68775 SABER - School Finance Objectives and Conceptual Approach October 20111 Ensuring Adequacy Education Finance Performing Promoting Efficiently Equity 1 This note was prepared by Emiliana Vegas (Lead Economist, HDNED), Alexandra Alderman (Consultant, HDNED), and Chelsea Coffin (Consultant, HDNED), based on discussions with the extended team that includes: Helen Ladd (Consultant, Edgar T. Thompson Professor of Public Policy and Economics, Sanford School of Public Policy, Duke University), David Plank (Consultant, Economist, Policy Analysis for California Education (PACE)) Andrew Reschovsky (Consultant, Professor of Public Affairs and Applied Economics, LaFollette School of Public Affairs, University of Wisconsin), and Halsey Rogers (Lead Economist, HDNED). The team is grateful to the following individuals, whose comments throughout this initiative have been very helpful: Robin Horn (Sector Manager, HDNED); Luis Crouch (Vice-President, Research Triangle Institute), Sachiko Kataoka (Education Economist, ECSHD); Richard Arden (UK AID); and Christine Wallace (UK AID). i Table of Contents I. Introduction and objectives....................................................................................................................................... 3 II. Conceptual Approach ................................................................................................................................................... 4 III. Education Finance Policy Goals........................................................................................................................... 7 Policy Goal 1: Ensuring Adequacy .................................................................................................................................... 7 Policy Goal 2: Promoting Equity........................................................................................................................................ 9 Policy Goal 3: Performing Efficiently............................................................................................................................. 10 IV. Five Core Areas of Education Finance Policy .............................................................................................. 12 Core Area 1: School conditions & resources .............................................................................................................. 13 Core Area 2: Education spending .................................................................................................................................... 14 Core Area 3: Revenue sources .......................................................................................................................................... 16 Core Area 4: Allocation mechanisms ............................................................................................................................. 18 Core Area 5: Fiscal control and capacity ...................................................................................................................... 20 Annex 1: Summary of previous related initiatives ................................................................................................. 27 Annex 2: Outline of Conceptual Questions for Policy Goals and Areas .......................................................... 30 Annex 3: Potential indicators for Policy Goals .......................................................................................................... 31 Annex 4: Potential indicators and sources for Core Areas ................................................................................... 35 ii I. Introduction and objectives Education finance has long been a topic of debate. With education consuming a large share of public expenditures in many countries, the public is increasingly interested in how education resources are used. In addition, the economic downturn is prompting many more questions as governments reconsider spending priorities in the context of tightening budgets. The goal of expanding educational opportunity for all students is inextricably linked to questions of education finance: How much do countries invest in education? How do governments support schools? What is the role of the private sector, including households, in education? What are the appropriate financing arrangements for an effective allocation of public funds? How should resources be spent in schools to maximize student learning? Efforts to answer these questions have been an important part of the World Bank’s operations and analytical services work in low and middle income countries. Important efforts include regional analyses to document the relationship between per student financing and learning outcomes; operational support for financing arrangements that provide those closer to the point of service delivery with greater control over educational resources; and the development of tools to empower education stakeholders to monitor school budgets and their implementation. While this work has contributed to understanding better education finance policies and practices, much more research is needed to document the policies that are most effective for ensuring equitable, efficient and adequate education spending across and within countries. The Human Development Department of the World Bank has launched an initiative called SABER - School Finance to gain a deeper understanding of the financing and governance arrangements that are used to create and sustain the conditions necessary for student learning in basic education. The initiative—part of a larger effort called System Assessment and Benchmarking for Education Results (SABER)—seeks to document and evaluate the characteristics of school finance systems, policies and programs across education systems around the world, and to make this information and analysis widely available to World Bank staff, policy makers and researchers. Countries commit very different levels of resources to education, even after accounting for differences in their income or wealth as typically measured by Gross Domestic Product (GDP). For example, in the Dominican Republic, public spending on education as a share of GDP, a measure of a country’s expenditure effort, is just over 2 percent while that of Botswana is over 8 percent (UNESCO 2010). At the same time, even countries that commit relatively similar shares of GDP to education can have very different results. Uruguay, which devotes about 3 percent of its public resources to education relative to GDP, outperforms neighboring countries on the Program for International Student Assessment (PISA) while Argentina, spending 4.6 percent, is the lowest performer among Latin American countries participating in the test. While there is variation in student learning outcomes—including access to schooling, completion of primary or secondary education, how much students learn—among countries that invest relatively large shares of GDP in education, all countries with low performance also invest relatively small shares of their GDP in education (OECD 2003). 3 While the level of financial resources is important for ensuring that students have access to a minimum standard of resources and materials, studies drawn on cross-country data from international assessments show a weak, if any, relation between overall educational spending and student learning, even when controlling for family and school factors (Hanushek and Kimko 2000; Hanushek and Luque 2003; Woessmann 2000; Fuchs and Woessman 2004). Research has shown that how resources are invested in education, both in terms of what is purchased as well as the incentives imbedded in financing arrangements, is more important than the absolute amount of resources invested (Hanushek 1996; Burtless 1996). Therefore, deepening our understanding of how countries generate resources for education and allocate them for learning based on their social, economic and political contexts is crucial for improving the effectiveness of resources invested in education across the world. II. Conceptual Approach As a launching point to develop the underlying conceptual framework for this initiative, the World Bank team reviewed other benchmarking exercises previously carried out by the Bank and other development organizations. The most relevant is that of the Organization for Economic Co- operation and Development (OECD) which in 2002 produced Financing Education—Investments and Returns to document the role of human capital and, by implication, education in fostering economic well-being as well as the financing tools to increase education and ensure a more equitable distribution of education costs and benefits across stakeholders. This work, while providing a useful framework for SABER - School Finance, is limited to the OECD and 19 additional participating countries—none of which were low income countries at the time of publishing.2 In the United States, Education Week’s annual Quality Counts reports scores and ranks states according to educational policy and performance in six areas, including education finance. The education finance component of the report provides a comprehensive picture of the state of equity and spending levels for education finance across U.S. states using a selection of indicators identified in education finance literature. At The World Bank, the Human Development Department of the Europe and Central Asia (ECA) region recently produced a report that reviews the experience with per student financing of basic education in six countries in the ECA region in an effort to learn which outcomes were achieved and how, and to inform future implementation of per student financing in the region. The UNESCO Institute for Statistics (UIS) is the primary international agency responsible for collecting and disseminating information on education finance across developing countries. It has regularly collected data on education expenditures; however, given the heterogeneity in how countries account for and report such information, UIS has faced challenges in maintaining its core indicators populated with updated information for a large number of countries. Fortunately, in 2010 UIS partnered with The World Bank to use alternative sources of information, namely, the Country Status Reports that the World Bank has regularly conducted for a large number of Sub- Saharan African countries, to fill in some of the more salient information gaps. This partnership is beneficial in providing some data related to the UIS core education finance indicators in several 2 Of the 19 additional participating countries, only Zimbabwe is classified as low income today. 