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