Schools in the eye of a storm

Division has broken out between the Dubai government agency empowered to cap school fees and the Indian entrepreneur behind the Gems group. Kathryn Lewis reports Sunny Varkey, a dapper Indian entrepreneur, may be the most important man in private education in the Emirates. His company, Global Education Management Systems (Gems), runs 26 for-profit private schools that teach 75,000 students in the UAE, and many more around the world.

So when Mr Varkey levelled a series of allegations last Saturday against the Knowledge and Human Development Authority (KHDA), the Dubai government agency established in 2006 to regulate the emirate's 220 public and private schools, the stage was set for a clash of epic proportions. Since then, Mr Varkey's accusations have sent ripples through the education community and sparked a fierce debate among school owners, operators and parents about the Government's role in regulating schools.

At its heart is the KHDA's power to impose caps on fee increases at private schools - and a new policy that links those increases to how schools perform on inspections. Mr Varkey has been embroiled in a public dispute with the KHDA since January over fee increases at one of his Indian schools, the Dubai Modern High School, where Gems had an approved 90 per cent rise in fees to fund a necessary move to a new campus.

He accused the authority of applying "inconsistent" reasoning in several rulings, including a recent decision that Gems must delay imposing its fee rise at Dubai Modern, which has now moved to a new building in Nad al Sheba. The KHDA, which took over responsibility for Dubai schools from the Ministry of Education, has taken a more active role in managing private education in the emirate. It has introduced international testing schemes to measure student achievement, and its new school inspections programme marks the first effort in the Emirates to assess the relative quality of private schools.

"Education and health is an extremely vital piece of Dubai's future," said Abdulla al Karam, the director general of the KHDA, adding that education is run largely by private operators. It was impossible to ignore the private schools because 85 per cent of Dubai's pupils were in them, he said. When the KHDA inherited the private schools from the Ministry there were close to 20 operating from villas. There were not enough regulations, he said, and before the KHDA, there was not that much attention given to private schools. "The regulations at the federal level had not coped with the growth," he said. "We might not be guilty for the landscape, but now we are responsible for it."

Mr Varkey said under the MoE's aegis there was more clarity. "The Ministry of Education laid down laws and they were very clear." In the case of Dubai Modern High School, the KHDA ruled several months ago that Mr Varkey could not raise fees until the new facilities were completed. He contends the work is now complete, citing clearance documents from the construction company Tecon and the civil defence authority.

Mr Varkey said he was initially given permission for a 90 per cent fee increase, based solely on a Dh156 million (US$42m) business plan submitted to the KHDA last year, and insists the new building conforms to that plan. The authority reiterated its position on the rise last Sunday and again on Thursday but did not respond to Mr Varkey's accusations. Mr Varkey says he is not sure what the KHDA wants him to finish.

In a statement released to the press Thursday Mohammed Darwish, chief of licensing at the KHDA, said Mr Varkey must "complete all ongoing construction on the site". As it stands now, Gems may not increase its fees and no announcement has been made about whether higher authorities will investigate the case. "How can you run an authority like that?" Mr Varkey asked yesterday, adding that he had invested Dh178 million based on the authority's commitment to let him raise fees. "It's on Government letterhead," he said. "Had you told me before I would not have invested the money."

The KHDA is not without its critics, but none has been as vocal as Mr Varkey, whose call for an investigation of the agency's practices could undermine its efforts at reform. Mr Varkey is not just any school operator. Beginning with a small Indian school founded by his parents in 1968, he has built a profitable education empire that includes Indian, American, British and International Baccalaureate schools. Fees vary from budget Indian schools that charge as little as Dh3,500 (US$950) a year for Grade 10, to international academies where the top rate is Dh92,000 for Grade 12.

Mr Varkey's complaint comes on the eve of the release of the findings from school inspections, and the stakes are high for private-school operators: fee rises will now be apportioned based on inspection performance. Schools classified as "outstanding" will be allowed to raise fees by as much as 15 per cent in a year, while "unsatisfactory" schools will be permitted only a seven per cent increase - just a percentage point away from the old fee cap for all Dubai schools.

