The EFA 2011 Global Monitoring Report shows that education spending as a share of Gross Domestic Product (GDP) increased from 2.9% in 1999 to 3.8% in 2008 in low-income countries. In more than one third of low income countries the share of education expenditure in total government expenditure exceeds 20%. Moreover, households, especially in low income countries, account for a significant share of education expenditure. International aid to education has also been very significant (about US$ 30 billion between 202 and 2008) of which about 90% went to low income and low middle income countries. Despite the growing investment and commitment by governments, households and donors education finance continues to experience a huge financial gap. The 2010 EFA report estimates that the financial gap to reach the EFA goals to be US$ 16 billion annually until 2015.
There is no doubt that it is important to mobilise more funds for education to achieve the millennium development goals and beyond. However, more importantly the issue of effective utilization of the already huge and growing investment in education is of critical importance if gains in education are to be sustained over the medium to long-term. Countries and donors need a clear understanding of how education resources are linked to learning outcomes to make informed policy decisions toward improving the quality of education. The best way to measure this link is by constructing comprehensive national education accounts (NEAs) to track all financial resources for education and document their end use in detail While financial resources are by no means the sole driver to improve quality education, governments need to allocate sufficient funding to providers at the appropriate levels. Access to NEAs connected to learning outcomes and other drivers of learning such as educational
Evidence shows that more financing is not the solution to the chronic problem of low quality education in many countries. There is also evidence that education finance in many countries continues to a large extent benefit the better-off groups, especially at the higher levels of the education ladder. Thus, improving the effectiveness and equity of education expenditure is yet an untapped potential for delivering quality education for all. Quality and equity of education outcomes hinges on a variety of factors including the level and quality of education inputs, the teaching, learning and assessment processes. The UNESCO General Education Quality analysis/Diagnosis Framework (GEQAF) deals with each of these education sub-systems and their inter-linkages. A well-functioning education financing system is one of the key enabling factors for the delivery of education quality for all.
This Analytical Tool [See the Full Version for more details] will deal with the education finance sub-system. The paramount question is:
How well have we designed our education finance system to enable the achievement of equitable and quality education outcomes? Through a set of structured questions, this Analytical Tool helps countries to undertake a diagnosis and analysis of their education finance system to identify potential strengths and challenges and design appropriate policies and measures to address quality and equity issues in the education sector. The diagnosis and analysis will focus on key areas of the education finance system covering adequacy of funding, financial allocation, distribution and utilization as well as system capacity for management of education finance.
Diagnosis and analysis
Adequacy of Funding
1. Have we properly costed our education strategic plan to determine the financial resource requirements for achieving the goals set in the plan? If yes how and how well was the costing done? What is the financial gap between what is required and funds allocated? Did we use benchmarks from other comparable countries?
2. How well is the education financing requirement projection consistent with the government’s Medium Term Expenditures framework (MTEF) allocation to the education sector? Have we considered different scenarios for availability of funding and prioritised our education programmes? Are potential efficiency gains considered to close potential financing gaps?
3. What data is available on the budget execution rate regarding current and investment public expenditures? What are the bottlenecks? What remedial actions have been planned (capacity building, organizational changes, changes in procedures)?
4. What mechanism do we have in place to estimate the amount of education spending from all sources including from households, development partners and private sector (See: National education accounts)? Is there evidence that we regularly monitor that and use the information in our financial planning?
Allocation of expenditure
1. What are the criteria for determining the allocation between different education sub-sectors? Do the criteria take account of expected relative social and private benefits of the various levels of education? How transparent and participatory is the process of setting the criteria for resource allocation?
2. What percentage of public education funds are allocated to the Ministry of Education? Of these, how much are allocated to teachers’ salaries?
3. What share of the public and private resources reach the classroom and contribute to teaching and learning?
4. To what extent does the allocation encourage performance? What is the evidence that more resources have been translated into improved learning outcome in this country? To what extent is differential performance in learning outcomes between different schools and between different types of school is accounted for by differences in availability of resources?
5. Have we conducted analysis of the relative effectiveness of different inputs in raising quality? What does the evidence say? To what extent does education finance prioritize those inputs which improve learning outcomes most?
6. What lessons can we learn from promising practices and existing research to understand the linkages between resource use and learning achievements, in order to steer available resources where they contribute most to learning outcomes?
Distribution of education finance
1. Have we made sure that the criteria for allocating education finance between different districts and schools reflect our equity and quality goals? Are the criteria applied transparently and consistently? What is the evidence to support that?
2. How do we know how much different groups (rural-urban, different income groups, regions) benefit from education at different levels of the education system? Is data available, analyzed and made available to policymakers?
3. What measures have we taken to improve equity in education finance and learning outcomes? What are the mechanisms in place to monitor the effectiveness of these measures in achieving equity in learning outcomes?
4. What is the burden of education expenses on households?
Utilization of financial resources
1. How do we make sure resource leakage in the system is kept to a minimum? Have we conducted some type of Public Expenditures Tracking Survey? If yes, what are the key findings?
2. What incentives has the management of educational institution to be cost-effective in its procurement and utilisation of different inputs?
3. What performance based incentives are in place to achieve the most possible education outcome for the level of funding provided to the school?
4. To what extent have we the necessary human resources and tools at all management levels to manage education finance effectively and transparently?
5. How effective is our data management on education finance at each level of the education system? Is financial data made available to all stakeholders in a transparent way?
6. Do we have a system for tracking the flows of funds between different actors? Do we have the capacity to disaggregate the data on the flow of funds by sub-sector (pre-school, secondary, non-formal) and by target beneficiaries (urban or rural, male or female)? [Technical Note Xii.2] Forbes and Baidas, Morocco National Education Accounts, 2006)
7. To what extent have we utilized findings emerging from monitoring and evaluation to inform financing choices to improve education quality? Have we been able to build and maintain the institutional and human capacities to assure sustainable results-based financing?
Priorities for action
1. What are the key areas to be addressed urgently to further improve our education financing system to support the delivery of quality education to our learners?
2. What are the knowledge gaps which need to be filled for an evidence-based policy on the system of education finance?
3. What are the required actions to deal with the priority constraint and the identified knowledge gaps?