Jordan: Public Expenditure Review
Issues in Education
Ayesha Vawda
June 18, 2003
Outline
• Purpose of PER in Education
• Key Questions to be Addressed
• Data Requirements
Purpose of PER in Education
• Assess how much is spent on education
• Evaluate allocation across levels and
inputs
• Analyze efficiency of resource use
• Gauge whether public financing is being
used to minimize poverty
Key Questions
1.
2.
3.
4.
5.
6.
7.
How much is spent?
How does government finance?
What does government finance?
Should government finance?
Does public spending protect equity?
Is the public getting its money’s worth?
How much is enough?
How does the PER define the
sector?
•
•
•
•
Basic education only?
All levels of formal education?
Does it include training?
R&D operations attached to
universities?
1. How much is spent on education?
• Public expenditures
– as % of GDP and of total public expenditures
• Private payments
– For public services (informal payments, formal
cost recovery by level of education)
– For private services
• If not integrated into public budget: donor
grants and loans
How much does government spend on
education (as a % of GDP), 2000
Portugal
5.7
Jordan
5.5
OECD Average
5.3
United States
5.1
Brazil
4.7
WEI Average
4.6
Hungary
4.6
Korea
4.1
Chile
3.6
T urkey
3
Uruguay
2.7
0
1
2
3
4
5
6
What share of total public spending has
gone to education in Jordan
20%
15%
10%
5%
0%
1992
1993
1994
Current
1995
1996
1997
Capital
1998
1999
Total
2000
Private expenditure
• ECD: 99% private
• Basic and Secondary: 14% private, 12%
UNRWA
• Tuition fees account for 30% of
university recurrent expenditures
Private expenditure as % of total
Netherlands
0%
Bolivia
France
UK
S. Africa
Malaysia
Venezuela
Ghana
USA
50%
Indon.
German.
100%
Peru
Uganda
Sierra Leone
Source: Psacharopoulos and Nguyen 1995 “Fighting Poverty: the role of government
and the private sector” World Bank.
Private enrollment as % of total
Kuwait
France
Netherlands
Mauritius
0%
50%
Mexico
USA
Niger
Cyprus
Australia
Korea
100%
Belgium
Chile
Is public spending sustainable?
• Macro-economic projections
• Government’s sectoral goals that impact
costs:
– Education Reform for Knowledge Economy
• Demographic projections for school-age
projections
• Government’s goals that affect
intersectoral allocations
Education Reform for Knowledge
Economy
JD m
450
400
Baseline
Scenario
350
Reform
Scenario A
300
Reform
Scenario B
250
200
1
2
3
4
5
Years
6
7
2. How does government finance?
• Intergovernmental fiscal relations
– Central vs. local financing?
– Tax rate setting authority for governorate?
– Subventions to governorates?
Conditional/unconditional?
– Local “top up” in education financing?
2. How does government finance?
contd.
• Budget framework and process
– Recurrent and capital budgets delinked?
– NGO/Donor/IFI financing linkages with
government budget
– Accumulating arrears? Why?
3. What does government finance?
Budget share by level of Education
100%
90%
80%
70%
60%
50%
Higher
40%
General
30%
20%
10%
0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
What does government finance? Budget
share by Type of Expenditure
(Basic and Secondary, 2000)
120.00%
Composition of Current Expenditures
100.00%
80.00%
Salaries, Wages and
Allow ances
60.00%
Other
Transferrable expenditures
40.00%
Other current expenditures
20.00%
0.00%
Current
Capital
Are wages crowding out
complementary outputs?
% of total current education expenditure for
teacher’s compensation, 1997
Jordan
Low income
Lower-middle income
Upper middle-income
Higher income
Source: World Development Indictors, 2001
75.0
67.5
64.1
47.8
57.3
4. Should Government Finance?
• Supply and Finance of Education
Originally Private
• And, why not?
• So why should government
intervene?