The decision to link fee caps to inspections has not gone down well with many school providers. Mr Varkey, for his part, says that fee caps should be abolished and the market should be left to regulate itself. "I have no problem with inspections, but do not link it to fees," he said. "All the old schools are dying because they cannot increase the fees to remodel." "The inspections and fee caps are two different ball games," he added.

In his comments during a tour of the new Dubai Modern High School building last Saturday, Mr Varkey framed the terms of his complaint with the KHDA as a matter of concern for all Dubai school operators - and for the future of education in the emirate, suggesting that the KHDA's decisions could deter new investors from entering the education sector in Dubai. "The KHDA's actions are only creating a disincentive for the providers to come into this sector, especially when there is no clarity as to what the authority wants," he said.

"We only want clarity, we want process and rules so we know what we should do and what we should not do. I am a small man and the Government is government. We only want to follow what are laid down by laws." Mr Varkey said the KHDA should define what the acceptable profit margin should be. "Then we know whether we should be in the business or not." Other private school operators concur. Abdullah Mazrui, chairman of the Choueifat International School in Abu Dhabi, says he has shelved plans to expand in Dubai because of the KHDA. "It's not just Varkey," he said. "We are all in the same boat; we are very unsatisfied with how the KHDA is trying to run the education system in Dubai."

Mr Mazrui feels schools should be able to set fees as high as they like: "It should be market-driven. If I am a parent I have a choice. If I want to go to a cheaper school I can do it." A spokesman for Taaleem, the second largest private school provider, said: "We welcome a time when deregulation occurs but hope that by then parents will have sufficient information and choice to be able to discriminate and choose between the 'profiteers' and 'pioneers' in education."

Mr al Karam takes a rather different position on the fee caps to Mr Varkey, which, as he observes, are mandated by the federal Government. Though he acknowledges that he would like to see a day when such regulations are unnecessary, he believes that in the short term the market is neither open enough, nor mature enough, to be set loose. "You cannot terminate the system overnight," he said. "But I believe the time will come, once supply meets demand and there is enough information in the public for the parents to choose the provider they wish based on their quality of education."

Those who were in education for the long term would continue to invest, he said, adding that the problem was with a minorityof private operators who had given a bad name to the whole field. "This system is going to put an end to unethical behaviour. You have to be sure that you protect the public. You are a public servant." More than a half-dozen school owners and operators contacted for this article, who asked not to be identified, opposed linking fee increases to inspections - and a number agreed with Mr Varkey that school fees should be subject to no regulation at all. Others expressed concern about how school inspections were conducted. "They keep changing the rules as they go along," one private school administrator said of the KHDA inspections.

The Universal American School, owned by ESOL, petitioned the KHDA to overturn its inspection classification. Bassam Abushakra, regional director of ESOL, said he thinks the KHDA needs to change the inspection process. "Our two Dubai schools went through rigorous inspections [by international accreditors] and we found those processes to be much more thorough and we believe those kinds of inspections are much more effective than a short inspection that results in a rating."

Not all private school operators agree that further regulation will discourage expansion either - the operator of another Dubai for-profit school, who also requested anonymity, said the KHDA's rulings would not affect their plans to open or expand schools in the future. The operator was wary of Mr Varkey's vocal criticism of the KHDA: "Going all out against a government organisation is not in good taste."

Rob Stokoe, the director of the not-for-profit Jumeirah English Speaking School, said the KHDA should be given credit for making "enormous strides in the past couple of years" in improving Dubai schools. "An external view of your school is always helpful," he added. "To have, let's say, a critical friend does help schools define their pathways forward." Peter Daly, head teacher at the Dubai English Speaking College, said his experiences with inspections and KHDA generally had been positive. "I think they are making the effort to come to terms with the challenges they have," Mr Daly said. "In the short term, I think there was regulation required and I think there was a need for a higher authority to sort some aspects of education out, certainly within the private sector."

But as time moves on, he said, a more hands off approach should be taken. "I would guess that the KHDA would prefer that themselves, to retreat away from the involvement that they have. But I think a need for inspection should be retained. But I think overall as the years go by the authority over the regulation of fees, the direction of the private schools, as each school proves that it can manage itself, that it can be seen as responsible, that it is a successful school, I think they can then begin to leave those school to manage themselves." [e-mail]