79952 Serbia SABER Country Report SCHOOL FINANCE 2012 Policy Goals Status 1. Ensuring basic conditions for learning There are policies in place to provide basic educational inputs and performance goals in education show ambition 2. Monitoring learning conditions and outcomes Current monitoring systems do not track most learning conditions in schools; national large-scale student achievement assessments occur, but frequency and coverage are too low 3. Overseeing service delivery Mechanisms monitor the availability of physical resources, but not how many days students are in school; there are systems to encourage teacher attendance, but substitute teachers are not provided when absences do occur 4. Budgeting with adequate and transparent information The budget is informed by detailed forecasts of education expenditure but not explicit criteria; budget documents present adequate information, but some reports are not publicly available 5. Providing more resources to students who need them System-wide policies provide additional resources to support students with disadvantaged backgrounds and special needs, but methods to identify these students do not follow best practices; fees for primary and secondary schooling do not exist 6. Managing resources efficiently Open competition is the default method of procurement, but personnel and payroll databases are only updated once or twice a year; reporting procedures for internal audits do not involve outside authorities THE WORLD BANK SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 Introduction achieve this goal without adequate resources (Reschovsky & Imazeki 2001). Education spending In support of the multi-annual efforts of the comprises a large share of government budgets— Government of Serbia to advance financing policies and particularly in low-income countries, where 18 percent practice in the education sector, the World Bank of public expenditures, on average, is devoted to conducted a review of policies related to school finance education (EdStats 2011). Wealthier countries also along the SABER-School Finance framework. School contribute substantial shares to education. Middle finance policy goals are observed in the following areas: income countries spend about 16 percent of public the basic conditions for learning, monitoring learning expenditure on education and high income countries conditions and outcomes, overseeing service delivery, spend about 14 percent, on average (EdStats 2011). budgeting with adequate and transparent information, Governments are responsible for using these public providing more resources to students who need them, funds in a way that promotes learning, especially given and managing resources efficiently. the shrinking budgets produced by the recent economic crisis. The Serbia Report for 2012 is one of the first national reports under the global benchmarking exercise of the Overview of SABER-School Finance World Bank—Systems Approach for Better Education Results (SABER) in the area of school finance, aimed at The SABER-School Finance exercise under the Systems outlining policies that drive performance in a school Approach for Better Education Results (SABER) informs finance system. the conversation about the policies that drive performance in a school finance system. This initiative This report presents findings on the strengths and of the World Bank collects, analyzes, synthesizes, and weaknesses of the school finance system in Serbia. It disseminates comprehensive information on school discusses the need to use more efficiently the public finance policies in pre-university education across a expenditure available for education in the country, and range of different education systems. The goal is to it looks at the policy goals in financing public education enable policymakers to learn about how other countries more broadly. address the same policy challenges related to school finance and, thus, how to make well-informed policy How money is spent, not simply how much, matters in choices that will lead to improved learning outcomes. education finance. All education systems rely on The exercise primarily examines education finance financing to function, but the characteristics and actions policy, not its implementation, due to the nature of the of a successful school finance system are not always data collection process, which involves key informants clear. The precise relationship between spending and and official document review 1. learning outcomes in education is unknown, which leads some researchers and policy makers to question whether the amount of spending in education matters at all (Hanushek 1986). Among countries with similar levels of income, those that spend more on education do not necessarily score higher on international assessments. Even within an education system, student achievement varies among localities that spend 1 comparable amounts (Wagstaff & Wang 2011). Education finance policy may include budget documents, national education policies, official processes, funding Understanding how to use resources for education mechanisms, and other formal guidelines that influence school finance systems. When possible, the exercise wisely should be a top priority for all education policy incorporates complementary research that assesses policy makers. Although the availability of financial resources implementation, which requires a different methodological does not guarantee quality education, it is impossible to approach and more resources. 1 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 To describe the essential functions of an education that were chosen based on a set of factors: (i) success finance system, information is collected in five areas: (i) on international assessments (Flemish community of School Conditions and Resources (ii) allocation Belgium, Finland, Hong Kong, the Netherlands, Ontario, mechanisms; (iii) revenue sources; (iv) education United Kingdom, Chile (as a rapid improver)); (ii) spending; and (v) fiscal control and capacity. These regional proximity and similarity of the education areas follow resources for education throughout the systems (Croatia, Montenegro); or (iii) EU membership complex funding cycle, although the activities do not (Bulgaria, Italy, Lithuania, Poland, Romania, Slovenia, necessarily occur sequentially. Spain). After identifying how a particular education finance Next sections of the report present detailed system functions, the focus moves to the