ESF chief admits levy could have been avoided

PUBLISHED : Tuesday, 30 November, 2010, 12:00am
UPDATED : Tuesday, 30 November, 2010, 12:00am

The head of the English Schools Foundation says the HK$25,000 levy being introduced next year could have been avoided if money had not been spent on building two private independent schools.

But the foundation denied that hefty fee increases over the past five years are due to late repayments on the HK$278 million investment in the loss-making Renaissance College and Discovery College.

Chief executive Heather Du Quesnay said yesterday: 'I guess you could argue that we wouldn't need the refundable capital levy if the HK$278 million had not been spent on the private independent schools.

'The amount of money that the refundable capital levy will raise - HK$300 million - is very similar to the amount that we spent on the private independent schools. But I think we still would argue that by establishing the levy, we hope to leverage extra government funding.

'We are waiting for approval from Legco for the finance for the rebuilding of Kowloon Junior School and we hope that if we get that funding, it will lead to the government being able to fund us for some of the bigger schools such as KGV.

'Fees in the ESF have not been affected at all by the establishment of the private independent schools. The funding of the PIS came from the cash balance, which had already been built up over the period when fees in the ESF were not increased.'

Du Quesnay said she did not expect the two schools to make money 'within their first few years', when some year groups were still to be established. But they should cover their costs and provide a 'little bit of surplus' once they were full. The schools were expected to repay the full investment plus an annual return within the 20-year repayment period.

ESF chiefs spelt out the terms of the investment in the two private independent schools in response to a complaint from the ESF Concerned Parents' Group that parents could be indirectly footing the bill for the schools through fee rises.

The explanation received a hostile response from the parents' group, which said it was 'a lot of nonsense and lies'.

Fees for the ESF's publicly funded secondary schools rose by HK$3,750 in September to HK$93,000 per year, with students in Years 12 and 13 paying a premium for the first time. Their fees rose by HK$4,750 to HK$94,000.

This year's rises bring the cumulative fee increase at ESF schools since 2005 to 27.3 per cent for primary and 17.7 per cent for secondary schools.

The parents' group has claimed that the ESF's 14 publicly funded schools are 'indirectly but effectively subsidising' the colleges through fee increases and it is taking its complaint to the Legislative Council or Chief Executive Donald Tsang Yam-kuen.

ESF chief financial officer Vivian Cheung said the HK$278 million was taken from ESF's cash balance towards the building works on the two schools over several years prior to 2006, when Renaissance College opened. The schools were repaying the investment sum in full over a period of 20 years, plus an annual return set at the Hong Kong interbank offer rate plus 1 per cent.

While Renaissance College had so far paid back HK$32.5 million, including a return of HKHK$12.4 million, Discovery College had outstanding returns of HK$3.2 million and had not paid back any of its HK$168 million capital.

Ada Cheng, spokeswoman for the ESF Concerned Parents' Group, said: 'It is a lot of nonsense and lies. Using the ESF cash balance over several years before 2006 must have played a significant part in the decision to increase fees.'