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Finance and governance reforms in education. Feb 14, 2009. Presented by: Lars Sondergaard World Bank. The World Bank. Efficiency of spending is poor in the ECA region…. Student-teacher ratios. cheaper. more expensive. Source: World Bank EdStat and World Bank estimates.
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Finance and governance reforms in education Feb 14, 2009 Presented by: Lars Sondergaard World Bank The World Bank
Efficiency of spending is poor in the ECA region… Student-teacher ratios cheaper more expensive Source: World Bank EdStat and World Bank estimates
…and there is lack of flexibility in the budgets allocated to education
WHY? Lack of financial incentives to downsize • This is problematic when school populations are declining
Remainder of presentation • Is that really true? Remainder of presentation: • 1) Answer: • (i) Yes and input-based financing provides no incentives; • (ii) Evidence from Bulgaria. • 2) Addressing concerns: What happens when you change to per capita finance?
There isn’t a financial incentive to consolidate schools with input-based financing A local government is losing students and is, therefore, considering closing one of its schools.
Summary • Input-based financing systems have problems! -> Lack of incentives! Question: Are there other financing systems that work better? If so, what are the pros and cons of such systems?
Input-based financing often goes hand-in-hand with lack of clarity on important questions Who is responsible? Who has an incentive to be proactive? Is the responsible person (financially) empowered to do something about problem? Someone may be formally responsible but does he/she have an incentive to be pro-active? -> With input-based financing, the answer is often no or unclear! Input-based financing places education managers in a straight-jacket: they have very limited ability to respond to new problems and innovate Who is responsible for identifying failing schools and turning them around? Who is responsible for reducing student drop outs? Who is responsible for ensuring that innovations gets spread and adopted? Who is responsible for ensuring that resources are spent wisely?
Answer: a per capita financing system provides better incentives One block of money based primarily (but not exclusively) on how many students are located in municipality x
Does this logic work in practice? • Case study: Bulgaria’s finance and governance reforms 2006-2009
Bulgaria (2005) Challenge 1: Quality had fallen and was seen as unacceptably low
The reforms • Finance: Introduce per capita finance • “Safe-guards”: support municipalities in the transition process and ensure that access. • Governance: revisit rules and regulations • External evaluation: introduce external assessments to monitor the quality of education
…and freed up significant resources which could be reallocated within the sector Amount “freed up” -> In Bulgaria, the sector gets to keep the savings and can now ask: where are these savings best re-invested to raise quality of learning!
BUT WHAT ABOUT? • Concerns: Impact of school closures?
There are four pillars behind successful finance and governance reforms
Initial design is important… • Articulate your vision in a multi-year action plan. Given that their role will change, stakeholders need to know where you are heading • In Bulgaria, the Minister started the reforms by articulating the vision in a strategic document (2006-2015) which was passed in parliament. • Know that there are different per capita models to choose from but there are “do’s” and “don’ts”! Do • Consider different models: to municipalities or to schools? [e.g. Bulgaria vs. Georgia] • Consider different paces and implementation schedules: [e.g. start with pilots, in certain areas, types of schools, allow for long/short transition period] • Consider different formulas: distinguish by types of students (primary vs. secondary, poor/non-poor, different-mother tongue etc) or structural features of municipalities (e.g Bulgaria) Don’t • Differentiate per capita amount by features within the control of education planners/principals! [e.g. don’t give more money to “small schools”, schools with poor insulation etc] • Make the formula too complicated!
…but is not enough • Think through intended and unintended impacts of the reform and be prepared with measures to provide support, e.g • Principals will need training. Bulgaria established an Institute for School Directors which, immediately, started providing ad hoc courses. • Municipal education officers will need hand-holding (seminars, training materials, information campaigns) • Teachers will need to be brought on board [this wasn’t done so effectively in Bulgaria] • How are you going to ensure quality education? (i.e. education is not just about saving money!!) • School closures are likely to increase. Be prepared with a strategy to support this process
You need to be proactive in designing programs to address concerns • Addressing concerns that switch to per capita finance will lead to a deterioration in quality • Commitment to rigorously monitor quality of education • Identify the cause of the concern? What exactly is the fear? • Recognize that closing small schools may be a good thing for quality • Recognize the weaknesses of input-based financing from a quality perspective! • SEE NEXT SLIDE
Preparing a program to address concerns related to school closures is essential • Addressing concerns that arise with school closures • Transportation of children • Bulgaria introduced a program to supply municipalities with busses • Provide funds to rehabilitate/expand “receiving” schools • Concerns about safety of children • No simple fix! Listen and allow municipalities to experiment with local solutions. • Safeguards to ensure that access isn’t impaired as a result of school closure • Introduce notion of “protected schools” • Review and strengthen your procedures and consider expanding staff who will be involved in reviewing applications • Built in mechanisms to do ex post evaluations: track students to their new schools!
Complement per capita finance with “sticks” and “carrots” • Introducing per capita finance may not be enough to accelerate school consolidation: it sets in place the right incentives but it could still take years for municipalities and schools to respond to those incentives (especially if you are not careful in the way the per capita formula is designed (again, for discussion)). • Think of additional sticks and carrots to accelerate the process • Sticks: tighten the screws! • Set per student amounts low to force municipalities to take action • Carrots: Create generous national programs to support the process (e.g. bus program, rehabilitation of school program, severance program to teachers) • Require that municipalities close down/ merge a school to receive funds from program
Strong political leadership and cooperation is required • Strong political leadership is needed: Closing schools and laying off teachers are unpopular decisions! -> You need a broad political consensus that the quality of education will not be improved unless some drastic measures are done. • In Bulgaria, (i) the current minister of education is also the deputy prime minister and leader of one of the main coalition parties; and (ii) his strategic vision was passed in parliament before the reforms began. • Be willing to face down strikes! [6 weeks in Bulgaria] and protests over school closures • Interministerial cooperation is critical. These reforms are complicated and require knowledge and skills from ministry of education, ministry of finance, and the statistical office. • Ad hoc collegial interministerial teams of trouble-shooters was established in Bulgaria. • Flexible funds were available from newly established Director’s Institute to conduct seminars and provide training.