4 countries. Nevertheless, important lacunae in education finance data remain, especially in the areas of allocation mechanisms and distribution of expenditures. All of the aforementioned efforts offer comparative information on educational finance systems. In addition to these comparisons, efforts to understand the relationship between funding and education outcomes within a country by tracking funding and resources and relating them at different levels of the delivery system to outcomes in different institutional and organization contexts are also ongoing within the World Bank. These tools include Quality Service Delivery Surveys, Public Expenditure Reviews (PERs), Public Expenditure Tracking Surveys (PETs), and National Education Accounts. However, these tools have been implemented in only a select number of the Bank’s member countries. In some cases, the tools are not applied on a regular basis, and existing information is outdated. Further, instruments differ in their objective and scope and even the same tool, when applied to different countries, may focus on different components of an education finance system. In addition to reviewing similar initiatives that have been launched in the sub-sector of education finance, the team also reviewed the empirical evidence on the effectiveness of education finance systems in developed and developing countries. Finally, the team consulted with World Bank and external experts with deep knowledge of education systems. Through these activities, the team identified three policy goals that, arguably, all education finance systems should strive to achieve. To assess progress toward these policy goals, the team will collect information in five core areas of education finance in primary and secondary education. These policy goals and core areas are presented in Table 1. We detail potential indicators and sources for each policy goal in Annex 3, and for each core area in Annex 4. All indicators that inform policy goals will be included in a core area, which will take into account additional information. This contextual information will be used to provide important background information on education finance systems. 5 Figure 1: Policy Goals and Core Areas of Education Finance Information on the general characteristics of a country’s basic education system also is necessary to inform, contextualize and facilitate analysis and benchmarking of education finance systems across countries. SABER - School Finance will build on general information about the structure of an education system being collected by other Policy Domains of the SABER exercise, including the number of phases of education and their duration; the types of schools that exist; the numbers of schools, teachers and students; the geographic distribution of schools; and the length of the school year and day. As well, SABER - School Finance will document countries’ demographic sectors and trends as they may affect education costs and efficiency. Systematic and comparable data along the five core areas described above and the general characteristics of a country’s education system will inform the extent to which a basic3 education 3 The focus of the initiative is on basic education, which comprises primary and secondary (non-technical) education. 6 system meets core education finance goals of (i) Ensuring Adequacy; (ii) Promoting Equity; and (iii) Performing Efficiently. III. Education Finance Policy Goals The following sections briefly discuss the three policy goals toward which education finance systems should strive to ensure that resources for education are used efficiently and effectively; and as important, that students of all backgrounds are provided with adequate resources for learning. These education finance goals are widely shared across countries, regardless of expenditure patterns or learning outcomes. Each policy goal is followed by descriptions of corresponding policy levers that affect progress toward it. By classifying countries according to their levels of development toward achieving the core goals, SABER - School Finance can help diagnose the key challenges that countries face in ensuring they have good finance policies and programs, expose the policies that top performing school systems have in place to address these challenges and thus offer guidance to countries on how to improve. Figure 2: Overview of SABER - School Finance Policy Goals Role Policy Goals Policy Levers Are there policies and systems set up to provide basic educational inputs to all? Are there basic educational inputs for all primary school students? Ensuring Adequacy Are there basic educational inputs for all secondary school students? Is the government making adequate effort in education? Provide resources so Does the government provide more resources to that all children students from disadvantaged backgrounds? Promoting Equity can learn Do payments for schooling represent a high share of income for low income households? Are resources allocated and disbursed in a manner that is transparent and effective? Do monitoring and auditing processes encourage Performing Efficiently accountability in the use of funding? Are there mechanisms in place to facilitate that resources reach the point of service delivery? Policy Goal 1: Ensuring Adequacy Education finance systems should provide adequate resources to ensure that all students have the opportunity to receive a high quality basic education. Specific basic education standards and goals will vary across countries and the costs of achieving these standards will vary by student. Yet an overarching goal of all countries should be that education finance systems provide sufficient resources to develop a citizenry capable of making informed decisions as well as acquiring the skills 7 and knowledge to succeed in work and life. Each country has the responsibility of defining an adequate education, given its development goals and available resources, and determining the amount of money that each school would need to achieve this level of achievement, as measured by student outcomes. Alternatively, given the absence of data on student performance in many low income countries, an adequate education may be defined in terms of a minimum set of required school inputs for learners to have a quality basic education (Reschovsky 2009). International assessments of student learning outcomes can also help inform absolute benchmarks that all countries should strive to achieve. Potential policy levers to ensure adequacy include: A) Are there policies The process of translating educational inputs into learning outcomes is and systems set up very complex (Goldhaber & Brewer 1997), but education finance policies to provide basic should stipulate which inputs should be provided so that funding may be educational inputs to allocated appropriately. Many education finance systems allocate all? resources on a per-student or per-school basis to supply sufficient inputs with this foundation grant. Although there is no way to precisely estimate the cost of education, the inputs these grants intend to provide should be explicitly defined so that funding may approximately cover the cost. However, policies to provide basic educational inputs do not guarantee that these inputs are available in all schools. Education finance systems must report the extent to which these policies are implemented. A system to monitor education inputs can be a tool for accountability in the use of funding at the school level as well as a way to improve budget plans. B & C) Are there The precise relationship between education spending and outcomes is basic educational complicated to estimate. Desired outputs are not clear, critical inputs are inputs for all hard to identify, and it is difficult to account for quality teachers and primary and student characteristics (Rice and Schwartz 2008). Although debate secondary school continues over the influence of better qualified teachers, smaller class size, students? a focus on academic fundamentals, or use of technology, there is agreement that beyond a certain threshold, how education funds are spent is more important than how much is spent. Below this threshold, however, the lack of critical inputs may do severe damage. An adequate system is one in which key inputs are provided on a sufficient scale nationally, on average, and, ideally on a sufficient scale between student groups as well. C) Is the government Adequacy-based budgeting allocates funding in relation to the estimated making adequate costs of achieving predetermined outcomes established on a country basis effort in education? by the constitution, legislature, courts, or an executive order. Spending per pupil should reflect the resources necessary to produce required outcomes, both overall and by groups with different learning needs. Long- run adequacy will also be assessed in terms of the responsiveness of capital spending to basic infrastructure needs over time. Achieving adequate educational outcomes requires incremental and cumulative investments in individuals, which demands a reliable and adjustable 8 supply of resources. Unexpected fluctuations in per pupil funding will hamper the ability of schools to provide a constant educational experience for all students each year. Purposeful variation in education spending is especially imperative in developing countries with youth bulges in which mortality has declined but fertility remains high. Policy Goal 2: Promoting Equity A key goal of education finance systems is to promote equity in educational opportunity. Access to quality education should not depend on a person’s socio-economic background, gender, race, or ethnicity. Reducing income and social inequality by improving education outcomes for students from low-income households, reducing achievement gaps between students from advantaged and disadvantaged backgrounds, minority and majority groups, and girls and boys, is often considered the responsibility of the government (World Bank 2004). A fundamental responsibility of central governments, where the commitment to promote equity across various groups can take precedence over local interests, is ensuring equity in educational opportunity. Education finance policy has the potential to minimize subgroup differences in educational access and achievement through policy levers including: A) Does the To realize equality in outcomes, students from disadvantaged government provide backgrounds often need additional resources. Thus an equitable pattern is more resources to one that provides more per pupil funding for student groups students from disadvantaged by socio-economic background, native language, region, disadvantaged gender, or other groups. Geographic resource disparities often exist by backgrounds? region or between urban and rural areas. Certain religious groups or ethnicities may experience discrimination, either in school choice or school experience. Language spoken at home may also affect the facility of learning if it differs from language in the classroom. More generally, socio-economic status can obstruct educational attainment, especially in developing countries where private contributions are common. In many countries, gender differences also prevail in access and quality of education services. Evidence suggests that countries that invest in girls’ education benefit from positive social and economic externalities (Psacharopoulos and Patrinos 2002). Students with disabilities or special needs present a greater diversity of needs, including physical, cognitive, and behavioral, which require additional spending to address (Harr et al. 2008). To allocate resources in a manner that favors needy students, education systems must first have a mechanism to identify relevant differences among students, and then introduce specific policies or programs designed to address the