extent to which assessments of Serbia’s school finance system, and the it effectively provides resources so that all children can final section summarizes findings and possible policy learn, using six policy goals widely shared across options. countries: (i) ensuring basic conditions for learning; (ii) monitoring learning conditions and outcomes; (iii) School finance in Serbia overseeing service delivery; (iv) budgeting with adequate and transparent information; (v) providing In Serbia, the government financing is crucial to more resources to students who need them; and (vi) education since almost all primary and secondary managing resources efficiently (see Figure 1). These schools are publicly financed and publicly managed. The policy goals reflect practical ways that school finance Ministry of Education and Science directly controls systems can follow three well-known foundational teacher payroll at the central level, although local concepts in school finance: adequacy, equity, and authorities finance about 10 percent of personnel efficiency. Progress in each of these goals is measured expenditure. Serbia spends about 80 percent of by policy levers, which are actions a government can education expenditure from all revenue sources on take to improve its education finance system. teacher salaries, more than comparator countries (See Figure 2). Teacher salary levels are established through collective bargaining between the Teachers’ Trade Figure 1: Policy Goals in School Finance Unions, the Ministry of Education and Science, the Ministry of Finance, and its Treasury Administration. Ensuring basic conditions for learning Monitoring learning Managing resources conditions and efficiently outcomes School Finance Providing more Overseeing service resources to students delivery who need them Budgeting with adequate and transparent information This report characterizes and assesses the school finance system in Serbia along the above-described framework. The results reference comparator countries 2 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 Figure 2: Education expenditure Figure 3: Distribution of revenue on teacher salaries sources for education expenditure in Serbia, 2010 Serbia Republican budget Netherlands Autonomous Poland Province budget Social insurance Spain funds Italy Other sources Romania Municipal/city Finland budget Slovak Republic Bulgaria Figure 4: Trends in public expenditure on education and 0% 20% 40% 60% 80% 100% enrollment Real 2005 Serbian dinars, thousands Number of students, thousands Teacher salaries Other expenditure 50000 700 Sources: BOOST database and EdStats 600 40000 The Ministry of Education and Science and the Ministry 500 30000 400 of Finance jointly plan and monitor the education budget at the central (Republican) level. Just over half of 20000 300 the education budget is financed by the Republican 200 budget, and about a third is financed by local 10000 100 authorities. Resources from the Republican 0 0 government are transferred as earmarked for education 2006 2007 2008 2009 2010 to provincial governments, but not to municipalities. The Republican and municipal budgets comprise a Primary expenditure larger share of the secondary budget than the primary Secondary expenditure budget. The remainder of the budget is financed by Primary enrollment social insurance funds, municipal budgets, donations and other sources (see Figure 3). For all revenue Secondary enrollment sources, the budget for primary education was about From 2006 to 2010, the real public expenditure on three times the size of the budget for secondary in primary and secondary education was increasing until 2010, where primary education covers 8 while 2008, when it started decreasing. As discussed below, secondary education covers 3 or 4 grades of schooling 2. the government’s efforts to reduce level of public spending in education are linked to the overall pressure to cut on fiscal spending ever since the start of the crisis. Over the same period, primary enrollments declined slightly and secondary enrollments remained mostly constant (see Figure 4). 2 In Serbia, primary education comprises of two education st th th cycles, one from 1 to 4 grade, and the second from the 5 Since 2008, government efforts have been focusing on th th to the 8 grade. Secondary education covers the grades 9 - the medium-term structural reforms aimed at improving th 12 . In many other countries, the systems are classified as the efficiency of resource allocation in the sector. primary/basic covering 1-4, lower secondary covering 5-8 and th Several recent studies showed that there was scope for secondary covering 9 grade and higher. 3 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 reducing teaching staff (along with non-teaching staff) the end of school year 2013/14, with a corresponding in schools without hampering the quality of education. impact on staffing and wages in the sector. 3 Due to the Serbia’s declining birth rate, the number of school age children has fallen. The number of teachers The second aspect of the reform is aimed at has not, at least not as fast, resulting in the extremely rationalizing the school network itself. In 2010, the low student/teacher ratios in some classes. The studies Parliament amended the law on education to require show that some savings could be achieved merely by municipal councils to pass an “act on the consolidation consolidating under-enrolled classes within the same of their school networks� 4. Criteria for consolidation are grade in individual schools. Larger reductions could be defined in the new bylaw. 