A BALANCING ACT: Assessing the quality and financial viability of low-fee independent schools

Low-fee independent schools (LFIS) are a growing phenomenon in South Africa. In many parts of the country, they offer an alternative choice of education to poor communities, they address the lack of public schools, offer access to better quality learning, and fulfil parents’ desire for schools with a religious affiliation or alternative philosophies not provided for by public schools. In South Africa, as elsewhere, there is growing interest from investors and donors to support these schools or invest in them.

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Varsity fee protests suggest need for more private players | Moneyweb

South Africa should learn from Brazil, where the availability of higher education has been significantly boosted by a rapid growth in private higher education institutions, argues Ann Bernstein. Read more at Moneyweb here.




TEACHER EVALUATION IN OTHER COUNTRIES AND SOUTH AFRICA: What works?

The Centre for Development and Enterprise (CDE) today released a report, Teacher Evaluation in South African Schools, as the third in a series that explores the connection between teacher evaluation, teacher effectiveness and student achievement. From its international and local research, CDE raises major doubts about South Africa’s new Quality Management System (QMS), which is in the wings awaiting implementation. CDE questions whether it should be implemented as it is unlikely to produce greater teacher effectiveness or higher learner achievement. Similarly, it finds that the recent Continuing Professional Teacher Development (CPTD) system for managing educators’ professional development is unlikely to achieve these goals. Yet given the poor quality of teaching and learning achievement in most South African schools, improving them is national priority.

CDE points out that the fundamental flaw in the QMS is that it separates educator performance assessment from professional development. The schools would no longer have a responsibility to support individual teachers’ learning. This would be left to the self-reflection and initiative of each educator, who could earn the required 150 professional development points over three years from certain activities, and courses on the central CPTD database.

Earlier this month CDE released its second report, Teacher Evaluation: Lessons from other countries. The international survey found that an integrated teacher evaluation model, which combines well-designed teacher performance-based assessments with productive feedback and high-quality professional learning opportunities, can increase both teacher effectiveness and student achievement.

In the words of Professor Linda Darling-Hammond from Stanford University, an international expert on teacher policy brought to South Africa by CDE: “If such a model uses multiple measures to assess the quality of teaching and closely links feedback from the assessment to job-embedded professional learning that meet individual teachers’ needs, research has shown that it can both predict and increase teacher effectiveness and student learning.”

In its South African report, CDE provides an analysis of the evolving policy framework for teacher performance appraisal and professional development in South Africa, using international best practice as a reference point. From interview research, the perspectives of government, unions and other key stakeholders, as well as school leaders’ experience of the current Integrated Quality Management System (IQMS) for performance appraisal and development, are also presented. “Although the school sample was small and the results are not generalisable to either sector, rich illustrative insights were obtained from five relatively well-resourced public schools achieving good results and five well-resourced, high-quality independent schools”, explained CDE’s Education Programme Director, Dr Jane Hofmeyr.

CDE’s analysis reveals that the IQMS for public schools is deeply flawed, as all key stakeholders recognise. Even in the sample of good public schools, as a result of a lack of capacity and the IQMS’s huge administrative demands, it has become largely a compliance exercise, to the neglect of professional development. By all accounts, it has not improved accountability or teaching, but it has increased educator scepticism of quality management.

Although CDE found no examples of international best practice in the public schools, it did find them in the independent schools, which have the freedom and capacity to innovate and implement their own appraisal models. They value the teacher appraisal process, yet indicate that it can take five years to embed it in an established school. The schools prioritise professional development over accountability and have found that it becomes a drawcard for recruitment and retention.

CDE’s research produced other important insights. Pay was not seen by principals as a performance incentive. Independent schools have the freedom to appoint the best teacher for their needs, but public school principals felt they had little control over teacher appointments. Dismissal of persistently non-performing teachers was very rare in public schools and last resort after remedial action in independent schools. Consequently, ‘re-allocation’ of poor teachers to less important subjects and good teachers to critical subjects happened in public schools, and to some extent in independent ones. As Jane Hofmeyr asks, “If numbers of teachers are not teaching in their areas of specialisation what are the quality implications?”

CDE argues that although the QMS may be seen as better than the current IQMS, neither it nor the CPTD system are good enough be fully implemented, given the cost and effort involved. Indeed, against the negative history of quality management in public schools, might they do harm?