needs of disadvantaged students. The system’s commitment to achieving equity is reflected in both the share of total education spending that is compensatory and the degree of differentiation among students. B) Do payments for Private expenditure supplements public funding for education in many schooling represent developing countries, where governments may be unable to generate 9 a high share of sufficient resources to provide quality basic education. However, in some income for low cases, required household payments for schooling represents a substantial income households? portion of earnings in low income households, which often discourages enrollment, particularly for girls. Even though primary school fees have been officially abolished in many settings, additional and sizeable required payments are common in order to maintain quality in the context of limited public resources or rising student populations. Sanctioned school fees are more prominent at the secondary level, and may increase future income inequality if the wealthy are more likely to complete additional schooling and become eligible for higher education or greater earning potential. Policy Goal 3: Performing Efficiently Efficient education systems require that systems invest in those inputs with the largest marginal return, as measured by student outcomes, given a country’s particular stage of development. The need to increase and sustain educational access and quality in light of adverse macroeconomic conditions is a huge challenge for policymakers—in particular in developing countries where education expenses are often the most important item in the budget. Given the growth in enrollments and unprecedented fiscal pressures, today it is perhaps more important than ever before that governments, providers and beneficiaries use educational resources in a manner that is transparent, accountable, and utilizes good governance. Essential policy levers for efficient school finance systems include: A) Are resources Quality of outcomes in education varies, even by systems that spend allocated and similar amounts per pupil (Wagstaff & Wang 2011). The efficient use of disbursed in a public funds relies on the capacity to budget and, importantly, manner that is disbursement systems to ensure that resources reach schools and benefit transparent and students. Certain allocation mechanisms promote efficiency by providing effective? funding in a clear and publically available method, tracking reported expenditures against budgets, and internally monitoring compliance. The use of a transparent funding formula with explicit criteria allows educational stakeholders to hold the education system accountable as it transfers resources from the national level to the subnational, and from the subnational to schools. B) Do monitoring Ultimately, efficient use of education funds relies on human capacity and and auditing availability of information. In light of the trend towards increased fiscal processes encourage decentralization, qualifications in monitoring and auditing procedures or accountability in the professional backgrounds have been highlighted as priorities for both use of funding? subnational and national education offices. Human capacity must be complemented by readily accessible information about education finance. Electronic information systems allow governments to track the flow of resources more transparently and efficiently, at the same time reducing the risk of data manipulation by consolidating all information in a central location. Formal requirements for reporting education expenditures allow 10 national and subnational governments to monitor budget compliance. In addition, audit procedures at the national and subnational level will help to identify issues with public funding flows. At a school level, monitoring and enforcing teacher attendance policies is imperative, as teacher absenteeism is a systemic problem in many education systems and administrative records do not always correlate to actual attendance, nor are salaries adjusted accordingly. Education finance systems that promote accountability will be capable of identifying excess expenditure, recognizing leakages, and reducing delays in use of funds. C) Are there In addition to providing and monitoring funding for education, an efficient mechanisms in place education finance system should confirm that resources are converted to facilitate that into learning opportunities. There has been a recent effort to measure the resources reach the quality of service delivery at the school level (PETS, QSDS) because point of service reported public expenditure on education does not guarantee that delivery? education policy has been implemented (Reinikka & Svensson 2004). 11 IV. Five Core Areas of Education Finance Policy SABER - School Finance will document in detail the five core areas to inform the analytical work that provides guidance for strengthening education finance systems. To determine the extent to which education finance policies contribute to achieving the core policy goals, information on each education system in the following five core areas will be collected and synthesized: (i) School Conditions and Resources; (ii) Education Spending; (iii) Revenue Sources; (iv) Allocation Mechanisms; and (v) Fiscal Control and Capacity. Figure 3: Overview of SABER – Finance Core Areas School Conditions and Resources •What are the basic inputs for all students? •Are there policies in place to ensure that basic educational inputs are provided? •What specific policies have been pursued in the last 5 years to provide minimum infrastructure and learning materials in public schools? Education Spending •How big is the education sector? •How much of the total public education budget is allocated to different levels of education? •How much is spent per student at each level of education? •How much is spent on different inputs? •How does spending per student vary within country and across groups of students? Revenue Sources •Where do revenues for education expenditure come from? •Of the public share, how are these revenues generated? •How much discretion do schools have over the use of revenues? •Does the public sector raise funds for education through school fees? • Is international aid integrated effectively into budgets? Allocation Mechanisms •Each year, at the national or subnational level, how is the decision made about how much is going to be spent on education? •What determines the distribution of public sector funding for education to lower levels of government and to schools (public & government dependent private)? •How is funding allocated for different student groups? • How is education funding monitored? •How much of the education budget is allocated to each level? Fiscal Control and Capacity •What are systems in place to track the transfer of resources to different levels of government and to schools? •How is the use of education resources at different levels audited? •What is the capacity for planning and monitoring the education budget? •How is school construction monitored? 12 Core Area 1: School conditions and resources Schools should meet minimum quality standards that include essential teaching inputs, instructional conditions and other basic resources not only to attract students and teachers, but also to provide an adequate environment conducive to learning. To understand school conditions & resources, the following questions will be addressed: 1. What are the basic A consistent relationship has not been established between specific inputs for all school resources as measured by learning materials, student/teacher students? ratios, teacher experience and/or education and spending per student. On the one hand, textbooks have consistently been shown to have a positive effect on student learning (Jamison et. al 1981; Heyneman, Jamison and Montenegro 1981). And there is evidence that school infrastructure is important for creating positive learning environments and improving student attainment (Duflo 2001). Related, Chaudhury et al. (2006) find that better school infrastructure is associated with teacher attendance. A holistic understanding of the learning experience includes the safety of the school environment or the provision of meals if appropriate. However, assessments of the influence of student/teacher ratios—a frequently measured school-level factor in education production functions, on student performance show inconsistent results (Hanushek 1986; Case and Deaton 1995; Woessmann 2001; Krueger 2002). Students per classroom can also be considered as a better indicator of overcrowding. Other personnel—school leaders—may be more influential, as strong leadership is a key attribute shared by schools that successfully improve the achievement of poor and minority children (Davis et al. 2005). Further, despite the general belief that Information and Communication Technologies (ICTs) have the potential to improve learning, rigorous evidence of its impact on student learning is scarce and few conclusive statements about the impact of ICTs on student learning can be drawn (Trucano 2005). In spite of the scarcity of solid evidence of what works in ICT for learning, they(to what does this refer?) are becoming increasingly pervasive in the workplace as communication tools and computer literacy is a requirement for jobs at all levels. Many believe that the 21st century classroom requires ICT access and computer-assisted learning, which requires ICT qualified teachers and preferably an internet connection. A library or media center is also expected to increase the ability to access information as well as to develop reading and comprehension skills (World Bank Working Paper No. 126). On the most basic level, whether schools operate regularly throughout the duration of the academic year has direct implications for instructional time. 2. Are there policies A review of government policies on provision of inputs shows the level of in place to ensure commitment to improving the basic learning environment in schools. that basic Having policies in place is the first step to ensuring coverage for all educational inputs students. are provided? 3. What specific It is useful to understand the nature of the policies that the government policies have been has implemented in the last five years to ensure minimum infrastructure 13 pursued in the last 5 and learning materials. This is especially true in weak institutional years to provide environments where budget allocation does not necessarily transform minimum into effective school expenditure due to a lack of accountability (Ablo and infrastructure and Reinikka 1998). learning materials in public schools? Core Area 2: Education spending How much countries invest in education provides the basis for achieving their learning goals. In this core area, we explore education spending at various government levels and by the private sector, both in aggregate and per-student terms. The following questions will be addressed: 1. How big is the The level of spending a country commits to education relative to its education sector, by national income represents a country’s ability to generate resources for levels? education. Greater national wealth does not always mean that countries spend more, in relative terms, on education. Even among countries with similar levels of GDP per capita, there can be substantial variation in the share of GDP devoted to education. However, among countries that face low levels of national income and invest low proportions of income in education, current spending levels may not be adequate to meet a country’s education goals. It is useful to understand the government’s policy emphasis on education relative to the perceived value of other public investments as well as its commitment to human capital development. Examination of aggregate spending levels on education allows researchers and policymakers to take the pulse of a country’s commitment to the education sector. Allocations of public expenditure to education in many countries are often higher than expenditures in any other categories of government developmental expenditure. This spending must be assessed for the extent to which it reflects a government’s particular objectives, its population’s education status, alternative sources of expenditure and competing demands. 