GEMS plays 'double or quits' with KHDA in Dubai school fee row

Dubai’s largest private school operator Gems, which announced last week that it would shut down its Westminster School, seems to be playing the ‘who blinks first’ game with the Knowledge and Human Development Authority (KHDA).

Dino Varkey, Group Executive Director at Gems Education, told parents in an emailed letter last week that the operator’s “ability to invest the resources required to produce the improvements needed, both educationally and in infrastructure, have been severely restricted because of the current fee structure.”

The KHDA follows a performance-based fee increment structure, wherein schools that are found to fall under the ‘outstanding’ category are allowed to increase their fees by 6 per cent per annum while those found ‘acceptable’ as well as ‘unsatisfactory’ are allowed a 3 per cent hike.

For the past four years, Westminster School has been ranked as ‘acceptable’, which means that, according to KHDA guidelines, it cannot raise its fees by more than 3 per cent per annum.

Gems says that the fees that it is currently allowed to charge some 4,800 students of Westminster School – between Dh5,000 and Dh10,000 per annum – is not sufficient for it to provide ‘quality education’ to its students.

“Sadly and with regret, it is therefore, our intention to close The Westminster School Dubai with effect from June 2014. KHDA has provided the necessary approvals,” said a circular that the school sent to parents last week.

Students of the schools launched an online campaign to save their school from imminent closure, with their ‘Save Our School’ Twitition (a Twitter petition) so far managing to muster 154 signatures of support from the UAE’s residents.

Ironically, the announcement of the school’s closure within the next 18 months comes barely a couple of months after Gems announced its plan to launch 10 new schools in the next 24 months, which it said will have British, Indian, International Baccalaureate, American and dual curricula across a range of fee levels.

Westminster, incidentally, is a British curriculum school –and clearly, Gems plans to launch at least one new British curriculum school within the next 2 years, according to the earlier announcement.

Some parents have raised doubts about the education institute’s real reason behind the announcement, arguing that Gems could have sought to sell the school to a new management if it really wished to get out of the ‘loss-making’ venture.

“Why would they close down without selling it to a different mgt?” John, an ‘Emirates24|7’ reader commented while still others believe that it is all part of Gems’ game plan to get the fees increased out of the KHDA’s guidelines – something that it has managed to do in the past with a couple of its other schools without having to resort to a closure threat.

“All they want is to increase the fees. Who suffers in this mess? The students and the staff will be displaced,” said a parent on the condition of anonymity.

In 2010, Gems managed to convince the Ministry of Education to overrule a KHDA decision on fees-freeze, and squeeze out a 30 per cent hike, spread over three years, for five of its Indian curriculum schools.

While it is not known whether or not it approached the Ministry this time around, Gems has cited a restrictive fee structure as the primary reason behind its decision to shut down.

Dino Varkey told parents in an emailed letter that the operator’s “ability to invest the resources required to produce the improvements needed, both educationally and in infrastructure, have been severely restricted because of the current fee structure.”

So how much is the school making currently, and how much does it want to increase it to, in order for it to be sustainable?

Considering an average fees of Dh7,500 per student (the school reportedly charges between Dh5,000 and Dh10,000 per student in annual fees), it will be perhaps fair to estimate that the school earns approximately Dh36 million a year, which it says is not enough for it to sustain itself.

Then, last week, local media quoted Sunny Varkey, Chairman of GEMS Education, saying that “no school charging fees below Dh15,000 will survive in the UAE.”

While that sum may be debatable, let’s take that benchmark sum of Dh15,000 as what Gems thinks will help it continue to provide quality education at Westminster. If that fees of Dh15,000 is applied to all 4,800 students at the school, Gems will be looking at a windfall of Dh72 million a year – exactly double the approximation of Dh36 million that back-of-the-envelope calculations show it currently makes.

And the most recent statement by Gems seems to put all those numbers into perspective.

A Gems spokesperson has been quoted as saying that a representative set of parents is willing to pay double the current fees for the school to continue.

“Over the past few days we have received many calls from Westminster parents indicating that they would pay up to double the fees to keep the school open,” local media has quoted a Gems spokesperson as saying.

“We have now submitted a new fee structure to the KHDA requesting a special concession to increase fees in a phased approach,” he said.

There, then. The game we referred to earlier isn’t really ‘who blinks first’. It is ‘double or quits’.

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