fair number of critics. Let’s also not forget that the private sector working in the education sector is not monolithic.
There are not just commercial entities running big colleges but there are also small private schools that are actually already providing a service to those who are under-privileged. Collaborations and partnerships between what are now public schools and private schools should also be considered, a model already being pioneered by Rato Bangala School in Kathmandu. Fixing the educational sector, making it more equal and inclusive but also more effective and quality oriented, is a gigantic task.
It is important to consider collaborations and partnerships between public schools and private schools, a model being pioneered by Rato Bangala School.
Private schools and colleges have been playing a key role so far in providing educational services to the country. Yet it is inevitable that they must be better regulated, including in the ways they are charging their fees. Those citizens who invested in these commercial undertakings must accept that they are in a line of business that actually is so important and strategic for the society that it cannot simply be treated as a normal business.
As for any complex policy issue, also in this case the devil is in the details, it will take time, expertise and a lot of good will to find a workable solution for all. Only negotiations carried out in good faith and, most importantly, with the interest of the nation in mind, will bear the results that the society will expect. At the same time, it is fair to state the following: We should bear in mind that private schools and colleges should be considered as social businesses and social enterprises and the state cannot stifle them with unrealistic red tapes and bureaucracy.
Views are personal.
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