2. How much of the Policy-makers face difficult decisions in balancing limited public funds and total education societal needs. Research has shown that externalities tend to diminish budget is allocated with the level of schooling; externalities are higher for pre-primary and to different levels of primary than secondary education, and higher for secondary than post education? secondary education, especially in developing countries. At the primary level where unit costs are relatively low, expenditures on primary education disproportionately benefit low income households given the proportion of primary age population from poor families. On the other hand, at the tertiary level where unit costs are considerably higher, the composition of students tends to be over represented by students of higher socio-economic status (Balu, Patrinos and Vegas 2009). As such, the distribution of education spending across levels of education may indicate the extent to which education funding is progressive—with poor students receiving a greater share of public funding relative to their rich counterparts. Nevertheless, high rates of participation at the primary and secondary levels have increased demand for post-secondary education. 14 Low income countries who have not achieved basic universal completion rates may chose to concentrate public funding at pre-primary and primary levels, due to the argument that investment in lower levels of education is associated with higher externalities. However, failure to foster higher level learning opportunities and acquisition of skills for a globalized economy may constrain innovation, economic development, and growth. 3. How much is spent There is enormous variation within and across countries in the amount of per student at each resources available per student. For international comparison purposes, level of education? expenditure data can be converted into Purchasing Power Parities (PPPs expressed in US$), which are international units that equalize the purchasing power of different currencies by reflecting the price of the same basket of goods and services in any country. While per-pupil spending adjusted for PPP shows how much, on average, a country spends per student and allows for a comparison of spending per pupil across countries, a key challenge for policymakers is understanding the real costs of achieving desired levels of education access, quality, and equity in each individual education system. Private expenditures are a crucial component in education finance, but they can place a disproportionate burden on the poor. Private expenditure per pupil for educational programs outside the mainstream system, such as tutoring, may be significant and create negative social, economic, and educational impacts. 4. How much is spent Expenditure on specific educational inputs helps to characterize education on different finance systems. For example, how much is devoted to current vs. educational inputs? capital expenditures and within current, salaried vs. non salaried expenditures? Ultimately, education funds should pay for inputs and services that lead to student learning. The amount of resources available for current, non-teacher salary items, those complementary to the learning process in particular such as textbooks, may have important effects on education quality (Abu-Ghaida 2010). Yet it is often the case that the pressure of teacher salaries squeezes out other inputs—particularly non-salaried current expenditures. Allocation of spending among the different inputs to service delivery signals current interest in spending available funds on teachers vs. non salaried current inputs. Capital expenditures should also be documented. In countries experiencing large growth in the school-age population, capital investments must be sufficient for school construction and long-term maintenance of school buildings. Lastly, spending on ICTs should be considered, due to their potential role in improving learning outcomes. 5. How does While aggregate spending figures provide a summary indication of a spending per country’s commitment to education, they may mask wide variation in student vary within spending across different groups of students. Access to quality education country and across should not depend on a person’s demographics characteristics such as groups of students? race/ethnicity, socio economic status and special needs (Oosterbeek and Patrinos 2008). An assessment of per-pupil spending (both public and household) and enrollment in public or private institutions by student characteristics can shed light on the extent to which resources for 15 education are distributed equally and whether existing disparities are in line with students’ demographic characteristics (including gender), socio economic status and special needs. In many countries, central governments increasingly call on subnational governments to share in the financing of education. However, variation in local resource generation capacity may lead to wide per-pupil spending gaps (Tsang 1996; Fiske and Ladd 2008). Assessing the progressivity of a country’s education finance system requires examination of how per-pupil spending varies across local jurisdictions, demographic characteristics, socio economic status and special needs. If appropriate, variation by municipality may be used as a proxy for other group characteristics, particularly if a system to identify students by special needs or demographics does not exist. Core Area 3: Revenue sources Education systems need to raise sufficient revenues to ensure that, if used efficiently, students may reach appropriate learning goals at each education level. In general, countries raise revenues for education through three broad sources: international, public and private. A big challenge for many countries is raising sufficient revenues to expand enrollment while maintaining, or even raising, school quality. While increasing efficiency in the use of resources is necessary, countries are looking also to additional funding sources such as subnational levels of government and the private sector, including households. The sources of funding and the mechanisms through which revenues are raised have implications for adequacy, sustainability, and equity in education finance. To understand how education systems generate revenues for learning, it is useful to address the following questions: 1. Where do Across countries, governments raise much of the funding for public revenues for education through broad based taxes such as those on value added, education income or property, or taxes on specific types of transactions or activities.. expenditure come However, the amount of revenues that governments raise depends on a from? variety of factors, notably national fiscal capacities. In low-income countries where tax collection effort is often low and inconsistent, and in crisis or post-crisis situations where state capacity is limited, the means for domestic education financing is limited and reliance on international aid is crucial (Inter-Agency Network for Education in Emergencies 2008). Similarly, school fees or direct household payments are prevalent in primary and secondary schools around the world. While school fees may provide a much-needed source of revenues for the education system, in many low-income countries they represent a disproportionate burden on the poor (Jimenez and Lockheed 1996; Jimenez and Paqueo 1996; Bentaouet Kattan 2006). 2. Of the public Increasingly, countries are decentralizing the responsibility for raising and share, how are these managing education resources to subnational levels of government. revenues generated? However, without central government-led equalization schemes to compensate for varying fiscal capacity across jurisdictions, fiscal decentralization can lead to wide disparities in resources available for learning. How governments manage the allocation of funds for education 16 is central to several important policy debates, in particular fiscal decentralization. Revenue generation capacity as well as the authority for allocating funding for education across government levels varies substantially across and within countries. Requiring local governments to raise all their own revenue for education is likely to result in an unacceptably high degree of inequality in per-pupil spending. In general, where local governments finance education from their own-source revenues, central and state governments have introduced intergovernmental grants to help mitigate spending inequalities between and across levels of government. Additional determining factors in education finance include which types of expenditures (current, capital, salaries) local governments are required to fund, the sources of own- source revenue for local governments, and the extent to which local governments have revenue-generating capacity for the education sector. Not only is it useful to understand the extent to which local governments have legal authority to raise funds for education, but also whether they are encouraged and empowered to do so. 3. How much By choice or necessity, schools often complement funding received from discretion do schools higher levels by raising revenue to meet locally informed needs such as have over the use of extra-curricular activities or classroom materials. Potential sanctioned revenues? revenue sources include registration and annual fees, PTA or community contributions, rentals, or advertisements. Due to concerns about equity, some of these revenue sources may be prohibited, as the ability to contribute outside funds can vary greatly within and across communities. 