Bureau to restart ESF funding talks after 6-year pause

Foundation says it will fight for parity with government and aided schools

Liz Heron Sunday Morning Post - Dec 12, 2010

After a hiatus of more than six years, education chiefs are set to resume talks with the English Schools Foundation over its funding.

The Education Bureau says now is "an appropriate time" for a review of the ESF's subvention, which was withdrawn amid rancour over dysfunctional operational procedures and financial mismanagement.

The announcement was welcomed by chief executive Heather Du Quesnay and parents, who said they would fight for the subvention to be restored to its original level of parity with funding per student in government and aided schools.

"Given that the ESF has established its board of governors and various committees and has also by now put in place a series of reform measures under its governance structure, we consider that it is an appropriate time now to conduct the subvention review with the ESF," the bureau's statement says. "We would commence formal discussion with the ESF shortly and would work out the timetable with the ESF. The review will cover a number of areas including the ESF's role and positioning, its service targets, financial management and fee-related arrangements.

"We will take into account the series of governance and financial reform measures undertaken by the ESF since late 2008, and will review the education services currently provided by the ESF in examining whether the government should continue with the existing mode of subvention and other ... matters."

The ESF's Du Quesnay said: "We have been waiting for the government to start a review for a very long time. I didn't know that they were going to do that today. But I am pleased that they have.

"It is good news that they have set out their intentions so clearly. We know that the subvention has shrunk very significantly since 2003, when it was at its highest, and we do need to see it restored to a higher level.

"I will argue for the restoration of parity and we will put that on the table along with everything else. But I think we need a whole new basis for calculating and deciding what the quantum should be."

Dr Ada Cheng, spokeswoman for the ESF Concerned Parents' Group, which is campaigning against fee increases in the ESF, said: "These talks are long overdue but we are glad that they are finally taking place.

"All ESF students are children of taxpayers in Hong Kong and nearly 70 per cent are permanent residents. So we support the restoration of parity of funding with other Hong Kong children in publicly funded schools."

A government review of the ESF's public funding was put on hold in 2004, when the ESF called in the Audit Commission following claims by its former chief executive Jonathan Harris of dysfunctional management and poorly controlled finances.

Both the ESF's damning 2004 audit report and the 2005 Public Accounts Committee report that followed it called for the bureau to complete its review of the ESF's subvention quickly.

But then Secretary for Education and Manpower Arthur Li Kwok-cheung insisted the ESF complete the governance reforms recommended by the accounts committee before the bureau would resume discussions on the future of the subvention.

Revisions to the ESF Ordinance were passed by legislators in March 2008, with the key reform replacing its bloated 130-member foundation with a 26-seat governing board. That board sat for the first time in October 2008.

But the subvention has since remained static, amounting in the last school year to HK$269 million - 20.6 per cent of the foundation's income compared to 27 per cent in 2000-01, according to the ESF.

The ESF's government grant was frozen for three years at HK$300 million in 2000 following a government review in 1999 that recommended it should be phased out. It was cut by 12 per cent over the three years up to 2006-07, when it was HK$264.7 million.