5 The bylaw requires each achieved by closing or consolidating schools. municipality to prepare a ‘plan for the number and territorial distribution of primary schools’ within its Government efforts to rationalize the school network jurisdiction’. It sets out a total of fifteen ‘criteria’ that have involved three initiatives: (i) the enforcement of are to be used in preparing these plans. Among these is the rules on minimum class sizes; (ii) the rationalization a stipulation that a primary school will only be of the school network in primary education; and (iii) the considered a legal entity if: (1) it has a minimum of 400 education financing reforms leading to the introduction students, or (2) it has less than 400 students but no of per-student financing approach. other primary school exists within a 2 km-radius. Schools failing to meet these criteria would no longer The Ministry of Education and Science (MoES) began the be considered separate legal entities and would be enforcement of minimum class size norms for primary merged with other schools in the same municipality. and secondary education in the 2009/2010 school year. Although the bylaw would not affect rural primary For the 2009/10 school year, the standards were schools (which tend to be more than 2 km apart), it applied to the 1st, 5th, and 9th grades—the grades would affect schools in urban areas, resulting in further marking the start of every education cycle when re- reductions in classes and the corresponding reductions organization of the classes makes most sense from a in teaching loads. pedagogical point of view. In the 2010/2011 school year, these classes were kept intact as the students moved on to the 2nd, 6th and 10th grades, and the norms were applied to the incoming cohort of 1st, 5th and 9th graders. The Government continued this practice for the 2011/2012 school year, and will do so in 2012/13 until all grades 1-12 are subject to the minimum class size rule. 3 To assess the impact of these measures, three of the 17 Regional School Administrations (RSA) were examined in Because the minimum class size rule applies only to the detail: Belgrade (the largest RSA), Zrenjanin (a largely rural schools with more than one class in the same grade, the area in Vojvodina, where minority language requirements program does not affect the Serbia’s many small have a significant impact on class sizes), and Valjevo (a large primary schools. It is, nevertheless, expected to have a rural area in central Serbia where teaching is done almost exclusively in the Serbian language). The number of full-time fiscal impact. According to the MoES, the application of equivalent teachers and non-teacher personnel has dropped the minimum class size standards resulted in the closing in all three RSAs (from -1.7 to – 2.9 percent) despite of 658 classrooms in 2009/10, 533 classrooms in simultaneous measures that imply increasing staffing 2010/11, and 394 classrooms in 2011/2012, or about 5 requirements. These include the introduction of new percent of the total. As teachers are paid on the basis obligatory and elective subjects and pedagogical assistants in of teaching hours, this has had a corresponding effect primary schools. 4 on the wage bill. Extrapolating from these results, it is In preschool and primary education only. 5 expected that roughly 2,400 classes--six percent of the Bylaw N°80-2010, “On Criteria for Passing an Act on total--will be closed due to classroom consolidation by Preschool Institution Network and an Act on Primary School Network� 4 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 The most powerful incentive for an efficient system of The Ongoing Education Financing education financing in the country, including school Reform—Per Student Financing for Pre- network rationalization, will be the introduction of per- University Education in Serbia 6 student financing approach. In effect, such financing system will set out the new rules which will increase The 2009 Framework Law on Education envisions the efficiency and equity in education funding across the new financing system to be introduced gradually from country. Given the demographic trends in Serbia, with 2011/12 and completed by 2014/15. The core principle less children enrolling primary education, the expected is that the education institutions will be funded on the immediate effect of the new financing system will be basis of a per student amount which covers all current the decrease in public spending in the sector. In the costs of the educational program (Art. 155). The per same way, in case of reversal of the demographic student financing system should be designed to serve trends, the per-student financing will allow for an the following objectives: increase of public spending for education that will be adjusted to the number of children, their characteristics • To ensure adequate funding for each institution to and the education needs. provide the educational programs for its students that are specified by laws and national standards; In late 2009, the Law on the Foundations of the • To promote efficiency in the use of resources in Education system was enacted, creating the basis for education; per-student financing for primary and secondary • To distribute resources equitably; education. In the school year 2011/12, the Government • To promote inclusion in the education system has started the pilot of the central per-student formulae where all children should have equivalent access to in 16 municipalities across the country (10 percent of all municipalities). Actual funds continue to be allocated on education regardless of differences in gender, the basis of inputs, but the MoES calculates how much religion, nationality, educational needs and family each municipality would have received if the capitation income; formula were in place. Full roll-out of the per-pupil • To have a transparent and accountable school financing reform would not occur until the start of the financing system; and school year 2014/15, as stipulated by the Law. • To stimulate greater involvement of parents and local communities in the education of the young people. The Serbia’s Ministry of Education and Science opted for the two-stage model of financing in the transfer of funds from MoES to schools. At the first stage, the central government would use a per student formulae to determine the amount of education transfer each municipality receives, and, at the second, the municipalities would have some flexibility in redistributing the municipal education transfer between schools according to a local per student formulae. 6 Adapted from the ‘Policy Options: A Per Capita Financing System for Pre-University Education in Serbia’ by the MoES’s consultant Rosalind Levacic. 