4. Does the public Households are a source of domestic funding for education through user sector raise funds fees – which include not only formal tuition fees but also payments for for education textbooks, materials, uniforms, and other inputs needed for children and through school fees? youth to attend school. Even where primary school tuition fees have been eliminated, parents often still report paying tuition (Transparency International 2009). Indeed, household education expenses can constitute a large share of total household spending, particularly for the poor. Fees may preclude the poorest and girls in particular from attending school. This exclusion may contribute to the intergenerational transmission of poverty that access to basic education is intended to reduce (Bentaouet Kattan 2006). While eliminating school fees is appealing because of its detrimental impact on poor households and therefore access to education of the most disadvantaged, there may be unintended consequences from the elimination of school fees. One such consequence is that the increases in enrollment as a result of the elimination of school fees, in the absence of alternate sources of funding, can lead to drastic declines in school quality (Fiske and Ladd 2008). School fee abolition may also reduce school accountability to households, which may generate further declines in 17 school quality (World Bank 2004; UNICEF 2009). Increased enrollment at the primary level creates more demand for secondary school and therefore increases the salience of fee policies at the secondary level, especially if secondary school completion has become a more important distinguishing factor in labor markets. The equity impact of fee policies are also influenced by the proportion of total private spending on education that is represented by school fees or which authorities are responsible for establishing or collecting the fees. 5. Is international International actors may contribute a substantial amount to national aid integrated education budgets. In some systems, the Ministry of Education might not effectively into have direct oversight over these funds, making coordination of effort budgets? difficult. Core Area 4: Allocation mechanisms The state can play a role in mitigating or exacerbating differences in educational opportunity. Intergovernmental transfers are a common tool for balancing regional and local budgets. Intergovernmental transfers are usually designed to address differences in revenue generation capacity between government levels as well as inequities across subnational levels (such as states or districts) (OECD 2002). The rules that govern intergovernmental resource flows, as well as the amount of discretion that governments give schools in managing resources to respond to students’ needs, affect the level of accountability, transparency, and performance in the system (Das et al. 2004; Reinikka and Svensson 2004). To examine how the resource flow affects the function of the education system, the following questions should be investigated: 1. Each year, at the The process for deciding how much to spend on education at the national national or and subnational level (constitutional mandate, parliamentary allocation, subnational level, tax sharing) affects the responsiveness of education expenditure to how is the decision changing needs of the student population. For example, in many countries made about how the executive arm of government makes annual budget proposals to the much is going to be legislative arm, which has final decision-making authority. These spent on education? proposals and decisions are often based on historical allocations, and change little from year to year. In other cases, the government makes a purposeful decision to allocate resources differently across sectors, implying a change in how much is available for the education system. Good use of information and analysis in these decisions can increase the allocation of government resources to education sector and improve efficiency of spending. 2. What determines Once the overall budget allocation decision for the education sector has the distribution of been made, decisions about the distribution across government levels and public sector funding to schools must be taken. To determine the level of educational resources for education to to be transferred to each level, funders may negotiate directly with lower levels of recipients or determine the level of funds through formula. For the former, government and to subnational levels of government (or schools) present their case for schools (public & funding based on known criteria to the funding agency (central government government) and receive resources according to how well the funding 18 dependent private)? agency considers the proposals to meet the criteria. Or the funding agency may modify the previous year’s payment up or down a few percentage points, or use its own discretion to determine the level of resources to be allocated to subnational levels of government (or schools) (Ross and Levacic 1999). Alternatively, transfers can be determined by formula, based on particular measures such as number of students or socio economic characteristics of students, communities, or regions. The main distinguishing feature of a funding formula is that explicit criteria are determined to guide the transfer of resources from one government level to another, and directly to schools. If the specific formula is relatively simple and easy to understand, made public, and respected and enforced, it will likely improve efficiency and accountability as it makes transparent to educational stakeholders the factors affecting the funding schools receive. Governments may use different funding mechanisms for different inputs, to understand the allocation of resources to each school, it is important to distinguish between capital and current expenditures and among salaried and non salaried recurrent expenditures. Many policymakers, particularly in developing countries, use a simple “in-kind� formula that employs student/teacher ratios to guide the allocation of teachers, textbooks, equipment and other materials for schools. Some state that best practices would distribute dollars instead of purchased resources or inputs, enabling schools and communities to make input purchasing decisions directly (Thomas Fordham Institute 2006; Roza, Guin and Davis 2008). However, this assumes an adequate level of capacity among school owners and administrators for managing and allocating school budgets, as well as an efficient market for inputs (teachers in particular) at the subnational level. In addition to teacher allocation, the level of government that determines the teacher salary schedule also influences the distribution of funding. 19 3. How is funding A budget translates an education sector’s policy objectives into financial allocated for plans. A variety of budgeting models exist, including line-item budgeting, different student activity/program budgeting, and outcome-based budgeting. Each of these groups? models has advantages and disadvantages, and the adoption of a particular model has implications for budget transparency, efficiency and organizational autonomy. For example, simple line-item budgets allow for the accumulation of expenditure data over time, and at each functional level. However, some argue that line-item budgeting invites micro- management by education administrators and governing boards, and offers no flexibility in reallocation between budget items. Program-based systems that base all expenditures on the primary objectives of a program offer the advantage of relating all costs to program objectives. However, program-based systems are challenging in their implementation due to the difficulty in predicting long range costs and the evolving nature of programs. Finally, outcome- or performance-based budgeting can make spending more effective, as it requires that goals and objectives be identified and allows for program innovation and flexibility in meeting those goals (Allison, Honegger, and Johnson 2009). But these systems rely on the capacity of providers to conduct realistic budget estimates and to deliver on the agreed results. In addition to overall budget arrangements, inclusion of a formal capital budgeting system facilitates planning for these large investments that require funding over time. 4. How is education Differences between budget allocation and actual education service funding monitored? delivery may occur for several reasons. These reasons can include: capacity constraints that prevent the central government from adequately budgeting for expenses or complying with what has been budgeted, or that prevent subnational governments or schools from allocating resources productively; fraud or corruption; and lack of transparency in the budgeting process that weakens the capacity of local communities to scrutinize the resources allocated and used. 5. How much of the Budgets for the primary and secondary levels of education may differ. The education budget is allocated amounts should reflect the needs of each level, and may depend allocated to each on current enrollment, planned expansion in access, or quality level? improvements. Core Area 5: Fiscal control and capacity A fifth important core area for understanding school finance systems is the fiscal control mechanisms used to monitor the use of budgeted resources for education service delivery. The education budget is a government’s plan for how it is going to use the public’s resources to achieve educational goals and objectives. If resources are not used for their intended purposes, then it is unlikely that education services will be of adequate quality. Providing the public with comprehensive and timely information on the government's budget and financial activities and opportunities to participate in decision making can strengthen oversight and improve policy choices. To document the policies in place to control fiscal resources for education, including the management capacity of those with oversight, it is important to understand the following: 20 1. What are systems The extent to which education systems put in place fiscal control in place to track the mechanisms to ensure that resources budgeted for education are spent in transfer of resources intended ways is a critical factor in school finance systems, especially to different levels of payment methods for teacher salaries that often comprise a majority of government and to education expenditure. Further, because teacher absenteeism is often schools? widespread and unlikely to result in punitive action (Chaudhury et al. 2006), a system for tracking absence and providing substitute teachers is necessary. School systems also need payroll controls and mechanisms for exposing “ghost teachers� who receive salaries but do not teach (Ablo and Reinikka 1998). Capital expenditures, which represent a substantial share of education expenditures, can be hard to track because capital budget allocations tend to occur at a higher level than their execution. Transparency and accountability in contractor choice and application of construction standards can improve quality of education infrastructure. General fiscal controls in school finance may include: reporting requirements; internal and external audits; public information on school budgets; budget tracking (through PETS, for example); and enforcement mechanisms. 