ESF to seek government help for plan to replace school buildings

Liz Heron Sunday Morning Post - Dec 12, 2010
Leaders of the English Schools Foundation will tomorrow launch their first bid for extra government funding since a damning 2004 audit report by asking legislators to back plans for a new school building. ESF chief executive Heather Du Quesnay will explain to the Legislative Council's education panel why the foundation needs HK$169.3 million of government capital funding to put into the rebuilding of Kowloon Junior School - its oldest campus. The ESF plans to put in HK$220.5 million of its own money - including the proceeds of a HK$25,000 capital levy that is coming in next year - to provide enhancements to the standard government style of campus that is the norm in ESF schools. The bid is the first step in an ambitious plan that aims to replace all the ESF's 15 publicly funded schools within 50 years at an estimated cost of around HK$5 billion. Many of the schools are crumbling or outdated. Following six tumultuous years that saw stinging criticism of the ESF from the Audit Commission and the Public Affairs Committee, reform of its oversized governing foundation, cuts in teachers' pay, funding cuts, and fee increases, ESF chiefs are seeking a new deal with the Education Bureau. They want to secure government capital funds for the rebuilding plan on the grounds that parents will also pay via the levy and the ESF will contribute from its operating surplus, private donations and borrowings. Du Quesnay said the ESF board had adopted the strategy of first wooing the government into discussions of capital works with a view to later moving on to the issue of the future of the government subvention. "We are in Legco on Monday to justify the funding for Kowloon Junior and if that goes according to plan, we will be in the Public Works Subcommittee in January and the Finance Committee in February," she said. "There is a real case that has to be made for the government to see that the ESF is justified in getting increased funding. I am hopeful that we will get something done in the next year." This strategy will have to be revised after the bureau's announcement on Friday that it plans to restart talks on the subvention shortly. ESF chiefs will embark on the negotiations as they face growing unrest among parents over rising fees and charges. A key challenge will be how to contain discontent and head off damage from parents' criticisms. At a public meeting on the ESF's finances on Thursday, the chiefs faced a barrage of hostile questions from angry parents about the levy and losses of HK$21.3 million sustained in 2009-10 by the ESF's two private independent schools. Finance chief Vivian Cheung said the ESF did not cross-subsidise the private independent schools and pledged that their payments would increase to ensure the ESF's investment plus a return was repaid within a 20-year period. But many parents remained unconvinced, with one calculating that the foundation was carrying HK$50 million in depreciation costs for the private independent schools. Hans Ladegaard, spokesman for the Concerned ESF Parents Group, said it was unfair for ESF parents alone to be facing a levy, when Du Quesnay had acknowledged that the sum raised would replace the money invested in the private independents. Du Quesnay said: "We recognise that the subvention is a hugely important issue. By comparison with the subvention ESF received in 2003, the subvention per child is 25 per cent less for primary schools and 30 per cent less for secondary schools. So there has been a huge drop in the value of the subvention per child." But she warned parents to be aware that, if the ESF started discussions on the subvention, "it could go the other way", with the government cutting or even removing the public funding to the foundation.