5 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 not possible to transport students to another school In this system, in order to give flexibility to the schools within an acceptable journey time. Consequently, it is in deciding the best use of the available resources, the recommended that the MoES sets criteria for ‘protected schools would receive a lump sum budget allocation. schools’ that should be kept open in order to ensure The school principal, in co-operation with the School access to education for all students. Board, would develop a budget plan for the school which is then executed over the financial year by the The proposed model is currently piloted in 10 percent principal, and monitored by the School Board and of all Serbia’s municipalities (16 of them). The purpose municipality. The two-stage transfer model has of the pilot is to develop the centre-to-municipal considerable advantages over the direct transfer for the formulae (state formula) for determining education Republic of Serbia as it is a medium sized country, with transfers to municipalities, and to pilot municipal-to- too many schools with different characteristics for the school funding formulae and to gain experience in MoES to be able to use a formula only to fund the schools managing their own budgets. As this is a pilot, schools directly. the selected municipalities are fully protected, and are receiving an equal amount of funding as if they had In a per student funding system, different groups of continued to be funded according to the present students are identified according to distinct differences system. The criteria for selecting pilot municipalities in unit costs. The MoES will need to determine, in were: (i) interest in participating in the pilot; (ii) consultation with other stakeholders, the student administrative capacity; and (iii) selected municipalities categories that are included in the per student funding reflect a range of different characteristics in the country formulae and the relative cost weightings of these including different challenges of inclusion of the different categories. In addition to the cost differentials vulnerable children in education. caused by differences in student grades and types of schools they are attending, class hours per week, class size and teacher class hours per week, as specified in the Serbian laws and by-laws, the new financing model will introduce the additional weights for the following student categories: • Minority national language students who need to be taught more hours or in smaller classes than majority language students; • Students in municipalities where small schools must be maintained in order to ensure access; • Socially disadvantaged students in order to promote social inclusion; and • Students with special educational needs who are integrated into regular schools. As a result of the introduction of this system, in some cases small schools that are located near to other schools with spare capacity could be closed and the students transported to a nearby school. The money saved can then be used to improve the facilities at the remaining schools. However, in sparsely populated rural areas many of the small schools will need to be kept open in order to preserve access to education, as it is 6 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 Box 1. Policy in practice Serbia’s School Finance System Results Although policies to ensure basic conditions are strong in Serbia, less students have proficiency in Goal 1: Ensuring basic conditions for mathematics than students in comparator countries of learning the Finland, Italy, Norway, Poland, Slovak Republic, and Spain. Serbia also spends less on secondary Advanced  education per pupil as a share of GDP per capita (see Figure 5). Serbia does provide some basic inputs School finance systems should create an environment widely, as almost all secondary schools have access to that supports and encourages learning. To do so, computers, more than comparator countries (see systems must provide adequate resources to ensure Figure 6). that all students have the opportunity to receive a high Source: SABER-School Finance (2012). quality basic education and set performance goals to drive the effective use of resources. Although Figure 5: Proficiency in mathematics standards of student achievement, as well as the costs and education expenditure Proficiency in mathematics (percent) to reach those standards may vary across countries and 110 student groups, there is a minimum amount of Finland resources required to produce learning outcomes. 100 Poland Norway Slovak SABER-School Finance uses two levers to assess Republic Italy 90 progress in this goal: (1) Are there policies to provide Spain basic inputs? and (2) Are there established learning 80 goals? Serbia Romania Bulgaria 70 (1) There are policies in place to provide necessary educational inputs. In Serbia, polices ensure basic 60 infrastructure, instructional materials, and qualified 10 15 20 25 30 35 teachers. Using policies to stipulate which inputs Public expenditure per secondary pupil as a should be provided is in line with successful education share of GDP per capita. systems such as Ontario, Canada, where the school Source: Public expenditure as a share of GDP per funding policy explicitly provides resources for qualified capita (EdStats and PISA 2009 (OECD)) teachers, textbooks, librarians, classrooms computers, and other inputs. In Serbia, teacher qualifications of at least ISCED 5A (a Bachelor’s degree) for primary and Figure 6: Share of secondary schools secondary school teachers meet standards that are with computers Share of secondary schools with 120 required in most high-performing systems. 100 80 (2) Performance goals in education show ambition, 60 computers requiring that primary and secondary students 40 progress to the next level of education or enter the 20 workforce successfully, as well as meet intermediate 0 targets. Specific and limited performance goals, such as proficient scores on a national assessment or students that are well-prepared to enter tertiary education, allow successful school finance systems (such as France, Japan, and the Netherlands) to set targets and measure Source: PISA 2009 (OECD) and SABER - School Finance success in delivering quality education. Serbia’s performance goals also include increased levels of enrollment, completion, and proficiency. 