Don’t count on me to demonize private school profits.
And why? Because all organizations must generate surpluses if they want to survive and invest in their mission and their buildings. And in the case of subsidized private schools, the profits do not go into the pockets of any shareholders, since they are non-profit organizations (NPOs).
Public schools don’t really have the latitude to make profits. They often have to spend or risk having their budget cut the following year…
Profits are not a sin, then. On the other hand, one must ask what is a reasonable level of profits for these private schools and what they are used for.
Because after all, it is in some way the government, with its subsidies, like the parents, with their contributions, which allow these schools to make profits.1. And this profitability allows them to deliver stronger competition to the public…
“Are the profits used to improve the labs, the gym, the air conditioning, to ward off bad times, such as an unexpected drop in students? Are they used to operate without sacrificing the quality of teaching?” asks Michel Magnan, professor of accounting at Concordia University.
Or rather, are the profits used to pay the executives of a school handsomely or to offer services beyond their mission?
On Monday, I demonstrated that several schools pay their management much more than the public sector, which raises questions. But on the other hand, is it the private sector that pays too much or the public sector that does not pay enough for the skills and responsibilities of its bosses, which explains the recruitment difficulties?
33 million profit
In any case, the 27 main private schools in Quebec together generated profits of 32.5 million in 2022-2023, according to their declarations to the Canada Revenue Agency.2.
On average, profits are equivalent to 5% of their revenue, or $605 per student.
Profit margins vary significantly from one school to another. At Collège Letendre, profits reached $3.9 million that year, equivalent to 14% of its revenues.3.
Villa Maria is also at 14% and the Pensionnat du Saint-Nom-de-Marie, at 10%.
Meanwhile, Notre-Dame College and Bourget College ended the year practically without profit.
Schools that make big profits tell me they need it to maintain and renovate their buildings, which are sometimes heritage properties. This is the case at Villa Maria. But also at many schools, explains Nancy Brousseau, general director of the Fédération des établissements d’enseignement privés du Québec.
“As with the public sector, infrastructure management is a major challenge for private schools. They must have the flexibility to cope with fluctuations in mortgage rates, but especially for the maintenance and upgrading of their buildings. The majority of private schools have buildings that are over 70 years old,” M wrote to me.me Brousseau.
It is difficult to compare them to the public sector, however, where many school buildings leave something to be desired due to lack of funds.
Subsidized at 44% or 60%?
Furthermore, the data analyzed helps to partially clarify another question that frequently arises in debates on private schools, namely the share of their income that comes from subsidies from the Quebec government.
Quebec finances 60% of the costs of educational services offered to students, in particular, a portion that includes teachers’ salaries. But private schools manage to obtain other income. In addition to subsidies, there are of course tuition fees, but also income for various services (cafeteria, rental of premises, etc.) or with a foundation.
According to my analysis, the share of government subsidies represents on average 44% of revenues in the 27 schools analyzed, with differences ranging from 31% for Collège Sainte-Anne to 53% for Séminaire de Sherbrooke.4.
Government funded retirement
There are some nuances to be made, however. First, in public schools, comparable government subsidies do not represent 100% of their revenues, but about 94%, because they also have other revenues.
Above all, teachers in subsidized private schools benefit, like the public sector, from the state pension scheme. Private sector teachers contribute half, via the RREGOP, and the government contributes the other half.
This government contribution, which represents around 7% of salaries, is not included in the share of subsidies to the private sector for educational services (the highest 60%).
This was confirmed to me by more than one source, including Nancy Brousseau. According to the general director of the Fédération des établissements d’enseignement privées du Québec, private sector executives also benefit from the state pension plan.
What do I take away from the exercise? That our large private schools appear to be in good financial health, all in all, and that is good news, although this observation may obscure the problem of other small schools.5.
Are their profits explained by the fact that they receive too much government subsidies, or is it the effect of the resourcefulness specific to the private sector? Or by parents who are wealthier than the public sector, who notably feed their foundations (4% of the total revenue of schools, on average)? Good questions.
What the numbers don’t tell us is the net effect of the private sector on the public sector, particularly on the retention of students, teachers and managers. And, of course, its impact on the composition of classes in the public sector.
But that’s another story, though…
1. “There are no real tax limits on the profits that an NPO can make, provided that these profits are used or reinvested in the mission,” explains Stéphane Parent, manager and trainer at Espace OBNL.
2. As charities, authorized to give charitable receipts, most private schools must produce a financial form (T3010) that the Canada Revenue Agency makes public on its website.
3. Letendre College receives income from three other private schools in return for covering some of their expenses, which reduces, among other things, its share of government subsidies (41%).
4. Collège Sainte-Anne actually manages five schools, one of which, a primary school, is entirely private. This particularity reduces its dependence on state subsidies, hence its lower share of income from subsidies (31%).
5. The Federation of Private Educational Institutions of Quebec points out that around sixty private, less niche establishments have been forced to close their doors over the past 15 years, “due to lack of resources”.