ESF parents fume at early demand for payment

Simon Parry and Liz Heron South China Morning Post - Dec 11, 2010
English Schools Foundation (ESF) parents with children about to start secondary school have been hit with a demand for cheques totalling HK$41,000 by the end of January in advance fees and levies for the school year starting next August. A letter has gone out to parents asking for a HK$16,000 deposit along with HK$25,000 to cover the new refundable levy by January 28 if they want to secure their children's places in ESF secondary schools. Parents are told in the letters they can send a separate post-dated cheque for the levy - which the ESF told them earlier was not due until May 21 - but are warned their children's places will not be confirmed until the cheque is cleared. The demand - which follows a debate over the introduction of the levy and steep rises in ESF school fees over the past five years - has angered some parents, who say it is excessive and that deposits should no longer be necessary now the controversial levy is being imposed. They are also unhappy parents must pay by direct debit in future and wary that mandate forms sent by the ESF showing an upper limit of HK$8,000 a month for primary schools and HK$11,000 for secondary schools indicate further fee rises. ESF officials said they were making direct debits mandatory and asking for the levy and deposit simultaneously to ease the administrative burden and to be more "environmentally friendly". The upper limits were a "buffer" against fee rises and rejected direct debits, they said. Hans Ladegaard of the ESF Concerned Parents group said it was "unethical" for the ESF to ask for the levy four months early. "There is no concern for parents and the financial difficulties we might have," he said. "Several parents from all ESF schools have written to us during the past week and complained. They are terribly distressed, and some of them have no idea how they are going to raise so much money in just one month." Tracey Duggan, whose son will move up from Kennedy School to West Island School next year, said the ESF payment demand was "aggressive". "It gives us very little warning," she said. "Christmas is coming, my tax is due and we are already taking out a bank loan to cover that. "The letter came as a shock because it is seven clear months before my son steps through the doors (of West Island School). "We knew the levy was coming and we presumed by paying the levy we probably wouldn't have to pay advance school fees. We are very happy with ESF and the teachers but not with the management." Mother-of-two Duggan, a pre-school supervisor and a former ESF pupil herself, said: "I also object to being told I have to pay by direct debit. I don't think that's fair. "We aren't on an expat package. We have to juggle money when we have tax due, or we need new windows or the dog is sick. It's life." At a stormy public meeting attended by 30 parents at Bradbury School on Thursday, Russell Williams, a parent member of the ESF's governing board, said the letter "alienates parents". "The board discussed the refundable capital levy in March and it is my belief that the board said the ESF should split the two payments of the levy and the deposit on fees," he said. "We had discussions and the parent board members saw the logic of discontinuing the deposit on fees for parents who have to pay the capital levy this year. The board's decision was that both the levy and the deposit should be paid but they should not be requested at the same time. But we have now had a letter that asks for both the capital levy and the deposit by January. To put them in one letter has proven to be a bad communication idea because it alienates parents." One angry parent, Angela Lam, who has a 12-year-old son at Sha Tin College and a 10-year-old daughter at Sha Tin Junior School, told ESF executives: "I feel that you are bullying me as a parent. We have no choice. Unlike some people, my fees do not come out of a company. They come out of my hard-earned pocket. What happens if we can't afford to pay? Are you going to kick us out of school?" ESF chief executive Heather Du Quesnay assured parents at the meeting: "We are not asking for HK$41,000 now. I have reassured you that your child's place will be held if we get the post-dated cheque by the end of May. "We have to make sure that we are very clear with parents that a place can't be held if the cheque will not be cleared by the end of May. We can't afford to offer places to parents unless we can be sure that they are able to meet their obligations in time." Responding to questions from the South China Morning Post , ESF communications manager Susanna Chiu said in an e-mail: "The reason for collecting post-dated cheques by January 28 is to avoid the additional administrative burden of having to follow up with parents and for parents to send in cheques then. "As the cheque can be post-dated up to May 21, and can only be cleared with the bank on or after the date of the cheque, it should make no difference to the parents whether to write the cheque now or in middle of May." Asked about the direct debit mandates and the upper limits allowing the ESF to claim greater monthly amounts, Chiu said: "Direct debit is a cost-effective and efficient way for parents to pay and for ESF to receive fees on a regular basis. We want to save administrative costs and be environmental friendly."

ESF investment in new schools is no scandal

Letters to the Editor - SCMP, Friday 10 December 2010

You have run several reports about the "concerned parents" group and their complaints about the English Schools Foundation funding for the private independent schools (Discovery College and Renaissance College). One correspondent described this as a "scandalous investment decision".

I beg to differ. If the ESF had bought condominiums in Bangkok or put the lot on the Triple Trio that would be scandalous.

Instead, it did what it has been doing for years, it invested in new schools. The fact that they are under the private independent schools scheme rather than subvented is because of Hong Kong government policy. As a consequence, the ESF has to keep separate accounts for the two new schools and the investment is treated as a loan that will eventually be repaid. However, in all other respects these are ESF schools.

In the 1980s, the ESF opened two new schools in the New Territories. At that time there was no need to make a loan, but the ESF took money out of its reserves and spent it on developing Sha Tin College and Sha Tin Junior School, rather than spending it on its existing schools.

As the parent of a child who attended the junior school, and is now in Sha Tin College, I am grateful that the ESF took the long-term view and invested in opening these two schools.

You reported that the core of the "concerned parents" group are parents of children at these two Sha Tin schools ("Parents disappointed as ESF rejects freeze on fees", October 31). I wonder if any of them can see the irony of the position they are taking.

Chris Tringham, Sha Tin

The price of duty [Heather du Quesnay in the SCMP]