7 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 Goal 2: Monitoring learning conditions test the abilities of primary school students. The extent and outcomes to which exams cover students in all grades on a regular basis influences the scope of information available to Emerging  policymakers on student performance (Clarke 2011), and the degree of disaggregation of student assessment Accurate information on learning conditions and results (for example, by student group or school) outcomes is necessary for informed decision-making influences how well data can be used to inform school about spending. Data are particularly useful to finance decisions (Ferrer 2006). Most importantly, encourage objective decision-making in challenging assessment results should be available to those in the political economy environments. As more data become planning unit so they can make information on resource consistently available, policymakers are more likely to allocations. use them (Crouch 1997). Knowing which inputs are available will inform school finance policymakers about Box 2. Use of data in Ontario, Canada 7 how funds are being used at the school level, and access 8 to assessment results will show whether funds are In the province of Ontario, Canada the Ministry of being used effectively. SABER-School Finance uses two Education’s (MOE) performance goals include increases in levers to assess progress in this goal: (1) Are there proficiency and secondary graduation rates. In order to systems in place to monitor learning conditions? and (2) meet these defined targets, the MOE began collecting regular data on student assessment results under the Are there systems in place to assess learning outcomes? Literacy and Numeracy Secretariat and identifying underperforming schools. Learning outcomes data are (1) Current monitoring systems do not track most then used by the Turnaround Schools Program to provide learning conditions in schools. Student enrollment and additional assistance of funding and coaching by teacher rosters are reported at least annually, but there experienced school administrators where these resources is no school census to document other school are needed most. This targeted support has influenced characteristics. Indeed, systems do not exist to monitor improvement over the years: from 2003 to 2007, the share the availability of basic infrastructure (such as potable of schools meeting the literacy standard increased from 53 water, electricity, and functional hygienic facilities) or to 64 percent. textbooks. Successful education systems, including the United Kingdom and Ontario, Canada, usually document Goal 3: Overseeing service delivery other learning conditions as well as enrollment and teacher information. With these data, policymakers can Established  consider the availability of basic infrastructure and In addition to creating and monitoring education instructional materials in order to redirect resources to policies, an efficient school finance system should the neediest schools or to take action with schools that confirm that financial resources are converted into do not provide the desired inputs. Additional learning opportunities at the provider level. The administrative information on current enrollment and provision of high-quality education requires adequate teacher rosters at the school level allows budgets to be service delivery in addition to physical inputs. There is systematically allocated to represent school and no guarantee that reported public expenditure on student needs (Porta & Arcia 2011). Ultimately, the education even reaches schools (Reinikka & Svensson monitoring of learning conditions is only useful if the 2004), let alone that resources are used well to provide data are actually used by the actors in school finance system (Amin et al. 2008). (2) National large-scale student achievement assessments occur, but their frequency and coverage are too low to inform school finance decisions. In 7 Adapted from Orland, M. (2011). School Turnaround Policies Serbia, a representative random sample of students and Practices in Australia, Canada, England, and New allows policymakers to make assumptions about the Zealand. WestEd. Available online: http://www.wested.org/ 8 student population as a whole, but assessments only In Canada, provincial governments are responsible for primary and secondary education. 8 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 schooling, so it is imperative that school finance lower absence rates, lack of substitute teachers can systems have mechanisms to measure the quality of increase inequality in learning opportunity as well as service delivery at the school level. SABER-School diminish the level of learning outcomes (Chaudhury et Finance examines these mechanisms using two levers: al. 2006). (1) What mechanisms are in place to verify the availability of physical resources at schools? and (ii) Box 3. Substitute teachers in the Flemish community What mechanisms are in place to verify the availability of Belgium of human resources in schools? In education systems without established mechanisms to identify and pay substitute teachers, it is difficult to (1) Mechanisms to monitor availability of learning provide replacements for absent teachers. To confront materials and school construction exist, but these issues, the Flemish Community of Belgium’s Ministry mechanisms could be established to track effective of Education has created an efficient and stable supply of substitute teachers in the Replacement Pool of substitute school days. In Serbia, school construction is monitored teachers. The pool provides a supply of teachers available by a government authority (not just the contractor), for short-term teaching who receive consistent salaries which should reduce corruption. In addition, systems to from the Ministry of Education. The teachers choose a check how many primary and secondary schools have preferred geographic area, and then are assigned to an the prescribed textbooks within 1 month of the start of anchor school, where they work when they are not the school year exist, which may shorten delays in the required to replace teachers in other schools, making it is disbursement of textbooks. However, there is no easier for schools to find substitutes for absent teachers, information on how many days students actually spend and beginning teachers have job security and a salary for in school. Research shows that increases in at least one year. instructional time are linked to learning gains across subjects and settings (Lavy 2010; Bellei 2009; Cerdan- Goal 4: Budgeting with adequate and Infantes & Vermeersch 2007). School finance systems transparent information should make sure that resources are used to the fullest extent possible, including maximizing potential learning Established  time. The number of hours that students spend in Although the Ministry of Finance often sets the overall schools can vary widely, making it crucial to monitor the allocation of resources for the education budget, sound number of school days that take place at each school. budget preparation requires