Because….Market Failure
•
•
•
•
Equity
Externalities
Capital market imperfections
Information asymmetries
Child Mortality by Education of
Mother
Morocco 1992
Yemen 1991-92
Nepal 1996
Philippines 1993
Uganda 1995
Bolivia 1994
Mali 1995-96
Deaths per 1,000 live births
No Education
Primary Only
Secondary or higher
But…Government Failure
•
•
•
•
Equity
External Efficiency
Internal Efficiency
Sustainable finance
Disparities between Girls’ and Boys’
Enrollment
• 1990, avg 6-year-old girl in low, midincome country: 7.7 yrs of school; up
from 6.7 yrs, 1980
• Gap between boys and girls widest in S.
Asia: 1990, girl could expect 6 yrs of
school; boy, 8.9
• Middle East: girl 8.6 years, boy 10.7
Government Failure: External
Efficiency
• Over-subsidized higher education
– In Africa, spending per student in higher
education is 44x that per primary student
• Continuing high proportion of secondary
education that is supply-driven
vocational education
• Tertiary more costly than primary
Government Failure: Sustainable
Finance
• Increasingly difficult to meet demand for
education, especially where little
economic growth (e.g. Africa)
• Aid can help, but not sustainable
Service Delivery
Public schools lack spur for efficiency
• Operated by Government
• No competition
• Teachers paid according to experience
and education, not performance
• Schools closed or opened depending on
demographics, not how well they perform
So What is the Answer?
• Market has
strengths and
weaknesses
(“failure”)
• Government has
strengths and
weaknesses
(“failure”)
• Draw on strengths
of both market and
government
• Minimize
weaknesses of
both
• Context-specific
Emerging Role of Government
Draw on Market Strengths
•
•
•
Matching of Demand and Supply
Competition
Willingness to pay
Draw on Government
Strengths
•
•
•
Broad National Vision
Capacity to redistribute and
promote equity
Information
Avoid Market Failure
Avoid Government Failure
•
•
•
•
•
•
•
Promote Equity
Achieve Externalities
Overcome Capital Market
Imperfections
Overcome Information
Asymmetries
Promote Equity
Avoid Inefficiency
Achieve Sustainable Finance
Financing and Provision
Provision
Financing
Private
Public
Private
Private schools
Home schooling
User fees
Public
Vouchers
Charter schools
Contracting out
Traditional public
schools
5. Does public spending protect
equity?
• Check for variations by level in:
– Enrollment ratios
– Completion rates
– Learning outcomes
• Between:
–
–
–
–
Poverty quintiles
Regions (rural/urban)
Genders
Minorities vs. majorities
Distribution of Expenditures by
Income Quintile
Poor get less education
50
40
30
20
10
0
Armenia
1996
Poorest 20%
Côte d’Ivoire
1995
Nepal
1996
2
Nicaragua
1993
3
Romania
1994
4
Vietnam
1991
Richest 20%
What else to check
• Fiscal decentralization
• Formal and informal private payments
by level and poverty status
• Public subsidies/transfers to students by
level and poverty status
• Public subsidies of nonpublic schools
6. Is the public getting its money’s
worth?
•
•
Measuring educational outcomes
Improving quality of public spending:
1. Spending on the right thing
•
•
Correcting for market failures
Demand vs. supply side interventions
2. Efficiency in spending
•
•
Absorptive capacity
Leakages and M&E
Outcomes
• What are the trends in:
–
–
–
–
–
–
Enrollment rates
Completion rates
Expected years of education and training during lifetime
Average learning outcomes
Variance in learning outcomes
Employment rates and wages for recent graduates
• Are trends going in the right direction? Fast enough?
• Compare outcomes to those for regional neighbors
and countries at similar incomes. If major
differences, why?
Education Expenditure and
Achievement
TIMSS Ranking
Maths
28
8
12
18
26
27
3
9
24
31
6
2
14
United States
Switzerland
Austria
Canada
Norway
Denmark
Japan
Netherlands
New Zealand
Spain
Czech Rep.