 

The full report can be obtained from the CDE website. For further information, please contact Dr Jane Hofmeyr (082 784 9190) or Buhle Hlatshwayo (078 340 2772)

 

About the CDE:

For 20 years, the Centre for Development and Enterprise has been gathering evidence, consulting widely and generating constructive policy recommendations to meet South Africa’s core socio-economic challenges. It has an exceptional track record in presenting sound ideas based on scholarly and stakeholder contributions, focused on South Africa, but always within an international context. CDE advocates a high-growth and labour intensive economic strategy reliant on market-based solutions.

The organisation’s convening power brings together cabinet ministers, MPs, senior officials, business leaders and experts (local and international) in frank discussions about moving the country forward. There are few other organisations whose conversations, discussions, and workshops on the country’s most important and often the most controversial issues can span such a wide range of diverse and senior participants.

CDE works in three core areas: jobs and growth, education reform and scouring international experience to influence domestic policy. The organisation has a special focus on the role of business in development.




Investing in schools: Opening bell rings | Financial Mail

CDE’s work on the private education sector in Financial Mail’s cover story.

This expansion trend has caught many off guard. Jane Hofmeyr, policy and advocacy director at the Centre for Development Enterprise (CDE), says the private-education sector is not well researched or understood. “But there is considerable potential … every week I hear of new players, local and international, coming into the market looking for opportunities in SA and Africa.”

 

Read it online here.




MEDIA RELEASE: THE FINANCIAL VIABILITY OF LOW-FEE PRIVATE SCHOOLS IN SOUTH AFRICA

In a report released today, the Centre for Development and Enterprise (CDE) explores the financial viability of low-fee independent schools charging fees below R12,000 a year. These schools are growing rapidly and currently educate an estimated 250,000 learners across the country, providing access to good education where there are no, insufficient or dysfunctional public schools in disadvantaged communities.

The research was a response to the increasing interest of investors and donors in these schools: “Are they worth investing in?”, “Are they financially sustainable?”, “What is needed to ensure they offer quality education?”

CDE analysed and modelled financial information from 23 registered, ‘stand-alone’ low-fee schools and four chains of low-fee schools to determine the key factors and requirements that influence their financial viability – defined as a school’s or chain’s ability to generate sufficient income to meet its operating expenses and other financial obligations.

“Our modelling points to the positive potential of low-fee independent schools to provide affordable, good schooling to poor communities on a sustainable basis. Two types of financially viable, hypothetical low-fee schools were identified: a ‘no-frills’ primary school that offers a good but basic education; and a secondary school which delivers quality schooling through innovative teaching and learning methods,” explained CDE’s Education Programme Director, Dr Jane Hofmeyr.

The findings show that the state subsidy is critical for the survival of low-fee schools. Their main sources of income are school fees, state subsidies and, in a few cases, donations.

Both the hypothetical schools would only be viable as stand-alone ones if they were not-for-profit and thus able to qualify for a state subsidy. They would need to charge fees of R11,700 a year (in 2013), obtain a 40 per cent subsidy, and enrol some 600 to 700 learners by their third year of operation. They would then be able to repay a loan of some R30 million at 5 per cent interest over 20 years.

Economies of scale make a significant difference to the operational costs of low-fee schools. If stand-alone schools were part of a chain of three schools with centralised administration, they could reduce costs and become more viable.

In the case of for-profit low-fee schools, a chain of 10 schools with centralised administration would be viable if every school charged annual fees of R11,700 and enrolled some 600 learners. This would enable it to cover the finance costs of a 20-year loan of R30 million at 5 per cent interest.

“We found that the schools charging fees below R6,000 a year were typically survivalist, living from month to month, not knowing whether they would be able to meet their financial obligations”, Hofmeyr said. However, many of these schools had existed for a number of years, even though they did not meet the requirements of the models, which were based on conservative cost assumptions. “These schools survive because they provide good education, although they are located in basic rented premises, are poorly resourced and pay low teacher salaries.”

CDE cautions that potential investors need to take into account a number of challenges and risks in establishing and operating low-fee schools. For example, teacher salaries must be adequate to prevent high staff turnover. Changes in the government regulations, new compliance costs and bureaucratic inefficiency in registering or subsidising a school can cause major financial problems.

To enable low-fee schools to become more financial stable and provide affordable, quality education to poor communities, CDE recommends a number of reforms by government and interventions by the private sector.

Government:   By simplifying the maze of legislation affecting independent schools and developing more supportive policies that still ensure sufficient accountability, government would reduce the heavy compliance costs of schools. Increasing the state subsidy for not-for-profit low-fee schools would enable them to charge lower fees and serve poorer communities, at a lower cost to government.