participation from many For example, in Chile, a rapidly-improving education actors in the school finance system, including central system, hours of instruction varied by school from 900 and subnational education authorities. Throughout the to 1,600 hours (UNESCO-UIS 2008). process, information is essential to develop a budget that reflects sector priorities and to communicate that (2) There are systems in place to monitor teacher budget to education stakeholders. SABER-School attendance and penalties for absenteeism if necessary, Finance uses two levers to assess progress in this policy but substitute teachers are not provided when goal: (1) Is information used to inform the budget absences occur. In Serbia, teacher attendance is process? and (2) Is the budget comprehensive and monitored by a school authority, and penalties for transparent? unexcused absences include dismissal. Instruction, and therefore teacher attendance, is the most crucial factor (1) Detailed forecasts of education expenditure are in the use of education resources; student learning will prepared for multiple years, and explicit criteria are not occur if teachers are not present. Serbia does not used to determine capital budgets. In Serbia, forecasts provide substitute teachers, but expects present of education expenditure are prepared for 3 future teachers to stand in for those absent. Hong Kong, the years in addition to the current year, and include United Kingdom, Japan, and Ontario, Canada provide predictions of expenditure by current, capital, primary substitutes. In some countries, substitutes rarely and secondary breakdowns which is mostly based on replace absent teachers, and so students simply mill historical spending levels. In the same way, student around, go home or join another class, often of a enrollment and teacher demographics are taken into different grade. Because higher-income areas have account during budget preparation, but these factors 9 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 only impact the capital budget, not the current – which constitutes the largest share of the education spending. Box 4. Per student funding in Lithuania 9 Some successful school finance systems, including In 2002, Lithuania instituted per capita financing of Poland, the United Kingdom, and the Netherlands, use education to increase efficiency of spending. Education was per student formula to allocate current expenditure as already managed by rayons (municipalities), who received well. A clear and rule-based funding method allows negotiated transfers from the central level, but funding on a educational stakeholders to hold the education system teacher basis encouraged schools to employ more teachers accountable as it transfers resources between levels of than necessary. The Student Basket financing reform government and finally to schools (Alonso & Sanchez directs funding based on enrollment, and clearly defines 2011). municipal and central responsibilities. The central government uses the Student Basket to finance the teaching (2) The education budget presents extensive process, which includes teacher salaries, education support information on budget classification and history, but staff, textbooks, and other education functions (about 65% of total education budgets). The Student Basket is more budgetary information could be publicly calculated primarily by factors of school size and number of available. Serbia’s education budget provides thorough lessons taught, as well as equitable considerations such as information on the amount of the current year’s special needs and at-risk students. Municipalities finance budget, the share of budgeted resources that were the teaching environment, which includes the salaries of spent in the previous year, and explanations of budget maintenance staff, energy and transportation costs, and implications for new policy initiatives. The budget is other remaining school expenditures. This approach also classified into a few categories: administrative, provides municipalities with stable funding from the central economic, and sub-functional. In addition, subnational government and increased efficiency, as decision-making education transfers and expenditures are reported in a occurs closer to those who directly provide services. timely manner. However, Serbia does not provide information on the mid-year execution of the budget or Goal 5: Providing more resources to availability of resources at schools, which would students who need them increase transparency. Successful education systems such as Ontario, Canada and New Zealand report on the Established  availability of resources at the school level. Promoting equity in financing of education is essential for several reasons. Access and the opportunity for success in education should not depend on a student’s background. However, socio-economic background, as well as other non-school factors, is often the most important determinant of completion and learning by students (Glick & Sahn 2009; Filmer 2008; Patrinos & Psacharopoulos 1992). Additional resources in schools may compensate for disadvantaged backgrounds (Baker & Green 2008; Rivkin, et al. 2005). Efforts on the demand side to reduce fees may increase the opportunity for the poorest and girls to attend school 9 Adapted from Herczynski, J. (2011). “Student Basket Reform in Lithuania: Fine-Tuning Central and Local Financing of Education.� In J.D. Alonso and A. Sanchez (Eds.) Reforming Education in Per Capita Financing Systems. Washington, DC: The World Bank. 10 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 (Kattan 2006). SABER-School Finance considers two including Finland, Ontario, Canada, and Belgium policy levers that education systems can use to (Flemish community). distribute funds according to students’ needs: (1) Are more public resources available to students from Box 5. Identifying disadvantaged students in the disadvantaged backgrounds? and (2) Do payments for Netherlands 10 schooling represent a small share of income for low The Netherlands was recently identified by its PISA scores income families? as a country where disadvantaged students are more likely to succeed than elsewhere (OECD 2011), as almost one- (1) There are system-wide policies in place to provide half of disadvantaged students are high achievers in PISA additional resources to support students with assessments. To close the performance gap between disadvantaged students and their more advantaged