Private Education Provision and Public Finance: The Case of the Netherlands

1. Private Education Provision and Public Finance:The Case of the Netherlands Harry Anthony Patrinos World Bank March 2010

3. Origins • 1917: ‘schools to the parents’ • Segregation ended conflict • Freedom of education, religion, constitution • Today: • Country unified • But schools retain independence • Ease of entry

4. School Choice/Public Finance • Integral system of public finance & private delivery • Each student chooses school, public or private, which are equally funded by central government • Funding follows student

5. Funding • Ministry of Education, Culture and Science administers central government expenditure • Article 23 of Constitution: all education institutions, public & private, funded equal • Government expenditure on public institutions must be matched by expenditure on private, government-funded institutions

6. Flow of Funds • Schools receive block grant to cover staffing & running costs • School boards are free to spend at their discretion • Based on formula • Negotiations on pay and conditions in secondary education have been partly decentralized

7. Flow of Funds

8. School Boards • Lump sum funding for a “school board” • Consolidation throughout the system • Number of schools decreased from late 1980s, but number of school boards to which funds flow – much more so, from 3,116 to 2,078 • Average 3 schools per board in 1996, 4 in 2000 • School boards run 1 or many schools

9. Information • Trouw, 1997: http://www.trouw.nl/onderwijs/ • Education Inspectorate: http://www.onderwijsinspectie.nl

10. Private & Public SharesPrimary, 1850-2000 (%)

11. Private & Public SharesSecondary, 1850-2000 (%)

12. Primary Schools by Orientation (%)

13. Targeted Funds for Low-Income & Minorities • For minority student, school receives 1.9 times basic amount • For native Dutch from low income background, school receives 1.25 times basic amount

14. Centralization & School Choice • A large central staff • Many school advisory services & coordination bodies • Strong Education Inspectorate • Stringent regulations

15. Dutch Inspectorate of Education • Responsible for inspection & review of schools & educational institutions • Assessing quality of education offered in schools • Reporting publicly on quality of institutions • Reporting publicly on system as a whole • encouraging schools to maintain & improve • providing information for policy development • supplying reliable information on education

16. Risk-based Inspection • Since 2007 Inspectorate carried out risk-based inspections, assessing potential problems that could affect the quality of education • Reduces burden felt by schools & makes inspections more effective • Schools delivering good education (no risks) & good results do not require inspection, allowing Inspectorate to focus on rapid improvement of schools that supply poorer education (risks detected) & results

17. Equal Treatment • Private schools decide what to teach & how • Ministry sets standards for public & private: • subjects to be studied • attainment targets or examination requirements • content of national examinations • number of teaching periods per year • required teaching qualifications • Publicly & privately run schools are financed in same way by Ministry & evaluated in same way by Inspectorate

18. Autonomy of Dutch Schools • Attainment targets, examinations • Schools responsible for organization of teaching & learning, personnel & materials • Annual budget received as block grant funding • Schools free to decide how budget is spent • Inspectorate monitors school’s quality • If school capable of monitoring & improving quality, the Inspectorate keeps its distance

19. Dutch Students High Achievers

20. Dutch Students High Achievers • Scores high in PISA and TIMSS • Top in math & science final years secondary 1995 • High scores controlling for income & expenditure • Confessional schools do better than public • Private schools do better • Substantial degree of competition is determinant • Positive link between intensity of competition and academic achievement in secondary school

21. Public Expenditure per StudentSecondary, $PPP 2005

22. Diversity and Religion • Parents choosers, base decision at times on religion • Choice of school: • 50% choose schools based on religion • 91% of private schools religious • 59% of all schools religious • Private schools make up 65% of all schools

23. Contribution of Private Schools

24. Does School Choice Help? • Need to estimate causal impact • Randomized control trial is gold standard • Not possible in this case: program not rolled out randomly, no pre-program data

25. Estimation Issues • Selection bias • But the direction of bias is not clear • Typical but biased estimates of small private school effects (from 0 to 4 points only) • Therefore need alternative methodology • Remember: religion is important in selection of schools

26. Instrument for Private School Choice • Religion is a predictor of private school choice (R-squared: 0.145) • But not of achievement (R-squared: 0.012, 0.016, 0.010) • According to PISA 2006, 38% of parents choose schools based on religion

27. Private School Choice Effects IV Estimates

28. Causal: Large Private School Impacts • Controlling for family, school, family, institutional characteristics • Impact of private school choice is large, causal, positive: • Math: 17 points • Reading: 28 points • Science: 18 points • Much larger than raw score or typical (OLS) estimates

29. Netherlands: Impact of Private Schooling through Choice

30. Why Large Effects? • Unlike most countries, private schools are not only for elites in Netherlands • In fact, elite school sector does not really exist • Rather, private schools offer opportunities to less privileged

31. It is the value-added of private schools for relatively disadvantaged that leads to large effects

33. Lessons for Other Countries • Universal, integral choice system – produces quality, equity, diversity • Institutional structures (standards, exams, inspections) & regulatory framework, allows government to use public funds & private delivery effectively • Large private sector, autonomy, freedom – compatible with central government role

34. Thank you Harry Anthony Patrinos hpatrinos@worldbank.org