ESF's decision to fund two private schools was made with the children and their family in mind
Heather Du Quesnay Dec 09, 2010
There is a curious irony running through the parallel education stories the SCMP has recently featured. One group of schools, in the direct subsidy scheme, has been criticised for misusing funds intended for education by investing in property or risky stocks and shares. Another group, the English Schools Foundation, has been excoriated by a small number of parents for spending its cash on education for children other than their own. To be clear, with the money that is under dispute, the ESF has built new schools offering more than 3,000 places to Hong Kong children whose parents desperately wanted high-quality, English-medium education for their kids. The decisions are 10 years old, and a little history is required. In the late-1990s/early-2000s, Hong Kong was recovering from an economic slump and business was beginning to boom again, a time not unlike today. Chinese families that had spent time overseas to establish residency were returning, bringing with them formidable entrepreneurial skills and children who had forgotten or never learned how to write Chinese characters. New businesses were beginning to move into Hong Kong, lured by the opportunities opened up by a smoother reunification than anyone had dared hope. The pressure for places in English-medium schools was building. At that time, the ESF offered only 11,000 places, compared with the nearly 16,000 (including those in the private independent schools) we have today. There was a need of another kind, too, when in late 2001 the Canadian Overseas International College (not connected with the present Canadian International School) failed, its proprietors fled and the government asked the ESF to take over the school at a week's notice, to safeguard the continuity of education for 380 children. The ESF's executive committee, which then served as its board, saw two things clearly: one was that it had a duty to save a school on which several hundred children depended, and the other was that the students could serve as the core of the new private independent school which it had won government support to sponsor. The school was duly taken over, housed as it was in a dilapidated building in Cheung Sha Wan and named Phoenix. The school thrived and in 2006 its students were transferred to new premises in Ma On Shan. Renaissance College was born. Likewise in 2002, confidence in the future led the ESF to establish a temporary primary school in an old government building in Kwai Chung. Bauhinia School had no government subvention but the executive committee planned, again with far-sightedness, to start a school whose students could form the core of the private independent school it was intending to open in Discovery Bay, again after winning government support for its proposal. And the funding? Well, the government played a part by making sites available for the two schools and paying part of the construction cost (HK$200 million for Renaissance and HK$142 million for Discovery College). But the ESF found the rest (HK$111 million and HK$168 million respectively). Was this the misuse of money that the concerned parents claim? Admittedly, these may not have been the smartest of investment decisions in terms of financial return. But the ESF was not set up to make a profit. We are an educational organisation with a passionate commitment to Hong Kong children. The executive committee of the late '90s saw a way to meet increasing demand and to serve the children of returning Chinese and Asian families and newly arriving businesspeople who would be at the heart of Hong Kong's next wave of prosperity. Every generation of children depends upon the spending decisions of their parents and grandparents. The children who are in our schools today are there only because in the past, the ESF saw fit to construct buildings for those schools, often funding them itself with the cash balances it had built up from the fees of the students then in the system. That is how the economy of education works - the lead-in times are long and an altruistic commitment to the future, to children not yet born, is essential. The deal with the private independent schools is that the schools will repay the ESF's share of the costs. It was recognised from the start that it would take several years before the schools would break even and that the financial return would have to be adjusted to avoid damaging the fledgeling institutions. But it was regarded as essential to establish the principle of repayment from the start and HK$41 million has already been repaid after just four years for Renaissance and three years for Discovery. Yes, the schools are making a loss, but that is being covered by other parts of the Educational Services budget, not by the ESF's subvented budget; the two are separate. As the student rolls build up, so the schools will be able to pay more back and we are confident that the total sum will be repaid within the 20-year period stipulated. If there were no Renaissance and no Discovery College, we would potentially have another 3,000 children on the waiting list to add to the 3,000 who applied for 1,200 places in Year One three months ago. Would that be a better situation for Hong Kong? As far as the ESF is concerned, while we recognise our financial responsibility to our parents and the absolute need to ensure that there is no cross-subsidy from subvented budgets, we see no difference between private independent school students and ESF students - they are all Hong Kong children. Once their parents entrust them to our schools, we owe them the same duty of care and we will not allow political sniping to distract us from the real job: educating the students. Heather Du Quesnay is chief executive officer of ESF [Comment]: Bit of dodgy maths, there, surely? The 3,000 pupils in Renaissance and Discovery wouldn't all be applying for Year One places in ESF junior schools at the same time, would they? There's also a slightly mysterious mention of "Education Services". I suppose Ms du Quesnay must be referring to ESF Educational Services, the wholly owned subsidiary of the ESF that operates the two PIS schools and the ESF kindergartens and provides sports and English language courses.