peers, disadvantaged backgrounds and special needs, the Netherlands provides disadvantaged students with although methods to identify these students could be funding to support additional learning opportunities. improved. Additional resources are provided to all Students are identified as disadvantaged on an individual municipalities and schools with eligible students from basis by their parents’ educational levels and immigrant disadvantaged backgrounds under the Delivery of status. Although it requires effort to identify students Improved Local Services (DILS) and the Instrument for individually instead of geographically or historically, Pre-accession Assistance (IPA) programs. These individual identification ensures that funding follows programs provide school grants to increase inclusion of students that are in need. The funding mechanism is students from socio-economically disadvantaged successfully implemented: primary schools with the backgrounds, Roma students, and students with special highest proportion of disadvantaged students have on average about 58 percent more teachers and more support educational needs (including visual, hearing, mobility, staff than schools with the lowest proportions. cognitive, and socio-emotional). Special needs students receive their education in both special schools and Goal 6: Managing resources efficiently mainstreamed education, as they do in successful education systems such as Finland and the Netherlands. Emerging  There are also policies to target demand side constraints, including secondary school scholarships for Experience in developing and developed countries has Roma students and cash transfers to households of shown that providing resources is not enough to ensure poorer students. However, Serbia identifies the needs good learning outcomes. Tracking inputs and outputs of disadvantaged students by projections of historical well is another important step, but it is not sufficient levels, not by the best practices of household survey either. Well-developed school finance systems also analysis or current student demographics (Coady et al. include governance arrangements that can hold all 2003). parties accountable for using resources effectively for their intended purposes. Such mechanisms include (2) Payments for primary and secondary schooling do ways of paying and monitoring teachers and education not exist. In Serbia, there are no primary or secondary staff, for example (Fiszbein et al. 2011). SABER-School school fees for tuition, Parent Teacher Associations, Finance uses two policy levers to assess the efficiency of textbooks, matriculation, or assessments. School fees, the expenditure process: (1) Are there systems in place or direct costs of education, may seem small, but they to verify the use of educational resources? and (2) Are should be considered as additional burden to the education expenditures audited? indirect opportunity costs creating by attending school (Kattan 2006). Serbia is in line with other successful education systems that have eliminated school fees, 10 Adapted from Ladd, H.F. and Fiske, E.B. (2009). “The Dutch Experience with Weighted Student Funding: Some Lessons for the U.S.� Durham, North Carolina: Duke Sanford School of Public Policy. 11 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 (1) School construction contracts are procured through Box 6. Validating teacher payroll and personnel open competition, but personnel and payroll data in Montenegro 11 databases are updated infrequently. Governments In Montenegro, teacher payroll and personnel databases should award contracts for school construction through are reconciled on a monthly basis before payments of open competition as Serbia does in order to ensure the teacher salaries are made. Education sector employees, best value for money and reduce corruption. However, including teachers, are paid indirectly through schools, teachers’ salaries often account for a larger share of the which verify teacher rosters to submit a monthly payroll request to the Ministry of Education. The Ministry of budget than capital expenditures, making an accurate Education adjusts its request for payment from the list of all education staff who should be paid every pay Ministry of Finance accordingly. After the Ministry of period necessary. In Serbia, the personnel database is Finance transfers funds to the schools’ bank accounts, the only updated and checked against the payroll database schools distribute the salaries electronically to individual 1 or 2 times a year, unlike the recommended 6 to 8 teachers’ accounts. Thus, there is a clear trail of teacher times per year (PEFA Secretariat 2005). The personnel salary payments, and employment status is confirmed on database should be updated frequently to account for a monthly basis. transfers, dismissals, and new hires, and verified periodically against the payroll database to reduce waste. (2) Both internal and external audits of education expenditure take place, but reporting procedures for the internal audit could be improved. In Serbia, internal audits are issued annually, and have possible consequences of improved financial supervision. However, these reports are not shared with the Ministry of Finance or Supreme Audit Institution as best practices advise (PEFA Secretariat 2005). External audits in Serbia are of a high quality, as they cover revenue and expenditure, take place regularly, and include formal follow up. External audits verify whether resources have been used for their intended purposes, and quality internal audits are necessary to provide regular feedback on the management of funds before a formal external review. 11 Adapted from PEFA. (2009). “Montenegro: Public Expenditure and Financial Accountability Assessment, Public Financial Management Performance Report.