2. How is the use of To understand a government’s ability to deliver annual education services education resources as expressed in policy commitments or sector plans, for example, it is at different levels important to audit annual education expenditure and revenues against the audited? budget. It is useful to understand how this spending deviates from original budgets for each of the major expenditure categories (e.g. teacher salaries), because different administrative levels are responsible for different expenditure categories. It is also important to distinguish between current and capital spending: because capital spending can be “lumpy,� combining it with other spending categories may misrepresent governments’ spending patterns. Leakage can be substantial in poor countries where auditing institutions may be weak or corrupt, and information about budgets is not publically available (Reinikka and Svensson 2004). 3. What is the Adequate capacity for planning, monitoring, and executing education capacity for planning budgets is essential for achieving the sector’s goals. It is therefore and monitoring the important to understand what specific agencies at the national and education budget? subnational levels have the authority for planning and monitoring the education budget. Similarly, tracking the qualifications of staff charged with this responsibility may prove useful in strengthening government capacity at the central and local levels. Finally, since research suggests that public accountability improves outcomes, it is also important to document any support systems (including training) for local school staffs and community representatives responsible for planning for and monitoring the use of education resources. 21 4. How is school School infrastructure is an essential factor in learning outcomes, making construction school construction standards and their enforcement crucial to ensuring monitored? the quality of school facilities. 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Skills, not Diplomas—The Path for Education Reforms in ECA. 26 Annex 1: Summary of previous related initiatives Financing Education-Investments and Returns UNESCO UIS and OECD’s World Education Indicators Program  The World Education Indicators (WEI) program in general focuses on consolidating basic education statistics, in addition to launching special projects to collect additional data on current and emerging education issues in the WEI countries. Objectives  Financing Education-Investments and Returns seeks to provide evidence on the role of human capital and education in fostering economic well-being  Financing Education-Investments and Returns to document financing strategies that enable public and private educational stakeholders to increase their participation in education and share costs and benefits more equitably  Investing in human capital and returns  rationale for investment in education from a macroeconomic perspective and at the individual level in terms of labor market outcomes  past and future trends in education participation and attainment, and of current investment in World Economic Indicators program countries  impact of demographic constraints and policy goals on education expenditure and the changes in levels of investment needed to achieve national policy goals Issues & topics  Public and Private roles in education covered  overall levels of public and private resources for education in WEI countries, including the distribution in spending across levels of education  rationale for public investment in education  the roles of different levels of government in funding education  state support for private provision of education  private sector as a provider of education and source of educational expenditure  Country profiles: statistical snapshots of the education system in each of the 19 WEI country documenting the key indicators for each featured country and comparable data for other WEI and OECD countries Data collected for report based on WEI/UNESCO/OECD/EUROSTAT annual data collection for education indicators. Government officials complete extensive electronic Data questionnaires based on various sources including: labor market surveys, population censuses, national household surveys, school censuses and financial data (national accounts) from government ministries that specialize in finance.  All OECD & WEI countries. WEI countries covered in study include: Argentina, Brazil, Chile, China, Egypt, India, Indonesia, Jamaica, Jordon, Malaysia, Paraguay, Sample Peru, Philippines, Russian Federation, Thailand, Tunisia, Uruguay, and population Zimbabwe.  Officials from each country are asked to complete questionnaire based on entire national education system regardless of the ownership or sponsorship of the institution concerned and regardless of education delivery mechanism. Relevant Link http://www.uis.unesco.org/ev_en.php?ID=5245_201&ID2=DO_TOPIC 27 Quality Counts 2010, Fresh Course, Swift Current Education Week  To characterize, track, compare and rank the quality of education provided in the 50 U.S. states, plus the District of Columbia  To inform researchers, legislators, policy makers, and practitioners of states’ efforts to improve the quality of education Objectives  Modules focused on education policy include: the teaching profession; and standards, assessments and accountability  Performance–focused modules include: school finance and the Chance for Success index (role of education in promoting outcomes at each stage of life—early childhood, formal k-12 education and adult educational attainment and workforce outcomes) The “School Finance� module tracks state performance on eight distinct measures of equity and spending, which are among the most commonly employed in the field of education finance. These measures include: Issues & topics  Equity measures: wealth neutrality score; McLoone Index; coefficient of covered variation; and restricted range ratio  Spending measures: per-pupil expenditures (PPE) adjusted for regional cost differences; percent of students in districts with PPE at or above U.S. average, spending index and percent of total taxable resources spent on education  The Education Projects in Education (EPE) Research Center distributed electronic surveys to all chief state school officers in the 50 states and the District of Columbia in June of 2009.  Respondents were asked to answer the questions and provide appropriate documentation to verify that the reported policies were in place at the time of the survey or for the 2009/10 school year. Such documentation might include state statues, administrative rules, or Web links for information on line.  To check the accuracy of information and that consistent standards were Data applied uniformly across the states, EPE Research Center evaluated each state’s responses and documentary evidence over a 12-week period. This process often included discussions with the respondents. In the absence of documentation, the center did not reward credit or assume that the policy was in place.  In the final quarter of 2009, the EPE Research Center sent each chief state school the completed survey indicating the state’s initial responses and the independent determinations by the center based on the available evidence. Officials in the state were asked to review the final answers and supply corrections and/or changes supported by additional documentation. Sample  The 50 U.S. states, plus the District of Columbia, with a focus on public population education in those states. Relevant Link http://www.edweek.org/ew/toc/2010/01/14/index.html 28 Per Student Financing of General Education in Europe and Central Asia. Has it Delivered on its Promise? The World Bank  To review the experiences with per student financing of general education Objectives in six countries in the Europe and Central Asia region in effort to learn which outcomes were achieved and how they were achieved Issues &  Influence of per student financing on: efficiency; transparency; topics accountability including schools’ management capacity and financial covered autonomy; equity and education quality  Key design issues of per student financing formulas  Data for this initiative is collected through case studies. The approach of relying on case studies entails certain trade-offs. On the one hand, in- Data depth knowledge of the experience of the six countries is available and documented in the individual case studies. On the other, any generalizations across the entire ECA region will require additional nuances based on individual country scenarios and specificities.  The six case study countries include: Armenia, Estonia, Georgia, Lithuania, Poland and the Russia Federation. These countries were chosen due to Sample their long experience with implementing per student financing and with population the hope that this in turn would increase the likelihood of observing outcomes of per student financing. An attempt was made at geographical variation across the ECA region as well. Relevant Link http://siteresources.worldbank.org/INTECALEA/Resources/KB_June_09_v6.pdf 29 Annex 2: Outline of Conceptual Questions for Policy Goals and Areas Education Finance Policy Goals and Levers I. Ensuring Adequacy a. Are there policies and systems set up to provide basic educational inputs to all? b. Are there basic educational inputs for all primary school students? c. Are there basic educational inputs for all secondary school students? d. Is the government making adequate effort in education? II. Promoting Equity a. Does the government provide more resources to students from disadvantaged backgrounds? b. Do payments for schooling represent a high share of income for low income households? III. Performing Efficiently a. Do allocation mechanisms encourage accountability in the use of funding? b. Is there public sector capacity for education finance policy-making? c. Are there mechanisms in place to facilitate that resources reach the point of service delivery? Education Finance Core Areas I. School conditions and resources a) What are the basic inputs for all students? b) What specific policies have been pursued in the last 5 years to provide minimum infrastructure and learning materials? II. Education spending a) How big is the education sector? b) How much of the total public education budget is allocated to different levels of education? c) How much is spent per student at each level of education? d) How much is spent on different inputs? e) How does spending per student vary within country and across groups of students? III. Revenue sources a) Where do revenues for education expenditure come from? b) Of the public share, how are these revenues generated? c) How much discretion do schools have over education resources? d) Does the public sector raise funds for education through school fees? e) Is international aid integrated effectively into budgets? IV. Allocation mechanisms a) Each year, at the national or subnational level, how is the decision made about how much is going to be spent on education? b) What determines the distribution of public sector funding for education to lower levels of government and to schools (public & government dependent private)? c) How is funding allocated for different student groups? d) How is education funding monitored? e) How much of the education budget is allocated to each level? V. Fiscal control & capacity a) What are systems in place to track and/or audit the transfer of resources to different levels of government and to schools? b) How is the use of education resources at different levels audited? c) What is the capacity for planning and monitoring the education budget? d) How is school construction monitored? 