Korea
Hungary
0
2,000
4,000
Expenditure/student
6,000
8,000
Science
17
25
8
18
20
34
3
6
22
27
2
4
9
Efficiency
• Cost implications of curricula structure (e.g.
specialized teachers, textbooks, IT)
• Efficiency of ratios between quantities of
different inputs (e.g., schools, classes,
teachers, students, textbooks)
• Estimated savings/costs of
reducing/increasing quantities of different
inputs
• Estimated costs of achieving savings
• Estimated savings of reducing repetition
rates/dropout rates
Efficiency
• Cost/benefit and cost/effectiveness analyses
– Prices for teachers and non-teaching staff
– Facility design and construction materials (best
cost per year over lifetime)
– Consolidation of facilities
– In-service training options
– Textbook printing standards
– Utility use
– Maintenance schedules
• Rough estimates of savings/costs from
adopting different standards and policies
School Size of MOE Schools in
Jordan
No.of Students Per
School
Less than 100
No. of
Schools
706
% of MOE
Schools
25.2
Cumulative %
101 – 200
478
17.0
42.2
201 – 400
710
25.3
67.5
401 – 600
375
13.4
80.9
601 – 800
254
9.1
89.9
More than 800
282
10.1
100.0
Total
2805
--
--
25.2
Cost Efficient School Size
Amortized cost of Capital and Equipment
Construction
Furniture & Equip
Computers
Total
Per Student (JD)
New Schools for student sizes:
Vertical
1,200
720
360
Extension
58,539
13,558
7,914
80,011
67
42,040
12,549
7,914
62,503
87
29,666
11,791
7,914
49,371
137
608
80
688
19
School Construction Alternatives
Students needing places
Classrooms Required
Number of extensions
Number of schools
Cost of construction
Cost of vertical extension
Total Cost of Construction and
equipping
Capital costs as a proportion of MOE
General Education budget 2001
Total
Annually for 5 years
New Schools with
720 students each
without capacity
utilization
157,365
4371
0
219
110,820,671
110,820,671
43.98%
8.60
Capacity
utilization, 20%
Capacity
vertical
utilization and extensions and
some new
some new
construction
construction
117,836
117,836
3273
3273
0
655
164
131
82,983,196
66,386,557
4,013,608
82,983,196
32.93%
6.59%
70,400,165
27.94%
5.59%
Cost-Effectiveness Analysis
of Inputs for Portuguese Achievement, Brazil
Input
Water
School furniture
School facilities
Hardware
Textbook usage
Writing materials
Software
Teacher salary
Training
Logos II
4 year primary
3 years secondary
Cost (US$)
1.81
5.45
8.80
16.06
1.65
1.76
3.41
0.39
2.50
1.84
2.21
5.55
Achievement change by Achievement gains
input (coefficients)
per US$ spent
3.513
1.94
-5.650
7.228
0.82
8.969
0.56
6.403
3.88
4.703
2.67
4.864
1.43
0.055
0.14
-0.160*
3.594
1.95
3.177
1.44
2.383
0.43
7. How much is enough?
• Using comparators:
• Compare expenditures to:
– Regional neighbors
– Countries at similar income levels
• But: comparators are imperfect
benchmarks, no matter how selected
– Number of students differ, prices differ
Is public spending adequate?
On the basis of country context, depends on:
• Thoughtput volume (# of school age hildren
and their enrollment rates)
• How efficiently resources are used
• Government’s goals for the sector that affect
spending
• Mobilization of private resources (e.g., private
provision, cost recovery)
Date Requirements
• Measures of outcomes: existence of
assessment system, household surveys
• Measures of inputs and costs: school
and household surveys with expenditure
data, program data, administrative data
on budget allocations and spending
• Impact evaluation data to estimate
program effectiveness