ESF muddies subsidy mission

Letters to the Editor - South China Morning Post - 8 December 2010

English Schools Foundation, as educational-services provider receiving government subsidies, should not spend money on private independent schools. The purpose of such subsidies is to provide education to the community, irrespective of wealth, through the organisations receiving the funding.

ESF has won a good reputation over the years and it is sad to learn that it has spent HK$278 million on private independent schools. One of the aims of private independent schools is to make a profit and, as a result, only those who can afford a much higher tuition fee can receive the education.

It is not appropriate for ESF to be involved in the private independent school business and if it insists on doing so, separate and independent accounts should be prepared and such documents should be audited by a third party for the sake of accountability.

Kung Hiu-tung, Tsuen Wan

[Comment: I really wonder why the SCMP publishes letters like this one. ESF Educational Services is a charity, its accounts are independently audited, and the fees charged are less than almost all other similar schools.]

ESF fees push affordable limits

South China Morning Post - 4 December 2010

Generally, I think that the focus on English Schools Foundation's scandalous investment decisions risks masking the larger point. The fee increases imposed by ESF mean that education is rapidly becoming unaffordable for many long-term residents of Hong Kong and for local families that hope for a good quality, liberal education for their children.

Unfortunately, the concerns of those affected are often dismissed as the whining of a bunch of rich gweilos. Yes, some ESF families are expatriates in the true sense, but most are with ESF because their employers will not pay international school fees. Indeed, there is growing anecdotal evidence that multinational companies are increasingly posting expatriates to Singapore rather than Hong Kong because of the lack of affordable school places here.

Yet many non-Chinese ESF families are long-term residents that own small businesses. They employ local people and account for a significant portion of the economy. They send their children to ESF schools because they cannot afford anything else. Many more ESF families are locals seeking a liberal education for their children because they realise that creativity, innovation and English-language skills will be critical for their success, and the education offered by more local institutions does not foster these attributes.

ESF management must be held to account for what they are doing with my school fees (and tax dollars). But the bottom line is that something must be done to ensure that education remains affordable.

I would ask that the government take a good, hard look at why the ESF exists and the many benefits it brings to the community. If an increase in the subvention is politically impossible, it could at least consider tax deductions for school fees. Financial support for building upgrades and even expansion should also be considered, possibly in the form of interest-free loans.

Laurel Dillon, Pok Fu Lam

Parents disappointed as ESF rejects freeze on fees

Sunday Morning Post - October 31 2010

Simon Parry

The chief executive of the English Schools Foundation (ESF) has ruled out a freeze on fees at a meeting with a group of parents protesting over sharp rises in schooling costs and the introduction of a HK$25,000 refundable deposit.

ESF chief executive Heather Du Quesnay told members of the Concerned Parents Group, who have called for a freeze on pay rises and a suspension of the HK$25,000 capital levy, she could not agree to their demands at a meeting last week.

One of the association's leading members, Dr Hans Ladegaard, said he was 'disappointed and disillusioned' with the way the meeting had gone.

'There was a lot of talk but nothing was accomplished,' he said. The group now wants talks with the ESF board and legislators to take their complaints further.

Seven group members with children in the ESF's Sha Tin College and Sha Tin Junior School attended the meeting to air concerns after the ESF imposed rises totalling 29 per cent for primary school and 19 per cent for secondary schools in the past five years.

Ladegaard has claimed parents are struggling to meet rising ESF fees, and that some expatriates had been forced to take their children out of school and leave Hong Kong because education costs were no longer affordable.

Fees for ESF primary schools have gone from HK$47,300 a year to HK$61,000 in the past five years while secondary school fees have risen from HK$78,600 to HK$93,500. A new HK$25,000 refundable levy will also be imposed from the next academic year.

Government subvention for ESF schools has been frozen for the past decade, so that each ESF secondary school pupil received a subsidy of HIK$28,927 in the past academic year compared to HK$41,270 for children at indirect subsidy secondary schools.

Du Quesnay, who met parents accompanied by two other ESF officials, said: 'The parents wanted me to promise that there would be no further fee increases and that they would be able to stay in Hong Kong with their children. I am not in a position to do that.

'The future of any family in Hong Kong can be decided only by the family itself. As far as ESF is concerned, I told them that fees will be reviewed every year by the board and it is for the board to make the decision about any increase or otherwise, taking into account all of the relevant factors.'

