From Line-Item Budgeting to Per Student Funding Formulas. Successes and Failures from the Experience...
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Transcript of From Line-Item Budgeting to Per Student Funding Formulas. Successes and Failures from the Experience...
From Line-Item Budgeting to Per Student Funding Formulas.
Successes and Failures from the Experience of Post Soviet
Countries
Jan HerczyńskiBaku, April 21, 2014
Movement towards formulas
• Accross transition countries there is movement towards using per student allocation formulas in the education sector
• The formulas have many different forms and applications
• Some countries which have not moved towards per student formulas have instead implemented repeated pilot projects
2Jan Herczyński
3
Movement towards formulas 2
• Historically, school budgets were defined separately for each budget line (salaries, heating, etc.), on the basis of budgets of previous years and negotiating incremental changes
• Per student formulas give hope of much simpler approach to set school budgets
• However the movement is not easy
Jan Herczyński
4
Movement towards formulas 3
• Successful countries have used the formula as an instrument supporting decentralization efforts– Poland, Macedonia, Georgia, Bulgaria
• Less successful countries used the formula as a purely technical tool to achieve rationalization of education finance– Romania, Ukraine
Jan Herczyński
5
Example 1: Georgia
• „Rose revolution” in 2004 led to establishment of strong reformist government
• Fight against corruption was one of dominant motivations
• In education, this led to complete removal of local governments from management and finance, in contrast to historical experience
• The Ministry of Education needed a formula to finance all Georgian schools
Jan Herczyński
6
Georgia 2
• Georgian schools became autonomous institutions with legal persona and own budgets
• In each school, the School Board oversees the school operations and selects the school director
• National Government sets minimum teacher salaries
Jan Herczyński
7
Georgia 3
• National formula determines only the overall volume of funds for each school– School vouchers of three levels (city, rural, mountain)
• Detail line budget is set by school director and approved by the school board
• The same applies to budget execution report• Extensive support from Education Support
Centers managed by the Ministry
Jan Herczyński
8
Georgia 4
Results: • School operations uninterrupted– Frequent updating of budgets– Only few conflicts between directors and School
Boards• Increased transparency and openess of
schools• Significant reduction of corruption in the
sectorJan Herczyński
9
Georgia 5
Results: • About one third of schools are deficit schools– No real budgeting procedures– Monthly additional transfer above vouchers
• Large schools became successful budgetary operations, especially in the cities– Large schools have ample budgets and little
motivation to economize
Jan Herczyński
10
Example 2: Romania
• No real motivation for decentralization• Education strictly controlled by judet (oblast)
level administrations subordinated to the Ministry
• No clearly defined financial transfers for education from the central budget to judet budgets, and from judet budgets to schools
Jan Herczyński
11
Romania 2
• Deep fragmentation of education finance– Employment levels and salaries in every school set
and stricly controlled by the Ministry– Maintenance costs uncontrolled and quite
differentiated in different municipalities• Administrative and not political responsibility
for education
Jan Herczyński
12
Romania 3
• Many attempts to define and implemented per student formula for school finance
• National Council for Financing of Pre-University Education was established in order to achieve this objective
• The council developed a series of complex formulas and published several books
Jan Herczyński
13
Romania 4
• Repeated pilot projects which remained purely formal (only on paper), in part because they contradicted existing legislation
• The pilot projects were not related to other reforms of school management
• No formula was finally implemented
Jan Herczyński
14
Example 3: Bulgaria
• System of delegated budgets gave budgetary autonomy to schools
• Beginning with a few pilot municipalities , gradually extended to the whole country
• In 2007, a national formula implemented for transfers from central budgets to municipalities
• An obligation to use local formulas for schools
Jan Herczyński
15
Bulgaria 2
• National formula used 4 values of per student amount depending on the municipality
• Pure per student formula from central budget to municipal budgets
• Local formulas have to be based on student numbers: – 80% allocated on a pure per student basis (no
coefficients)– 20% allocated according to additional standards
Jan Herczyński
16
Bulgaria 3
• Initially, great opposition from teachers and municipalities– Long strike by teachers, which the teachers lost– Many municipalities used pure voucher formulas
in gesture of protest• School directors supported the reform– More autonomy of directors over budget– More school discretion over teacher salaries
Jan Herczyński
17
Bulgaria 4
• Over time, opposition to the reforms was decreasing
• School directors implemented necessary cuts in school expenditures to adapt to new allocation levels
• Education efficiency was increased accross the system– Increased class sizes– More efficient use of funds
Jan Herczyński
18
Conclusions
• Per student formula should be applied to a specific and legally well defined flow of funds between different levels of governance– From the central budget to local budgets– From the local budget to schools
• Formula should be a part of the budgeting process
• Formula must be public
Jan Herczyński
19
Conclusions 2
• Formula is an instrument of communication: – It communicates the priorities of the institution
setting the formula and sending funds– It should be used for dialogue between the sender
and receivers of funds• Therefore formula should be comprehensible– All details necessary to understand the formula
must be publicly available – Receivers of funds should be able to verify whether
the formula was applied correctly Jan Herczyński
20
Conclusions 3
• Simple formulas are easier to implement than complex formulas which nobody can understand– Bulgaria, Georgia used very simple formulas– Formulas developed in Romania were very
complex• Simple formulas are much easier to maintain
and change (adapt) over time
Jan Herczyński
21
Conclusions 4
• Success depends on creating a real independent actor with strong competencies who will implement the reforms locally– In Poland, Macedonia: local governments– In Bulgaria, Georgia: schools
• Vigorous activities of that actor are necessary for the reform to benefit students
Jan Herczyński