Modern High School Dubai fee increase

[wanderer]

Hi,
Any one here understand the basis of a doing a 90% full increase by Modern High School.
With recession on the brink and the people being sacked.. or moving out.. Is this a good move..
Personally I am quite shocked and reconsidering if its worth the price..?
A Grade one student fees in 2101 would the cost of 2 bedroom flat on rent for full year in Dubai in 2004.
Any views..? Aren't schools supposed to be more philanthopic ,subsidized and recovering costs over a period of time.. this looks like a 2 year all out recovery by an increase for moving to new premises..!
Any pointers.. People../ parents..?

Wanderer...

[shawarma]

A Grade one student fees in 2101 would the cost of 2 bedroom flat on rent for full year in Dubai in 2004.

Hello wanderer and welcome to the Dubai forums .

Fees in 2101? Did you mean 2009? Or 2010? Or something else? Two bedroom flats in Dubai in 2004 would have been about 50k-70k. While that does sound expensive, there are a number of schools charging that amount as school fees in 2008-2009, although admittedly not many at grade one level. See the Dubai international schools list for fees. The Modern High School charged about AED 14k-21k annual fees for 2007-2008 as far as I know. Have they given you figures for 2008-2009? The Knowledge and Human Development Authority Dubai (KHDA) imposes limits on the fee increases that schools are allowed, I think it was 16% for last year, so if the school is asking for more, it could be worth contacting the KHDA to enquire if the school can do that. There were schools last year that tried to implement large increases but in the end weren't able to after the KHDA got involved.

[shawarma]

Ok, I've just seen a report in the Gulf News from Friday 23 January 2009 about the Dubai MHS fees increase (fees table has been added to the DMHS page on dubaifaqs.com). Now I understand. Apparently the fees increase was approved by the KHDA, which seems surprising they will rise by 45% for 2009-2010 and 45% again for 2010-2011. I thought the KHDA had a lower limit on how much fees could go up by. The Gulf News did report that the KHDA said "Once the change in the fee structure is implemented, the school will not be allowed to have any further increases for the following three years, ... We understand that not all parents can afford such an increase in the current financial situation. Therefore, we have allowed the increase on the condition that the GEMS school would help provide an acceptable alternative,"

Whatever that means. What's an "acceptable alternative" and how are GEMS going to do that? Move students to one of the other GEMS schools with lower fees? It's not the first time GEMS have been lambasted in the press - see the GEMS fees increase from November - December 2006 (although that time in the end the Ministry didn't allow the increases in the end).

[shawarma]

Dubai Eye radio had a live telephone conversation with Mr Varkey from the GEMS group discussing the fees increase. It wasn't Sunny Varkey, the boss, but another one, I didn't quite catch the name - Dino? He was on with Jessica Swann and Akhtar Khan. Among the things Mr Varkey said were

• DMHS school fees increase is due to school location having to move from current spot to somewhere else that is a plot of land five times larger.
• I thought he said the move was forced upon them, and something about Dubailand. At present DMHS is in Jumeirah (an expensive area to rent) so maybe they're moving to Dubailand?
• Rent on current plot has increased 479% from AED 3.0 million to over 29 million per year - I presume if new plot is 5x bigger, new rent will be substantially more again. Hopefully not 5x more. If there are 2500 students (I don't know, I thought I saw that somewere), that means AED 11-12k of each student's fees go just towards land rent - I would estimate that's 60-70% of total revenue that Dubai MHS receives from student fees.
• Radio presenters said they were receiving lots of messages from listeners expressing their dissatisfaction with the increase (that's probably putting it mildly).
• Mr Varkey made the point that normally school fees are regulated but their costs are not regulated. Some of the fees and cost increases over the past 4 years he stated were
  
  • tuition fees increased 39%
  • teacher salaries increased 49%
  • other staff costs increased by more than 60%
  • staff accommodation costs up 512%
  • furniture and other facilities costs +159%
  • visas costs up more than 100%
• On the question of what happens to GEMS profits Mr Varkey said that school profits are reinvested into same school or new schools
• Parents who have financial difficulties (eg lost job) could have fees hike deferred - Mr Varkey wasn't specific about the terms. He said something about a GEMS Cares program to assist parents with financial difficulties?
• Mr Varkey said so far 35 parents had asked for transfer certificates, 25 to another GEMS school, which leaves 10 outside the GEMS network.
• Dubai Modern High School profit he estimated at AED 2-3 million per year. He wouldn't divulge GEMS group profit as it is a private company. Again, if there are 2500 students at DMHS, then that means each student is contributing AED 800 - 1200 per year to the DMHS profit. The 90% fees increase (45% per year) is equivalent to about AED 8000-10,000 per year additional fees (I'm basing that on comment from Mr Varkey that fees increase was on average about AED 800 dhs per month per student)
• Dubai Eye text message system was flooded with negative comments on the fees hike. Ms Swann at the end said 100% of the sms messages were negative and they were receiving 5 per second (which works out to about 300 per minute). Mr Khan said in the last ten minutes they'd received 25 messages. At least one of them might need to do a refresher course in Math. Would Mr Varkey give them a discount if they went to Dubai MHS ?

I have to say, I was surprised at how rational and reasoned Mr Varkey came across (in contrast to the presenters who I thought were obviously biased against Mr Varkey and GEMS, especially towards the end - perhaps they were trying to pander to the negative text messages pouring in). I didn't want to be on Mr Varkey's side but he made his points clearly and, I thought, fairly. However, I cannot vouch for the accuracy of them - and it's worth noting that GEMS have a range of schools. Accommodation costs may well have gone up for teachers at some schools but if GEMS does not provide DMHS teachers with accommodation, then that cost increase is a bit of a red herring. And since GEMS Group is a private company, they have no obligation to divulge financial details therefore the numbers that Mr Varkey was giving cannot be independently verified. We just have to choose whether to believe them or not.