30 Annex 3: Potential indicators for Policy Goals Policy Goal 1: Ensuring Adequacy Policy Lever Indicator 1A) Are there policies 1. Are there policies in place to ensure that basic educational inputs are provided? and systems set up to provide basic 2. Are there systems to monitor whether basic educational inputs are provided? educational inputs to all? 1. What is the share of primary schools that meet the standards for basic infrastructure? 2. What proportion of primary school students has access to potable water? 3. What proportion of primary school students has access to functional hygienic facilities? 1B) Are there basic 4. How many primary school students are there per teacher? educational inputs for all 5. What is the percent of primary school teachers who are qualified? primary school students? 6. What proportion of primary school students has access to a library? 7. What proportion of primary school students has access to computers? 8. How many primary school students are there per teacher, among the 20% of subnational divisions with the most students per teacher? 1. What is the share of secondary schools that meet the standards for basic infrastructure? 2. What proportion of secondary students has access to potable water? 3. What proportion of secondary school students has access to functional hygienic facilities? 1C) Are there basic 4. How many secondary school students are there per teacher? educational inputs for all 5. What is the percent of secondary school teachers who are qualified? secondary school 6. What proportion of secondary school students has access to a library? students? 7. What proportion of secondary school students has access to computers? 8. How many secondary school students are there per teacher, among the 20% of subnational divisions with the most students per teacher? 1. What is public spending per primary student as a percent of per capita GDP? 1D) Is the government 2. What is public spending per secondary student as a percent of per capita GDP? making adequate effort 3. Does spending per student respond positively to changes in GDP per capita? in education? 4. How much does spending per student change from year to year? 31 Policy Goal 2: Promoting Equity Policy Lever Indicator 2A) Does the 1. Are there school financing policies that target socio-economically disadvantaged students? government 1a. What share of total public education spending is differentiated by socio-economic background of students? provide more 2. Are there school financing policies that target other disadvantaged groups of students (ethnicity, gender, native resources to language, urban/rural)? students from 2a. What share of total education spending is differentiated by other disadvantaged groups of students? disadvantage 3. Where do students with disabilities or special needs receive their education? d 3a. Which special needs are met? backgrounds 3b. What share of total public education spending is differentiated for students with disabilities or special needs? ? 2B) Do 1. Do the poor devote a lower share of their household expenditure to education than do the wealthy? payments for 2. What types of school fees are charged at the primary level? schooling represent a 2a. Are there mandatory waivers for students that are from disadvantaged backgrounds at the primary level? high share of 3. What types of school fees are charged at the secondary level? income for 3a. Are there mandatory waivers for students that are from disadvantaged backgrounds at the secondary level? low income households? 32 Policy Goal 3: Performing Efficiently Policy Lever Indicator 1. Are explicit criteria widely used at the national and/or subnational level to decide education funding? 1a. If so, what criteria are used to decide where the money flows? 3A) Are 2. What proportion of education budgets is allocated to the central office? resources 3. What proportion of education budgets is allocated to teacher salaries? allocated 4. How are school construction contracts awarded? and 5. What type of system is used to monitor expenditures? disbursed in 5a. What type of system is used to monitor expenditures at the national level? a manner 5b. What type of system is used to monitor expenditures at the subnational level? that is transparent 5c. What type of system is used to monitor expenditures at the local level? and 5d. What type of system is used to monitor expenditures at the school level? effective? 6. What specific expenditure items does the government monitor? 7. How are public school teachers’ salaries paid? 8. Does the government keep records on how often public school teachers are paid? 1. How does the national and/or subnational government publicly report the amount of funding for education from other levels of government? 2. What information, if any, are schools required to report? 3. What information, if any, are subnational authorities required to report? 3B) Do 4. Who is responsible for reporting teacher attendance? monitoring 5. Who monitors school construction expenditure? and auditing 6. Is education financing required to be audited at the national level? processes encourage 6a. What is the audit procedure for education financing at the national level? accountabili 7. Is education financing required to be audited at the subnational level? ty in the use 7a. What is the audit procedure for education financing at the subnational level? of funding? 8. Is education financing required to be audited at a school level? 8a. What is the audit procedure for education financing at a school level? 9. What are the qualification requirements for personnel in auditing and monitoring positions? 9a. If there official qualification requirements, what share of personnel in auditing or monitoring positions meet these? 33 3C) Are 1. How long is the primary school year? there 2. How long is the secondary school year? mechanisms 3. In the last school year, what proportion of primary schools had prescribed textbooks and/or learning materials in place to within the first month of school? facilitate 4. In the last school year, what proportion of secondary schools had prescribed textbooks and/or learning that materials within the first month of school? resources 5. Is there a policy to ensure that substitute teachers are provided when teachers are absent? reach the point of service 6. Are there penalties (salary, promotion or dismissal) for teacher absenteeism? delivery? 34 Annex 4: Potential indicators and sources for Core Areas Core Area 1. School conditions and resources Conceptual Question Indicator Source a) What is the share of schools that meet the standards for basic SABER - School Finance infrastructure? b) What proportion of students has access to potable water? SABER - School Finance c) What proportion of students has access to functional hygienic facilities? SABER - School Finance d) What is the average student teacher ratio? UIS e) What is the percent of teachers who are qualified? UIS SABER - School Finance; PISA, f) What proportion of students has access to computers? 1. What are the TIMSS, PIRLS basic inputs for all SABER - School Finance; PISA, g) What proportion of students has access to a library? students? TIMSS, PIRLS h) What is the average textbook-student ratio? SABER - School Finance i) What is the share of schools that have a roof? SABER - School Finance j) What is the share of schools that have a cement floor? SABER - School Finance l) What is the share of schools that have walls? SABER - School Finance m) What is the length of the school year? SABER - School Finance n) What is the average student-teacher ratio across the subnational SABER - School Finance divisions with the highest student-teacher ratios? 2. Is there an official policy to ensure that a) Is there a policy to provide each input? If so, how is that policy SABER - School Finance each input is monitored and enforced? provided? 3. What specific policies have been pursued in the last 5 years to provide a) What are the objectives of education finance policies? SABER - School Finance minimum infrastructure and learning materials in public schools? 35 36 Core Are 2: Education Spending Conceptual Question Measure Potential Indicator(s) a) What is total public expenditure on education as a share of GDP? UIS 1. How big is the b) What is total public expenditure on education as a share of government education sector? UIS spending? c) What were total public expenditures on education for the last 5 years? SABER - School Finance a) What is public expenditure on pre-primary education as a share of total UIS 2. How much of the public education expenditure? total public b) What is public expenditure on primary education as a share of total UIS education budget is public education expenditure? allocated to c) What is public expenditure on secondary education as a share of total UIS different levels of public education expenditure? education? d) What is public expenditure on tertiary education as a share of total UIS public education expenditure? a) What is public expenditure per primary student as a share of per capita UIS GDP? b) What is public expenditure per secondary student as a share of GDP UIS per capita? c) What is public expenditure per tertiary student as a share of GDP per 3. How much is UIS capita? spent per student at each level of d) What is public expenditure per primary student in PPP? UIS, SABER - School Finance education? e) What is public expenditure per secondary student in PPP? UIS, SABER - School Finance f) What is spending per pupil over time in constant terms? UIS, SABER - School Finance http://wbro.oxfordjournals.org/con g) What is private expenditure per pupil for educational programs tent/23/2/161.full.pdf+htmlJ; Mark outside the formal sector, e.g. tutoring, exam prep programs? Bray, LSMS a) What is public education expenditure by nature for all purposes 4. How much is (schools intergovernmental transfers, transfers to private sector, other spent on different SABER - School Finance expenditure, capital, current) at the national, subnational, and local inputs? levels? 37 b) What is public expenditure on teacher salaries as a share of total public UIS;SABER - School Finance education expenditure? c) What proportion of education spending goes to privately-managed OECD, SABER - School Finance schools? d) What is capital expenditure as a share of total public education UIS, SABER - School Finance expenditure for all levels? e) What is current expenditure as a share of total public education UIS; SABER - School Finance expenditure for all levels? f) What is current expenditure for education at primary, secondary, and EdStats, SABER - School Finance tertiary levels, as a share of current education expenditure? g) What is public education expenditure on salaried, non-teaching SABER - School Finance personnel as a share of current education spending? h) What is public education expenditure on other, non personnel as a EdStats, SABER - School Finance share of current education spending? i) How are teachers compensated, including salary and non-salary benefits? SABER - Teachers a) Are there school financing policies that target disadvantaged students (socio-economic background, ethnicity, gender, native language, SABER - School Finance urban/rural, special needs)? If so, which student groups are targeted? b) What share of total public education spending is differentiated for each SABER - School Finance student group? 