Unwise

Imagine trying to use any of our tollways by issuing a promissory note to the tellers guarding the gates. It will not happen. The barriers will not rise.

If the tollway companies were ordered to accept promissory notes, they will spend all their time and manpower trying to collect debts. The whole system will collapse.

Yet the same thing is being proposed by some populist legislators for school fees. They want to ban the “No Permit, No exam” policy that private schools use to enforce collections. This will, if it passes the legislative mill, be a most unwise law.

The “No Permit, No Exam” policy is the last instrument private schools have to be able to make timely collections. If they are deprived of that instrument, they will be unable to meet their payrolls and cover maintenance costs for their schools. The private schools system, which serves about half of our students, will cease to be a viable enterprise.

We saw what happened when bleeding heart legislators passed a law abolishing tuition fees for public tertiary institutions. Tens of thousands of students migrated to public schools. Many private educational institutions ceased to be financially viable. Several of them closed down.

Our educational system is in disarray as it is. The learning deficit widens in the post-pandemic period. Not enough capital investments are being made to upgrade the quality of our education and move it into the 21st century.

In the region, we are competing with neighboring Vietnam. Recent studies show that Vietnam has evolved one of the best educational systems in the world. She has used this advantage in human capital to power her rapid industrialization. In the next generation, Filipinos will not be able to compete with the highly skilled Vietnamese workforce.

Now our legislators want to widen our disadvantage. They want to kill off private educational institutions even as our public schools are unprepared to serve total demand for learning.

Government subsidizes our entire public educational system. The budget is large because no tuition is collected to offset the costs of providing education. There is no scheme for cost-sharing with the beneficiaries. This is a major contributor to our chronic budget deficit and therefore our ballooning public debt.

The private schools are left to their own devices, even as the pandemic and the scourge of inflation taxed their ability to be financially viable. The “No Permit, No Exam” policy is the last thread on which the survival of many private educational institutions hangs. Now, legislators seeking brownie points want to cut that thread. The results will be disastrous.

The private educational institutions threatened with bankruptcy by way of populist lawmaking have said as much. The Catholic Educational Association of the Philippines (CEAP), the Philippine Association of Colleges and Universities (PACU), the Philippine Association of Private Schools, Colleges and Universities (PAPSCU), the Association of Christian Schools, Colleges and Universities (ACSCU) and the Unified TVET of the Philippines (UniTVET) have issued an open letter asking the Senate to reconsider the passage of Senate Bill 1359. The bill was approved on third reading March 20, 2023.

In that letter, the educators warned that the prohibition of the “No Permit, No Exam” policy “will adversely affect the schools’ viability, ultimately leading to reductions in investments, scaled-back operations or closure. These would result in unemployment for teachers and staff. Displaced students will add to an already overburdened public education system.”

Simulation studies undertaken by the schools show that once the incentive to pay on time is removed, and parents and students will have the option to delay payment, private schools will run out of operating cash in just over two months. They have no other sources of financing. Payrolls for teachers and staff will be held up. Massive lay-offs could happen very quickly.

Dr. Guillermo Torres, chairman of the University of Mindanao, the biggest private school in the south, drew a useful analogy. In the same way taxes are the lifeblood of government, he points out, tuition fees are the lifeblood of private schools. If they are not collected in a timely manner, the schools fall deep into debt. Unlike government, their ability to contract debt on a losing enterprise is extremely limited.

Even if the schools manage to borrow, they will have to increase fees to cover the interest expense. That opens a vicious cycle.

If our legislators forced the tollways to accept promissory notes, that would be called economic sabotage. Schools are even more important. Without them, the country could not climb out of the rut.

If the private schools, irreplaceable complements to the public schools system, wither because of unwise legislation, the country’s future suffers.

Erratum

My skills at proofreading are clearly not impeccable. Now, my sense of direction is also in doubt.

In my last column (Tollways, 18 July 2023), I mistakenly typed in SLEX in place of NLEX as the tollway service that recently raised in charges. That needs to be corrected. It is the NLEX that is now targeted by an agitprop truck drivers’ group opposing the adjustment in charges. The group, fortunately, has found no public support.

On the same day this column appeared, news broke that SMC’s Ramon Ang and MPIC’s Manuel V. Pangilinan (who operate SLEX and NLEX, respectively) have agreed to collaborate to build a new tollway to Batangas. This is good news for motorists exasperated by the road congestion in Southern Luzon.

This new development should help hasten the consolidation of the payments system for all our tollways.