Assuming Mr Varkey's comment about the rent at AED 29 million is correct, and there are 2500 students, it's easy to see that GEMS are not making money out of the school. Revenue from 2500 students is about AED 42.5 million. Teacher salaries at 4000 dhs per month (a guess - might be too high), and 200 teachers (again, a guess), adds up to AED 9.6 m. I don't know if Dubai MHS provides accommodation for teachers, maybe not. Anyway, after teachers and rent, Dubai MHS is left with about AED 4 million to pay for visas, admin staff salaries, teacher accommodation (if provided), books and other resources, telephone, water, electricity, and so on. AED 4 million (about AED 350k-350k per month) doesn't sound like much for all that.

What is no doubt true is that companies as well as people are struggling financially, and running a school to make a profit is not an easy thing to do at the best of times. What is also true is that GEMS is a profit making company, and as such, if they struggle financially they end up going out of business. No one is going to bail them out, and therefore, if Dubai MHS was to run at a loss I expect they'd consider closing it down (Mr Varkey sort of implied that in the radio discussion). So what's a fair increase to keep DMHS open then? No increase? 45% per year (90% in total)? Less? More? How much?

[shawarma]

The issue of the fees increase at Modern High School Dubai (MHS) was in the news for the past few days, and parents staged protests outside the school. Several reports pointed out that the claimed 90% fees increase was actually a 110% fees increase since the second year's 45% increase was on the already increased fees for 2009-2010. Seems to be a bit of a nasty trick on the part of GEMS schools. For example:

Grade 11 & 12 fees for 2008-2009 are AED 20,880
45% increase brings it to AED 30,276 (GEMS say 2009-2010 fees are AED 30,270)
90% increase brings it to AED 39,672 (GEMS say 2010-2011 fees are AED 43,890)

The protests had an effect. Mohammed Darwish of the Knowledge and Human Development Authority Dubai (KHDA) has instructed the school to reduce the amount of increase, and that GEMS would not be able to charge the new fees until students had moved to the new school campus. According to a report in The National this morning, Mr Darwish said "They will be able to charge parents only 45 per cent of the increase in the first year and the remainder of the increase in the second year, adding up to 90 per cent,"

But Mr Varkey from GEMS said "After discussion, KHDA said that fees could increase by 45 per cent in the first year and 31 per cent in the second, ... This threatened the financial viability of the project and therefore, after further discussion with KHDA, we were given written approval for a fee increase of 45 per cent in the first year of operation in the new building and 45 per cent in the second year." Which comes across as though GEMS were trying to be too clever by half and making it sound like more was less.

I thought I also heard on the radio that parents who could not afford the increase would be able to apply for financial support from the government but I haven't found anything else about that yet. The National did report that over 300 MHS Dubai parents had applied to GEMS for subsidies.

[shawarma]

There are a couple of reports that Modern High School (Dubai MHS) is reconsidering the move to new premises that prompted the large increase in the first place. Apparently DMHS may be able to stay where they are after reconsideration of their tenancy by the landlord (sounds like a consequence of the sudden turnaround in the Dubai property market rather than compassion on the part of the landlord), but at this stage it's only a possibility. There was a letter from the DMHS principal, Darryl Bloud, that said “there is a possibility that the notice to vacate may be revoked following re-consideration by the landlord – a move which is being supported by the authorities”. Parents are being given a choice of

1. Move to new site with 45% increase this year and 31% increase next year (effectively a 90% increase)
2. Stay at current premises with 25% increase this year and 16% next year (effectively a 45% increase)

The good news / bad news is that the KHDA says if DMHS don't move, then they cannot increase their fees by more than what is normally permitted (16% every two years) - “They will be treated on par with every other private school ... This rent increase cannot be passed on to the parents,” according to Mohammed Darwish, Chief of Licensing and Customer Relations at KHDA (Khaleej Times 04 March 2009). But Sunny Varkey, the chairman of GEMS Dubai says if they're not allowed to implement the 45% increase then they'll move to the new premises and charge 90% anyway - “We will have to shift to the new school premise in April,” (Khaleej Times 04 March 2009)

The new academic year for Dubai MHS starts 05 April 2009. So unless GEMS are building a new school out of Lego in the next month with thousands of assemblers, that must mean that the new school building is already constructed, or almost complete? Unless GEMS were planning to charge parents before starting the the construction ... but that was not allowed I thought?

[shawarma]

A report in the Gulf News this morning (18 March 2009) based on a circular from MHS Dubai, says that the school will be moving to the new premises in Nad Al Sheba after all. The survey giving parents a choice between fees increase at the old premises, and fees increase with new premises, resulted in little support for staying at the old premises with a fees increase (there was of course, a popular third choice not available - no fees increase). MHS Dubai, or the GN report, didn't say what the overall response level was (previous reports indicated that many parents were refusing to respond at all). However, the trump vote came from the Knowledge and Human Development Authority (KHDA) who ignored the Modern High School choices and said if they stayed in their Al Wasl location, then they'd be treated as the same as other schools, in other words Dubai MHS would not be allowed to increase fees for 2009-2010 if there was an increase for 2008-2009, or it would be limited to 16% as far as I know. I don't know if there was an increase for 2008-2009 though.

The Khaleej Times adds a comment from GEMS that "Any concession that has been given to parents will be re-evaluated before the beginning of the 2010-2011 academic year,". But the best is saved for last. According to the Gulf News, a GEMS spokeswoman said "We have been listening very carefully to what parents have been saying and were prepared to sacrifice our move to the new building.".

I wonder how many parents thought they had been carefully listened to by GEMS?