When you don’t have the capacity to pay salaries during vacation, it must be easy to convince yourself that the employees were at home and therefore did no work! Let’s examine factors why some school proprietors do not pay the 4th month. Traditionally we usually think of a school term as a period of 3 months. That is largely correct – as far as attendance to school is concerned. The school term is usually 12 to 14 weeks long, with a 2 or 3 day midterm break somewhere in the middle. However for administrative purposes, a school term is actually 4 months. There is a situation that prevails among most proprietors who run their institutions in an “informal” way. They tend not to pay their staff for the 4th month when they are on vacation. These schools are usually not central urban schools where employment is usually formalised with tax payments and social security benefits. They are mostly peri-urban schools, servicing the medium to low income communities. Characteristics of such school include:

1. They charge lower than the average level of school fees – there are cases where the pupils pay fees on a weekly or daily basis.
2. They pay lower than average salaries.
3. They do not – or cannot employ and retain high quality teaching or administrative staff.
4. They have a higher than average turnover of employees (teachers “come and go”).
5. Their school facilities are below average, and still in the process of development.
6. They very often overlook tax and social security payments – which is also illegal.

Clearly surplus cash flow is a problem with such schools, and so cash to pay teachers during vacation appears to dry up! Some of them will pay only part of the regular salary for that 4th month. Others will not pay at all. When you don’t have the capacity to pay salaries during vacation, it must be easy to convince yourself that the employees were at home and therefore did no work! Such arguments come up during some of our focus group discussions. Of course that is not right, otherwise it will mean that the school owners – including government – who pay the employees for the 4th month are just doing them a favour…? Others say it is a way of retaining teachers, because the teacher is likely to return to the school from vacation if there is outstanding salary to collect. That way, it helps to ensure that you don’t lose teachers midstream or without proper notice. This is a fair argument so far as the proprietor pays the full outstanding salary on resumption from vacation, but it is still not good practice as it is not fair to the teacher who must also plan a life. Why do some proprietors get into this situation where they do not pay for the 4th month? Simple – it is a budget problem. When you run a fairly informal administration, you are likely to get into the habit of reckoning with 3 months when planning the school term. So to avoid this situation, it helps to plan for the year instead of term-to-term. At least, reckon the school term to be 4 months instead of 3 if you insist on going by the old habit… What would a good budget for the school year look like? Here are some guidelines:

1. Project your income for the year using your student population as the basis. That is fairly easy. However, make room for delayed fee payments. Depending on how you collect your fees, your delinquencies could be high or low. Whichever way, factor it into your projection.
2. Project your expenses for the year. Your budget lines include:
   1. The staff strength you will maintain in the year, which will collect salary for 12 months
   2. Utilities and other overhead costs that recur every month, and are paid over 12 months
   3. Annual fees – paid once a year; such as municipal or certification fees
   4. Maintenance costs. After your first few years of operation, you can project for the year
   5. Have a separate account or cashbox for items that are handled daily such as food and bus fare. Separate that from the school fees even if your collection system receives them together. The children need to eat and be bussed daily, so you can’t mix that revenue and expenditure with others. Technically that revenue is not “income” for you – unless you put a good margin on it to gain some income from there.

3. When all this is in place, you can now plan how much you can afford to pay your teachers each month. They also have to plan their lives and having regular income helps to organise that. So negotiate their salaries with the knowledge that you are paying every month. For instance, paying a teacher GHȼ600 for 3 out of 4 months and paying the same teacher GHȼ450 for 4 months are the same in terms of total payment. But the second option is definitely better.

Once you have the rhythm working well, you can now plan to include tax and social security payments with subsequent years.