Reforming Education Finance in Transition Countries

Abstract

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The OECD Review of Policies to Improve the Effectiveness of Resource Use in School

“…Second, the use of a central funding formula for teaching costs ensures that the central government has means to influence teaching quality. This centralised formula funding scheme is consistent with the institutional setup in which the Ministry of Education and Science is responsible for the content and quality of teaching and for providing adequate level of funding to each school (Herczyński, 2011). At the same time, giving local governments the opportunity to allocate a minor share of resources for the teaching process at their own discretion leaves some room for local education policies to be developed and adds some flexibility to the funding scheme.…”

“…These incentives, accompanied by the autonomy and flexibility provided for schools in resource use, played an important role in the adjustment to the dramatic decline in the number of the student population and improved the cost-effectiveness of education. Even though it can be argued that the efficiency improvement is not on par with the ambitious original goals of the reform, given the depth and speed of demographic change the adjustment of the school network should be regarded as a considerable achievement (Herczyński, 2011).…”

“…At the same time this formulation of the additional support for small schools is often argued to still generate fiscal pressure for some schools and possibly perverse incentives. As Herczyński (2011) pointed out these discontinuities impair horizontal equity in funding, since two almost identical schools, apart from the fact that one of them enrols one additional student, receive substantially different levels of funding. These discontinuities emerge because of the sharp drops in total funding at the cut-offs between size categories of schools.…”

“…In 2004 the coefficients for the very small schools were cut by about 10% (Herczyński, 2011). Later the school size categories were also modified and a more detailed classification was established for the smallest primary and basic schools.…”

“…Interestingly, this component of the funding scheme has been changed substantially after the introduction of the education finance reform (Herczyński, 2011). The share of the resources distributed by the local governments was initially set to 15%, later was gradually reduced to 6% and then adjusted to the current level of 7% (6% for the five cities).…”