Transcript Public Expenditure and Education Outcomes -- Deon

Public Expenditure Analysis for
Education
Deon Filmer
DECRG
January 2004
Key questions

What are the basics of public expenditures?
–

How much, what are the trends, what is public
money spent on, etc…
How can public money be put to its best use?
–
–
–
What should government finance?
What is the distributional impact of public spending?
How can the system be improved in order to
maximize the impact of public spending?
The basics of public expenditures

How much does government spend
–
–

As a share of GDP
As a share of total public expenditures
And how has that changed over time
Education spending as a percent
of GDP
Haiti
1.1
Cambodia
1.9
China
2.9
Senegal
3.2
United States
4.8
South Africa
5.5
Denmark
8.2
Cuba
8.5
South Asia
2.5
Sub-Saharan Africa
3.4
World
4.4
Source: World Development Indicators Database. Data are for 2000
Public education spending as a percent
of government expenditures
30
75th percentile
20
Mean
25th percentile
High-income
countries
Middle-income
countries
Low-income
countries
Sub-Saharan
Africa
South Asia
Middle East and
North Africa
Latin America
and Caribbean
Europe and
Central Asia
0
East Asia and
Pacific
10
Note: Of the 135 countries included, 52 have data for 2000, 8 for 2001, 30 for 1999, 17 for 1998. The remaining 28 have
data from earlier in the 1990s. Source: World Development Indicators database.
Some things to keep in mind



Planned vs. actual expenditures
Real vs. nominal expenditures
Consolidated budget:
–
–
all sources of public money
all expenditures for the sector
Spending on what …

Type of spending
–

Functional allocations
–

Capital vs. Recurrent
budget shares by level of education
Economic allocations
–
inputs—e.g., teachers, textbooks
Spending on teachers in Sub-Saharan Africa – as a
share of recurrent spending (primary level)
Source: WDR 2004
But don’t get lost in the budget
numbers

Frequently, more public money and better
outcomes are not strongly related (or related at
all)
–
Public Expenditure Analysis is an opportunity to
reflect on how to make money work to improve
outcomes
Primary completion rate and public spending on
education across countries (conditional on GDP per
capita)
Source: WDR 2004
Changes in the primary completion rate and public
spending on education within countries
Source: WDR 2004
Education expenditures and learning
Spending and median math test scores
700
Singapore
600
Median math score
Korea
Japan
Hong Kong
Switzerland
Netherlands
Slovak Republic
Bulgaria
Australia
Thailand
Sweden
Germany
500
Czech Republic
Norway
United States
Spain
Romania Greece
Denmark
Lithuania
Portugal
Iran
400
Colombia
South Africa
300
0
2
4
6
Public spending on pre-primary, primary, and
secondary education (% of GNP)
8
Source: TIMSS
Why public intervention ?

Public responsibility for education motivated by
–
–
–
Equity (Human Rights?)
Market failures
Social cohesion/Nation-building
Equity
How unequally is education distributed – and where
are the problems?
Percent aged 15 to 19 completing each grade or higher
Source: WDR 2004
Equity
Is the current allocation of expenditures pro-poor –
benefit incidence analysis
Source: WDR 2004
Equity
Education as an anti-poverty program

If spending on education is justified as an antipoverty program, then it needs to be assessed
as such
Market failures
Externalities

Productivity
–

e.g. spread of adoption of green revolution
technology in India (Foster and Rosenzweig, JPE
1995)
Social outcomes
–
Not just for the person making the education
investments but others as well
Externalities – social outcomes
Percent of children with all immunizations by
mother’s education
Secondary
100
Primary
None
80
60
40
20
0
Nigeria 1999
Ethiopia 2000
Paraguay 1990
Haiti 2000
India 1998/99 Philippines 1998 Indonesia 1997
Peru 2000
Brazil 1996
Source: Analysis of Demographic and Health Survey data
Market failures