Private sector: There are multiple ways in which investors and donors could strengthen this sector, explained Hofmeyr: through public policy engagement for regulatory reform; establishing new schools and helping existing ones to expand with affordable loans; funding key components of their quality and financial viability, providing technical expertise; and funding research which will support quality improvement, innovation and sustainability.

“In the context of a struggling public schooling system, the development and expansion of independent schools serving poorer communities is a positive trend that needs greater support and an enabling policy environment,” concluded Hofmeyr.

The full report and Executive Summary can be obtained from the CDE website: www.cde.org.za.

 

For further information:

Buhle Hlatshwayo: 078 340 2772

Dr Jane Hofmeyr: 082 784 9190

 

About the CDE:

For 20 years, the Centre for Development and Enterprise has been gathering evidence, consulting widely and generating constructive policy recommendations to meet South Africa’s core socio-economic challenges. It has an exceptional track record in presenting sound ideas based on scholarly and stakeholder contributions, focused on South Africa, but always within an international context. CDE advocates a high-growth and labour intensive economic strategy reliant on market-based solutions.

The organisation’s convening power brings together cabinet ministers, MPs, senior officials, business leaders and experts (local and international) in frank discussions about moving the country forward. There are few other organisations whose conversations, discussions, and workshops on the country’s most important and often the most controversial issues can span such a wide range of diverse and senior participants.

CDE works in three core areas: jobs and growth, education reform and scouring international experience to influence domestic policy.

The organisation has a special focus on the role of business in development.




Low-fee schools could benefit state education | Pretoria NEws

Tebogo Monama of The Pretoria News covered CDE’s latest report on low fee independent schooling. Read the article here.

Bernstein said the increase in low-fee schools was not only good for parents, but beneficial to government as it saved a lot of money that could then be used to improve already existing public schools. “If they did not exist, the Gauteng Department of Education would need to build another 73 or so schools, each with 1 000 learners. If all learners in the sector had to be accommodated in public schools in Gauteng, it would need to build another 250 public schools. If the 500 000 learners in all independent schools had to be accommodated in public schools, it would cost the state some R6 billion a year in operating costs alone,” she said.




PODCAST: Low-fee private schools | Radio Islam

CDE education research manager, Dr Kim Draper shares insights into low-fee private schools, and new research examining the latest developments, emerging players, and the significance of low-fee schools’ growth in South Africa.

 

This podcast is based on a new report by the CDE: Low-fee private schools: International experience and South African realities.




Op-ed: Quality education is indispensable; how do we get it?

1 June 2015, Ann Bernstein and Jane Hofmeyr for The Star. This article is based on a new report by the CDE: “Low-fee private schools: international experience and South African realities”.

South Africa needs urgent education reform. While the vast majority of children in South Africa are in school, they are being denied a quality education. This is not because of underspending (6.2% of GDP is at the high end of upper middle income countries), nor a lack of interventions by government, the private sector and non-governmental organisations.

However, the contribution of the private (officially called “independent”) school sector is typically disregarded. A new report from the Centre for Development and Enterprise (CDE) examines the role and growth of the independent sector. This has revealed some surprising facts, particularly about low-fee independent schools.

Education system change is complex. A system as large as ours, with 12.4 million learners in just under 26,000 schools, and some 425,000 educators in nine different provinces and 86 districts, is one of the largest management challenges in the country. But the challenge will be compounded and we may fail another generation unless government provides decisive leadership and establishes a chain of accountability throughout the system. You cannot run a system without accountability.

Teachers who don’t come to school or who don’t teach must face the consequences of non-performance, or the system will never improve. Performance management linked to accountability and effective professional development is imperative for the quality of schooling.

Accountability is a hallmark of independent schools. Principals and teachers are held accountable for learner achievement because the schools will go out of business if they don’t deliver quality.

Sir Michael Barber, a leading authority on education reform and low-cost private schools internationally, was recently hosted by the CDE.  He pointed to the significant role played by private schools for the poor in developing countries.  Between 1990 and 2010 the percentage of students in low-income countries attending private primary schools doubled, from 11 to 22 per cent. In India alone, with 253 million children in school, 35 per cent of the enrolment is in private elementary schools and over 50 per cent at the secondary level.

In South Africa, while the independent sector is growing rapidly, it is off a low-base. According to the official figures, in 2014 there were 1,651 independent schools (6.5% of all schools). Umalusi, the statutory accreditation body, estimates there are twice as many schools, but even so, the numbers are small.