5. How does spending per c) Which ethnicities and/or native languages are targeted? SABER - School Finance student vary within country and across d) Is there a law that requires compulsory education for students with groups of students? certain special needs (visual, hearing, mobility, cognitive, and socio- SABER - School Finance emotional needs) ? If so, for which needs? e) Where do students with special needs receive their education SABER - School Finance (mainstream and special schooling)? f) What is public expenditure per student by municipality/district? BOOST 38 Core Area 3: Revenue Sources Conceptual Question Measure Potential Indicator(s) a) As a share of GDP, how much of total education expenditure comes UIS from public revenue? b) As a share of GDP, how much of total education expenditure comes 1. Where do UIS from private revenue? revenues for education c) As a share of GDP, how much of total education expenditure comes UIS expenditure come from international revenue? from? d) Over the last 5 years, how much of the education budgets at the national, subnational, and local levels have come from each source SABER - School Finance (international actors, intergovernmental transfers, own-source revenue, and private sources)? a) At the lowest subnational level that provides education, what percentage comes in the form of transfers from a higher level? What SABER - School Finance percentage comes from own source revenue? b) Is the subnational or local level 2. Of the public authorized/encouraged/required/prohibited to raise funds for SABER - School Finance share, how are these education? revenues generated? c) Are there restrictions on the use of own-source revenue? SABER - School Finance d) For each level of government that generates funds, what are the SABER - School Finance sources of own source revenue? e) Are there dedicated sources of revenue? SABER - School Finance f) Is there a stabilization fund? SABER - School Finance a) Can school directors request additional funds from government and SABER - School Finance private sources? 3. How much b) For what purposes can schools use private or international revenues? SABER - School Finance discretion do schools c) Is public funding received by private, government-dependent schools have over the use of SABER - School Finance earmarked for certain purposes? revenues? d) What share of private, government-dependent schools’ current SABER - School Finance budgets is received from the government? 4. Does the public a) For which grades at the primary level can public schools charge fees? SABER - School Finance sector raise funds Which are provided free of charge? 39 for education b) For which grades at the secondary level can public schools charge through school fees? SABER - School Finance fees? Which are provided free of charge? c) For what purposes are mandatory fees allowed at the primary and SABER - School Finance secondary levels (tuition, textbooks, PTA fees)? d) If school fees are allowed, which individuals have the authority or SABER - School Finance right to set school fees at the primary and secondary levels? e) If school fees are allowed, which individuals have the authority to SABER - School Finance collect fees at the primary and secondary levels? f) Are there mandatory waivers of school fees for disadvantaged SABER - School Finance students? If so, who finances? g) What additional charges related to education are households required SABER - School Finance to pay at public schools? h) What is average household expenditure on education as a share of SABER - School Finance, LSMS, other total household spending for the lowest and highest income quintiles? household surveys 5. Is international a) Do donors use country systems (financial management, procurement, Paris Declaration Monitoring aid integrated etc.) when they disburse aid? Indicators effectively into Paris Declaration Monitoring budgets? b) Is the government given discretion over how it uses aid financing? Indicators Core Area 4: Allocation Mechanisms Conceptual Question Measure Potential Indicator(s) a) Is the total public education budget largely determined centrally? SABER - School Finance 1. Each year, at the b) What is the process at each level of government for deciding how national or much to spend on education (constitutional mandate, legislative process, SABER - School Finance subnational level, executive decision, or transfer from another level of government)? how is the decision made about how c) What authority is responsible for planning and monitoring the much is going to be SABER - School Finance education budget at the national, subnational, and local levels? spent on education? d) Are schools’ current budgets centrally allocated by the Ministry of SABER - School Finance Education? 2. What determines a) How are teacher salaries determined? SABER - Teachers 40 the distribution of b) Who controls the teacher payroll? SABER - School Finance public sector funding for c) How much are monetary transfers allocated by formula as a share of SABER - School Finance education to lower total transfers? levels of government d) For the capital budget, what is the process at each level of government and to schools for deciding how much to spend on education (formula, performance- (public & SABER - School Finance based, negotiations, incremental increase, line item, program-based, government project-based)? dependent private)? e) For the current budget, what is the process at each level of government for deciding how much to spend on education (formula, SABER - School Finance performance-based, negotiations, incremental increase, line item, program-based, project-based)? f) How are non-formula based transfers determined (formula, performance-based, negotiations, incremental increase, line item, SABER - School Finance program-based, project-based)? g) If there are funding formulas, what criteria are used to decide where SABER - School Finance money flows? h) How is the allocation of these resources calculated? SABER - School Finance i) What levels of government uses this formula? SABER - School Finance a) Are there school financing policies that directly or indirectly target 4. How is funding SABER - School Finance disadvantaged groups? allocated for b) Are there any specific government programs to provide incentives to different student SABER - School Finance households for children to attend or complete school? groups? c) If a program exists, what is the education requirement? SABER - School Finance a) If there are monetary transfers from a higher level of government, are SABER - School Finance transfers earmarked for education? 5. How is education b) How are public monetary resources transferred? SABER - School Finance funding monitored? c) What system is used to track expenditure at all levels (electronic, SABER - School Finance paper)? d) Which expenditures are required to be reported on? SABER - School Finance 41 6. How much of the education budget is a) Over the past 5 years, how much of the education budget was allocated SABER - School Finance allocated to each to each level of government? level? Core Area 5: Fiscal control and capacity Conceptual Question Measure Potential Indicator(s) a) In the last school year, what proportion of schools had the prescribed SABER - School Finance textbooks and learning materials within the first month of school? b) Which actors are required to report on the use of public resources for SABER - School Finance education? c) To whom are the actors required to report on the use of public SABER - School Finance resources for education? 1. What are systems d) What are the actors required to report? SABER - School Finance in place to track the e) How frequently is reporting required for each item? SABER - School Finance transfer of resources to different levels of f) How does the national and/or subnational government publicly report SABER - School Finance government and to the amount of intergovernmental transfers for education? schools? g) How is teacher attendance monitored in public schools? SABER - School Finance h) What are allowable consequences of teacher absenteeism without SABER - School Finance valid cause and/or previous notification? i) Is there a policy to ensure that substitute teachers are provided when SABER - School Finance teachers are absent? j) How are teacher salaries paid (electronically, by check, or by cash)? SABER - School Finance k) Does the government keep records of how often teachers are paid? SABER - School Finance a) Are audits for education financing required for schools or levels of 2. How is the use of SABER - School Finance government? education resources at different levels b) What do audits cover? SABER - School Finance audited? c) Are there required consequences for failed audits? SABER - School Finance 42 d) Do audits take place at least annually for the national and subnational SABER - School Finance levels? e) How frequently are audits conducted at the school level? SABER - School Finance f) In the last year, how many audits were carried out at each level? SABER - School Finance g) Are education audit results required to be made available? To whom? SABER - School Finance h) Are the audits required to follow international standards? SABER - School Finance a) What are the qualification requirements for personnel in auditing and SABER - School Finance 3. What is the monitoring positions? capacity for planning b) What is the number of personnel in education auditing or monitoring and monitoring the SABER - School Finance positions that meet these qualifications? education budget? c) What percentage of budgeted resources is spent? BOOST, SABER - School Finance a) Are there standards for school construction? SABER - School Finance b) How are school construction standards monitored? SABER - School Finance 4. How is school construction c) How often are school construction standards monitored? SABER - School Finance monitored? d) How are school construction contracts awarded? SABER - School Finance e) Who has the formal authority to monitor construction expenditure? SABER - School Finance School System Conceptual Question Measure Potential Indicator(s) 1. What is the a) How many public, private, government-dependent, and privately- SABER - School Finance composition of managed schools are there? schools in the b) Do public schools operate in multiple shifts? SABER - School Finance education system? 2. How many a) What is the total number of students enrolled in public and private, SABER - School Finance students are government-dependent schools? 43 enrolled? b) If students are classified as socio-economically disadvantaged to receive benefits, what is the total number of students classified as socio- SABER - School Finance economically disadvantaged? c) How many students are enrolled by native language? SABER - School Finance d) How many students are enrolled by urban and rural location? SABER - School Finance e) How many students are enrolled by each subnational division? SABER - School Finance 44