� Washington, DC: The World Bank. 12 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 Main findings of the SABER-School Finance 3. Overseeing service delivery Exercise in Serbia with recommendations Mechanisms to monitor the availability of physical In addition to laying out the ongoing efforts of the resources do not exist, neither the system to monitor Serbia’s government in managing public expenditure in the number of days students actually spend in schools; education, as discussed in the introductory sections, there are systems to encourage teacher attendance, but there is a separate school finance policy agenda qualified substitute teachers sometimes are not focusing on a set of areas contributing directly to the provided when absences occur. results of school learning: the basic conditions for learning, monitoring learning conditions and outcomes,  Regular reports on the status of physical overseeing service delivery, budgeting with adequate resources in the primary and secondary schools and transparent information, providing more resources are needed to inform investment in the to students who need them, and managing resources country’s school infrastructure. This planning efficiently. should be aligned with the government’s effort to increase efficiency in education, i.e. tightly 1. Ensuring basic conditions coordinated with the plan for the optimization for learning of the school network. There are policies in place to provide basic educational  Information systems to track teacher roaster inputs, and performance goals in education are and its deployment are needed to enable ambitious. human resources management for better system results. 2. Monitoring learning 4. Budgeting with adequate conditions and outcomes and transparent resources Current monitoring systems do not track most learning conditions in schools; national large-scale student The budget is informed by forecasts of education achievement assessments should occur more frequently expenditure and a set of criteria; budget documents and cover grades in secondary schools as well. To provide expenditure information, but the wage bill data advance in this area Serbia could: are not adequately reported.  Increase efforts to monitor basic infrastructure  Although budget planning takes place within and learning materials, as well as the student the three-year cycles, it is based on historical achievements at primary and secondary level of budgets instead of the actual data. The budget pre-university education; is still organized based on the demand for  Develop a policy framework for monitoring inputs and is not led by the information on student achievements using a mix of student cohorts and its characteristics. assessment types aligned with the education  The country should continue to implement its system objectives, which should have clear education financing in line with the plans to calendar, costing and funding sources; and roll-out the per capita formulae in the school  Include in Serbia’s developing EMIS the updated year 2014/15, as defined by the 2009 information on school-level indicators on Framework Law on Education. schools finances and student outcomes.  Introduction of an operational Education and Management Information System will make possible greater accountability of spending education resources. 13 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 5. Providing more resources to students who need them System-wide policies provide additional resources to support students with disadvantaged backgrounds and special needs, but methods to identify these students do not follow best practices; payments for primary and secondary schooling do not exist.  In addition to having the advanced policy framework for education of the disadvantaged and special-needs students, Serbia will need to base the implementation of these policies on the data from household surveys and student demographics.  Education financing reform will be help in these efforts as the per-capita formulae in education designed for Serbia is weighted for disadvantage. 6. Managing resources efficiently Open competition is the default method of procurement, but personnel and payroll databases are only updated once or twice a year; reporting procedures for internal audits until recently did not involve outside authorities  Serbia should develop systems to increase the frequency of updating the personnel and payroll databases for teachers and other education staff on a monthly basis.  Data on personnel and payroll should be subject of the internal audits with the Ministry of Finance and/or the Supreme Audit Institution. 14 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 Ferrer, G. (2006). Educational Assessment Systems in Latin Acknowledgements America: Current Practice and Future Challenges. Washington, DC: PREAL. This report was prepared under the Serbia Education Filmer, D. 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(2009). “Montenegro: Public Expenditure and Financial Accountability Assessment, Public Financial Management Performance Report.� Washington, DC: The World Bank. Porta, E. and Arcia, G. (2011). “Improving Information Systems for Planning and Policy Dialogue: The SABER EMIS Assessment Tool.� Washington DC: The World Bank. Reschovsky, A. and Imazeki, J. (2001). “Achieving Educational Adequacy Through School Finance Reform.� Journal of Education Finance, 26(4), 373-396. Reinikka, R. and Svensson, J. (2004). “The Power of Information: Evidence from a Newspaper Campaign to Reduce Capture.� World Bank Policy Research Working Paper 3239. Washington, DC: The World Bank. Rivkin, S. G., Hanushek, E. A., and Kain, J. F. (2005). "Teachers, Schools and Student Achievement." Econometrica, 73(2), 417-458. UNESCO-UIS. (2008). A View Inside Primary Schools: A World Education Indicators (WEI) cross-national study. Montreal, Canada: UNESCO Institute for Statistics. Wagstaff, A. and Wang, L. C. (2011). “A Hybrid Approach to Efficiency Measurement with Empirical Illustrations from Education and Health.� World Bank Policy Research Working Paper 5751. Washington, DC: The World Bank. 16 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS SERBIA ǀ SCHOOL FINANCE SABER COUNTRY REPORT |2012 www.worldbank.org/education/saber The Systems Approach for Better Education Results (SABER) initiative produces comparative data and knowledge on education policies and institutions, with the aim of helping countries systematically strengthen their education systems. SABER evaluates the quality of education policies against evidence-based global standards, using new diagnostic tools and detailed policy data. The SABER country reports give all parties with a stake in educational results—from administrators, teachers, and parents to policymakers and business people—an accessible, objective snapshot showing how well the policies of their country's education system are oriented toward ensuring that all children and youth learn. This report focuses specifically on policies in the area of school finance. This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. THE WORLD BANK 17 SYSTEMS APPROACH FOR BETTER EDUCATION RESULTS