South Africa’s private school sector is different from that in other developing countries. Here the vast majority of schools are not-for-profit; the fees of the low-fee schools are considerably higher; more girls are enrolled than boys; and a maze of actively implemented legislation and regulations govern independent schools, with severe sanctions for non-compliance. Only not-for-profit low- and mid-fee schools may qualify for state subsidy.

The right of independent schools to exist is also protected in the South African Constitution as long as they do not discriminate on the basis of race, are registered and provide standards equal to comparable public schools. And the Constitutional Court found in 2013 that independent schools advance children’s right to basic education.

Government requires more from independent schools than public schools. Many public schools, especially those in poor communities, would be unable to meet the same standards of provision and quality. Unfortunately exploitative ‘fly-by-night’ schools, typically unregistered, exist and give the independent sector a bad name, and the provinces are responsible for closing them down.

New players establishing chains of for-profit and not-for profit, ‘affordable’ or ‘lower-fee’ schools have accelerated the growth of the sector. CDE’s research shows that independent school enrolments have doubled since 2000 from a quarter to half a million learners. Low-fee independent schools – defined by CDE as those charging fees of less than R12,000 per year, the average provincial expenditure on a learner in a public school in 2014 – are educating nearly half of these learners.

In Gauteng, for example, between 1995 and 2013 the number of independent schools increased by 363 to 593, compared to an increase of 229 public schools to 2056. New schools are emerging all the time: the province received 261 applications for registration in 2013 and 2014.

By 2014 there were 651 independent schools in the province catering for a quarter million learners (246,898). They are 24 per cent of all schools, and educate 11 per cent of all the learners and, according to the Gauteng Department of Education (GDE), are “making a meaningful contribution to providing access to education for all Gauteng citizens”.

However, it is the contribution of the low-fee subsidised schools in the province that is most significant. Enrolments in these schools grew by nearly 5 per cent between 2013 and 2014 compared to 2.4 per cent in public schools. The result is that some 73,000 learners in Gauteng are being educated in low-fee, not-for-profit, subsidised independent schools, charging fees below R12,000 and serving poor communities. With lower compliance costs and a higher government subsidy than the current maximum of 60% of the cost of public school learners, more low-fee schools could charge less than R6000 per annum and reach even poorer communities.

Subsidised independent schools save Gauteng money. If all the learners in these schools had to be educated in public schools in 2012, it would have cost Gauteng another half a billion rand in recurrent costs alone. To accommodate only the 73,000 learners in the low-fee subsidised schools, the province would need to build another 73 public schools, each with 1000 learners. In fact, if the 246,898 learners in all independent schools (at all fee levels) in the province had to be accommodated in public schools, Gauteng would need another 250 public schools.

Innovation is a strength of independent schools. As Sir Michael Barber said, “Innovation in a public education system is difficult because it is tough for governments to take risks. It is in this area that the private education sector can make a significant contribution to improving educational outcomes.”

South Africa needs to find the right mix of public and private schooling to ensure that growing numbers of children receive a good education as quickly as possible.  CDE argues for a diversified national system where parents have a choice, whether they’re poor, middle class or wealthy.

The Punjab province of Pakistan is an example of rapid, education system reform that involves a collaborative – rather than competitive – relationship between the public and the private sectors, and strong leadership from the Punjab Chief Minister.  The Punjab Education Foundation was established to promote high quality education for the poor through partnerships with the private sector. It is funded by the government of the Punjab and is headed by a team, most of whom are from the private sector. One of its programmes targets low-cost private schools to improve the quality of education through a voucher scheme, teacher training, and a monetary incentive to schools for improved academic performance

The 21st century is going to be a very tough place for anybody who does not have access to quality education. With the speed at which technology changes and is adopted, the difference between not being educated and being educated is more extreme than it has ever been before. Given the extent of South Africa’s unemployment and education crisis, we cannot neglect the role a growing independent sector can play.

Ann Bernstein and Jane Hofmeyr are with the Centre for Development and Enterprise. This article is based on a new CDE report: LOW-FEE PRIVATE SCHOOLS: International experience and South African realities, available from www.cde.org.za




Op-ed: Myths and facts about low-fee schools

New research shows that these private institutions fulfil a vital role in SA’s education system.

29 May 2015, Ann Bernstein and Jane Hofmeyr for The Mail and Guardian. Read the op-ed on M&G Online

 

This article is based on a new report by the CDE: “Low-fee private schools: international experience and South African realities”.

Myths and facts about the low-fee private school sector in South Africa are revealed in new research released this week by the Centre for Development and Enterprise (CDE).