Du Quesnay indicated that the ESF board was unlikely to agree to meet the parents' group. 'I did say I would ask the board if they wished there to be a further meeting, but the board has discussed the Concerned Parents' [earlier] letter at some length.

'It was the board and the Committee of Parents who suggested the meeting that has just been held. I was there as the board's representative, not as an individual.'

Du Quesnay described the meeting, held at the Baptist University staff quarters in Sha Tin, as 'constructive' and 'courteous' and said: 'We explained our strategy on trying to secure the recurrent subvention, answered a large number of questions and promised to get back to them ... with answers to detailed questions which we do not carry in our heads.'

However, Ron Abbott, chairman of the Overseas Inspectors Association and an ESF parent who has raised questions over the way the ESF board is run, said parents who attended had expressed 'extreme frustration' to him afterwards.

Abbott, who did not attend - saying that he knew from previous meeting with Du Quesnay that it would be 'next to useless' - said: 'The consultation ended up typically as 'her way or the highway'.'

Abbot said parents had been asked by Du Quesnay not to speak to the press after the meeting. 'If the ESF management team has nothing to hide, why do they fear the attention of our legislators and the press?' he asked.

Going up

In the past five years, ESF fees have increased 19 per cent for secondary schools and, for primary schools,: 29%

End this ESF dispute and seek a better deal

Leader - South China Morning Post - Friday October 1 2010

Peace, it seems, did not break out for long at the English Schools Foundation, which provides the education of choice for an increasing number of ethnic Chinese as well as expatriate parents. Rises in fees that are becoming annual events, and a HK$25,000 capital levy on new pupils and those graduating to secondary level, have strained relations with parents. Now they have deteriorated, with two parent action groups snubbing management and taking their concerns to lawmakers. Reforms under new ESF leadership to clean up corporate governance resolved conflicts with the government and parents. They were also supposed to make management more accountable. But the ESF Concerned Parents Group and the Overseas Inspectors Association - speaking for police with more than 250 children at the foundation's schools - say this is not the case. The foundation's governing board is accused of failing to communicate with parents for two years and ignoring calls for an end to fee rises. The parents' group says a fee increase, the levy and an attempt to change the school calendar have been introduced without warning. Moreover, parent members of the ESF's governing board are allowed to speak but not vote on financial matters, even though parents provide 70 per cent of revenue. The police officers' association says a clause in the code of conduct for members of the governing board stifles dissent and communication with parents. The perception of lack of communication, transparency and accountability must be tackled, though ESF chief executive Heather Du Quesnay has strenuously defended the board. It is important that relations with disaffected parents are repaired. It would help if their representatives agree to meet Du Quesnay again and are given a full hearing. There is, after all, a need for parents and ESF management to pull together and face a broader problem faced by the foundation. The increasing cost to parents reflects the fact that the government subsidy to the ESF, currently about 20 per cent of total income, has been frozen - thus effectively declining - for a decade. While this remains the case, more fee rises seem inevitable, with costs getting closer to those at private international schools. The subsidy has been a politically sensitive subject ever since former education chief Professor Arthur Li Kwok-cheung threatened to end it unless the foundation reformed its governance. Even though it has now done so, the foundation appears reluctant to open negotiations about the subsidy in the absence of any indication officials would be sympathetic. It should not need to fear such a move. Given the persistent but mistaken perception, rooted in the colonial past, that ESF schools are only for privileged expatriate families, any significant rise in the subsidy would raise questions of social equity. But those questions would be misplaced. In fact, a majority of ESF students are now permanent residents and more than half are ethnic Chinese. As a result, the schools are not unlike other direct subsidy schools. The ESF has the same case for consideration of a higher subsidy as other school sponsoring bodies. The foundation should certainly be inclusive and transparent when justifying rising fees and charges with parents. But both sides should also have an eye on the bigger picture. Having put its governance house in order, the ESF is entitled to expect more financial support from the government. If that was provided, the pressure for fee rises would decline. It is, therefore, in the interests of all concerned to settle the dispute swiftly and unite in seeking a better deal from the government.