STUDENT DEBTORS MANAGEMENT AND FINANCIAL SUSTAINABILITY OF PUBLIC SECONDARY SCHOOLS IN ALEGO USONGA SUB-COUNTY, KENYA.

Abstract

Financial sustainability in public secondary schools has been under test, with the disbursement of funds and school fee payments cited as significant issues. Coupled with substantial student debtors totalling KShs.3.1 billion, public secondary schools face financial sustainability challenges amid pressure to settle accounts payables. This study examined the relationship between student debtors management and the financial sustainability of public secondary schools in Alego Usonga Sub-County, Kenya. Its objectives were to determine the effect of funds disbursement on the financial sustainability of public secondary schools, the contribution of debt collection techniques on the financial sustainability of public secondary schools, the effect of socio-economic facets on the financial sustainability of public secondary schools, and the moderating effect of school factors on the relationship between debtors management and financial sustainability in public secondary schools in Alego Usonga Sub-County, Kenya. The study was founded on three theoretical pillars: Fund Accounting Theory, Debt Management Theory and the Agency theory, with Fund Accounting theory being the central theory of the study. The study employed a mixed research design, targeted all 50 public secondary schools in Alego Usonga, and purposively sampled the principal and bursar/accounts clerk in all the schools. Primary data was collected using a closed-ended questionnaire, while secondary data was extracted from audited financial statements from public secondary schools. Ten respondents (five bursars and five principals) were piloted in Kakamega County. Data analysis involved descriptive and inferential statistics. The study made findings which may be essential to public secondary school administrators, managers of various financial institutions and school suppliers wishing to deliver items to public secondary schools on credit terms. It may be important to researchers and future scholars who might refer to or build on this work for further research. The study established that funds disbursement account for 46.7% of the variances in financial sustainability of public secondary schools in Alego-Usonga Sub County, Kenya (R2 = 0.467, p<0.000). Further, debt collection techniques accounted to 45.5% of the variances in financial sustainability in public secondary schools in Alego Usonga Sub-County (R2=0.455, P<0.000), and socio-economic facets accounted for 52.3% of the variances in financial sustainability of public secondary schools in Alego-Usonga Sub-County (R2 = 0.523, p<0.000). The study further found a significant moderating effect of school factors. The study recommends that public secondary schools should have a timely fund disbursement by ensuring that government capitation and county and National Government Constituencies Development Fund are promptly transferred to the schools. Debt collection should be designed using cash and kind forms to ease the debt burden. Debts can be made in periodical proportion to reduce the debt burden. The study recommends that parents' household income be well considered to ensure parents manage fee payments to gear up financial sustainability. Equally, schools should adopt income diversification strategies to ensure they are financially sustainable.