In Gauteng alone, some 73?000 pupils attend these schools. The province would need to build 73 public schools with 1?000 pupils in each, and employ 250 teachers to educate all pupils in the independent sector.

The discussion about independent schools is frequently based on assumptions and myths. CDE offers some facts:

• Myth: Independent schools are expensive, exclusive and deepen social inequality.

Fact: Low-fee schools charging annual fees below R12?000 educate about 250?000 children. Without these schools, even fewer children would have access to good education in areas where there are dysfunctional public schools, or none at all. Most low-fee schools are not selective and accept pupils who have failed in the public system to give them a “second chance” at passing matric. Most provide bursaries.

In low-fee schools, most pupils are black. Girls make up 51% of pupils in all independent schools, but 63% in low-fee high schools. With few exceptions, low-fee schools follow the national curriculum, embodying national goals and values, and they write the state matric examination.

• Myth: Support for the growth of low-fee schools means support for the privatisation of all schooling.

Fact: Not at all. The independent school sector is growing, but off a small base – only some 4% (about half a million) of the 12.4-million pupils in school. It is possible to support private schooling and therefore increased access and choice for poor parents, and work for the reform of the public schooling system at the same time. The accountable, innovative, cost-effective models with which low-fee schools are experimenting can inform system reform.

• Myth: Independent schools turn education, a public good, into a profit-generating commercial commodity.

Fact: Most independent schools, and especially low-fee ones, are not for profit and qualify for public benefit status for providing a public good. Most rise organically out of communities’ unmet needs for access to a school, good-quality education, or a different type of schooling. The majority of the new chains of low-fee schools are also not for profit. Most also have extensive community development programmes or partnerships with public schools. For-profit independent schools also fulfil demand from parents for good-quality schooling, which the country urgently needs.

• Myth: Independent schools undermine children’s fundamental right to education and the state’s obligation to provide it.

Fact: On the contrary, the Constitutional Court in April 2013 found that the right to basic education applies to all children whether in public or independent schools.

Independent schools also enable parents to exercise their democratic right to choose the education they want for their child, such as faith-based schooling, that is not within the state’s mandate to provide.

• Myth: Independent schools are a distraction from the challenge of improving public schooling.

Fact: The national and provincial departments of education devote considerable effort to improving the public school system, as are the private sector and many non-governmental organisations. In the meantime, independent schools not only offer parents a choice, but also contribute to the education system by:

1. Saving the state money, thus releasing more funds for public schools. If the 500?000 pupils in all independent schools had to be accommodated in public schools, it would cost the state some R6-billion a year in operating costs alone, never mind the capital costs of building and equipping all the public schools; and

2. Experimenting with innovative and cost-effective educational models that, if successful, can be adopted by the public system.

• Myth: State subsidies to independent schools deprive the public system of funding.

Fact: None of the for-profit or high-fee independent schools qualify for state subsidy. Less than 1% of provincial education budgets is spent on subsidised independent schools (except 1.45% in Gauteng with nearly half of all independent schools).

Even subsidised independent schools save the state considerable money: R1.85-billion in 2013 in operating costs alone. The Constitutional Court agrees that subsidised independent schools “constitute a saving on the public purse” resulting in more funding being available for public schools.

• Myth: Most low-fee independent schools are “fly-by-nights” that provide poor-quality education.

Fact: All registered low-fee schools are subject to a strict and extensive set of regulatory requirements to ensure they provide quality education. Much more is required of them than public schools, many of which would not qualify for registration or accreditation.

And low-fee schools face severe sanctions for noncompliance, including losing their subsidies.

Unfortunately, there are “fly-by-nights”, typically unregistered, and it is the responsibility of the education departments to close them down.

CDE argues for a diversified national system that gives parents a choice, whether they’re poor, middle class or wealthy. But most of all, we want more pupils to receive a quality education and we want better results. The independent school sector is complementary to the public system and a key part of the solution to improving the quality of South African education.

Ann Bernstein is the executive director and Jane Hofmeyr the education director of the Centre for Development and Enterprise. The full report (Low-Fee Private Schools: International experience and South African realities) can be found at cde.org.za




Independent schools gain popularity | The Mercury

“The new research from the think tank estimates that 250 000 South African children from disadvantaged communities are enrolled at low-fee independent schools, and for a key reason: teacher accountability.

What used to be a predominantly white, high-fee school sector in South Africa now has a majority of schools which serve pupils from middle-income to low-income families, and nearly 80% of the pupils are black, the report reveals.”

Leanne Jansen of The Mercury covered CDE’s latest report on low fee independent schooling. Read the article here.