RTE Reimbursement – designed to fall short?

Reimbursement model:

The reimbursement of the expenditure incurred by private Hindu schools upon taking in RTE category students is determined by the individual State Governments. However, more or less, all the State Governments have announced a similar method to determine the amount.

For e.g. the Karnataka Government has the following high level rule

“The total annual recurring expenditure incurred by the State on elementary education in respect of all schools established or owned by it or by the local authority, divided by the total number of children enrolled in all such schools, shall be the expenditure incurred by the government. For this purpose the expenditure on schools and students enrolled in such schools shall not be included. The government shall notify per child expenditure every year before commencement of academic year, which shall be reimbursed in respect of admission of eligible children to private unaided school”

Essentially, the expenditure incurred by the local body is taken into account, and private schools are supposed to be reimbursed with that amount. The unit of calculation here is a district. In other words, the government calculates, on a per district basis, the average expenditure it incurs on a student, and pays private schools to that extent.

So in a district, even if a major city or town exists, the fees that a school in that city or town will get will be the same as what a school in a village in that district will get. Needless to say, this is a flawed model.

Also, the expenditure considered by the Government *does not* include other essential expenses such as those of books, uniforms, meals, etc. It therefore covers only a part of the expense that the school actually incurs.

Sourcing:

As per Section 7 of the RTE Act, the primary responsibility of financing the costs of implementing this Act lies with the Central Government. Therefore, the State Governments make a claim with the Central Government on the expenditure incurred by them in reimbursing private Hindu schools.

One would assume that the costs estimated and demanded by the State Governments would be fully compensated by the Central Government (since the Act is the creation of the Central Govt) – but alas! that is not the case.

As per this report by the Right to Education Resource Center, in the year 2015-16, 14 states made a request to the Project Approval Board (PAB) of the Ministry of Human Resources Department for Rs 146652 lakhs for reimbursing RTE costs to schools. Out of this amount, the PAB approved an amount of Rs 25060.31 lakhs, which comes to 17.1 percent of the requested amount.

It is therefore a no-brainer then that the State governments will not (or will not be able to) reimburse the actual costs incurred by the schools.

An example from the same report will highlight this problem.

In Rajasthan, in the year 2014-15, the expenditure incurred by schools in paying salary to their teachers was Rs 18453 per student. Note this is only the teacher salary expenditure and does not account for any other expense that may qualify for a reimbursement.

The Govt of Rajasthan announced a ‘recurring cost’ per student of Rs 14034, which is only 76% of the salary costs incurred by the schools.

Out of this amount of Rs 14034 that the Govt recognised, it paid the schools an amount of Rs 4641. That turns out to be a mere 25.1% of the salary cost per student.

So this is the stark reality of the burden imposed on Hindu schools as a result of the imposition of the RTE Act.

25% of their capacity is taken away by the state and in turn a negligible amount is being reimbursed. We have of course not even ventured into the aspect of whether the Governments pay the schools on time, pay every time, etc.

And of course, if any of the schools fail to comply with the requirements of the Act in toto, they are forced to shutdown.

Schools will be left with only 2 options

• Close down eventually due to their inability to compete with private non-Hindu schools as a result of damaged business model.
• Amortize the cost using the other 75% of students. This is unlikely given the stringent rules RTE imposes in terms of fees that can be charged.

Minority schools – or to put it correctly – non-Hindu schools – will not undergo any of the above problems.