Capital market imperfections
–
–
–

Education is a long-term investment process: financial
institutions unwilling to take risk
Difficult for providers to borrow against future revenue stream
Difficult for students to borrow against future income stream
Asymmetric information
–
–
School quality is hard to assess
Student quality is hard to assess
Public provision and public finance … no
single model
More public
finance
Voucher schools;
Public schools with
regulated private schools little/no cost recovery
(Chile basic,
(many)
Netherlands, Belgium)
Unsubsidized private
Public facilities
sector (Philippine, tertiary with cost recovery
level)
(US, Korea, Chile
universities)
More public provision
Public responsibility for education

A key question
Is public spending allocated in such a way as to
address the equity and efficiency issues that
motivate public involvement?
The share of private spending also varies
substantially
Private expenditure as % of total education expenditure
Netherlands Bolivia
France
UK
0%
S. Africa
Malaysia
Venezuela
Ghana
USA
50%
Indonesia
Germany
100%
Peru
Uganda
Sierra Leone
Source: Psacharopoulos and Nguyen 1995 “Fighting Poverty: the role of government and the private sector” World
Bank.
And government intervention need not be
public provision or even finance

Regulation
–
–
–

Can regulate without financing or providing
Should regulate whether provision is public or private
If provision is public, regulator and provider should not be the
same
Information
–
–
To inform student and provider choice
To create incentives for policymakers and providers to deliver
Public provision is widespread in education,
especially at basic levels

Buying a sandwich vs. getting educated
–

Supply and consumption of educational services are
not a simple market transaction with direct feedback
from the customer
Just as there are market failures, there are
government failures
Accountability in the delivery of education
services … the WDR 2004 framework
Policymakers
Provider
organizations
Students/
Parents
Schools/
teachers
Building accountability into the system
Voice
Policymakers

Students/
Parents
Enhancing citizen voice to avoid:
–
–
–
Resources to political constituents and
voting blocks such as teachers’ unions
(political patronage)
Resources to personal gain (corruption)
Resources for less relevant learning
outcomes (delinked from private sector and
labor markets)
Building accountability into the system
Compact
Policymakers

Improving the compact(s) to ensure
that providers have the incentive to
serve poor people (well):
–
–
Need to balance the autonomy of
schools and teachers with performance
assessment
Schools and school systems must be
able to manage for performance,
particularly, to train and motivate
teachers
Provider
organizations
Schools/
Teachers
Building accountability into the system
Compact – Staff absence
Percent of staff absent in primary schools
30
20
10
0
Ecuador
India
Indonesia
Papua
New
Guinea
Peru
Zambia
Uganda
Building accountability into the system
Compact – Show me the money
The money trail in Papua New Guinea
Flow of recurrent expenditures for community and primary schools
Bank Account
Education
payroll
Non-teaching
staff
Teacher
Bank Account
Leave fares
Treasury
"Grants to provinces" (Transfer)
Contractor
Contractor
Province
Education subsidy (Q2,Q4)
Education subsidy (Q1 and Q3)
Education subsidy (Q1,Q3)
School
NDOE
Funds for maintainence and infrastructure
District ?
LLG ?
Parents
Infrastructure and Maintenance grant (Developed with districts for grades 7 & 8): only 46 schools in 2001
Bank Account
Building accountability into the system
Client power

Improving client power directly to improve
services:
–
–
Choice (e.g. Girls’ scholarship program
Bangladesh, with school subsidies for girl’s
enrollment)
Participation (e.g. EDUCO in El Salvador with
parent committees responsible for education
delivery)
Students/
Parents
Schools/
Teachers
Building accountability into the system
Client power – Parent participation in EDUCO
EDUCO promoted
parental involvement…
…which boosted
student performance
Source: Adapted from Jimenez and Sawada 1999
Key elements of PEA
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Basic budget information
Data on outcomes
– assessment system
– household surveys
Links between spending and outcomes
– Household surveys
– School surveys
– Administrative data
Impact evaluation evidence on programs
What does this say about the adequacy of spending?
What does this say about how to improve the effectiveness of
spending?