Financing Elementary Education
Kathrin Bock-Famulla
7th Meeting of the OECD Network on Early Childhood Education and Care
Paris, 21st June 2010
ECEC in the German context
… requiring effective investments
in ECEC
Increasing
Enforcing
… demand for
institutional
EC CARE
… quantitative
extension
… importance
of EC
Education
… qualitative
improvements
of the German
ECEC system(s)
21. Juni 2010
Page 2
Central hypotheses
Funding
structures &
mechanisms
impact
Structures
and
range of effect
services
Professional
pedagogical
practices
in
facilities
Education
and
development
of children
affect
Allocation of
resources
21. Juni 2010
Seite 3
Basic assumptions and mission of the project
Funding mechanisms and structures govern the
quantity and quality of services
Desired ECEC quality should be the main starting point
for the design of a funding approach
Heterogeneous educational needs of children require
different and diverse educational practices
Needs-based educational practices are based on
unequal allocation of resources
21. Juni 2010
Seite 4
Requirements on the funding approach
 Politics, administration, providers, centers are tied
to defined goals
 Transparent criteria are used for determining
the budget of each facility
 Differences in the funding are based on
comprehensible and legitimate reasons
 Differences in the center funding on the local level
are transparent and well-founded
21. Juni 2010
Seite 5
Project steps
Pedagogical mission and goals
a) Developing an approach of ECEC practice of good quality
b) Defining the pedagogical & supporting activities of ECEC facilities
Quantity and value structure of necessary resources for ECEC facilities
a) Specifing all relevant human and material resources for ECEC facilities
b) Identifying additional resource requirements
c) Determining operating costs (typical & special cost structures & levels)
Methods and procedures
a) Developing a formula funding approach for ECEC facilities
b) Generating a cost-calculation tool
c) Designing a simulation model for testing purposes
21. Juni 2010
Seite 6
The formula funding approach
… can be described as a function of the
operating costs of an individual ECEC
facility
… is composed of multiple mathematical
formulae by which the financial resources
to be made available to an ECEC facility
are calculated
21. Juni 2010
Seite 7
Key components of the formula funding approach
Base rate I
… is dependent on the size of the facility (approved slots)
but not dependent on the number of children enrolled
… provides the coverage of fixed costs
x f *b1
21. Juni 2010
Seite 8
Key components of the formula funding approach
Base Rate II
 … is dependent on the number of children enrolled in the facility
 … provides the coverage of the facility‘s variable costs
x f * b1   b2 * ac * t c 
c
21. Juni 2010
Seite 9
Key components of the formula funding approach
Base Rate II
 … funds are disbursed per child (c) weighted
- by the child‘ s age (ac)
- by the time the child spends in facility (tc)
x f * b1   b2 * ac * t c 
c
21. Juni 2010
Seite 10
Key components of the formula funding approach
Indicators (i)
… correlating to variations in the intensity of the children‘s and facilities‘ resourcing
needs (child-, group- or facility-related)
… that recompense providers for these relative needs
Formula with child-based & facility-based indicators




x f * b1    b2 * ac * t c *  ic  *  i f
 j
c
c 
21. Juni 2010
Seite 11
Key components of the formula funding approach
Indicators (i)
Child- and/or group-related weighting factors (ic and/or ig)
 …represent factors applied to Base Rate II to account for a child‘s individual
situation (i. e. migration background; socio-economic background)
Formula with child-based & facility-based indicators
 

x f * b1    b2 * ac * tc *  ic  *  i f
c
 j
c 
21. Juni 2010
Seite 12
Key components of the formula funding approach
Indicators (i)
Child- and/or group-related weighting factors (ic and/or ig)
 …represent factors applied to Base Rate II to account for a child‘s individual
situation (i. e. migration background; socio-economic background)
Facility-related weighting factors: if
 … can be lump sums in addition to Base Rate II funds that reflect local and
regional conditions affecting the facility (i. e. in a area of deprivation)
Formula with child-based & facility-based indicators
 

x f * b1    b2 * ac * tc *  ic  *  i f
c
 j
c 
21. Juni 2010
Seite 13
Key components of the formula funding approach
Rent
… as a lump sum r covers the rent and depends on the size of the facility
x f * b1    b2 * ac * t c *  ic  *  i f  r
 j
c
c 
21. Juni 2010
Seite 14
Key components of the formula funding approach
Lump sums
… can create incentives to promote specific government policy objectives,
e.g. to stimulate innovation or to foster certain educational programs.
One or more lump sums lf are possible.
f operatingcos ts f
 

 x f * b1    b2 * ac * tc *  ic  *  i f  r   l f
k
c
 j
c 
21. Juni 2010
Seite 15
Key components of the formula funding approach
Function
… represents the total funding an ECEC facility receives for financing its operating
costs
f operatingcos ts f
 

 x f * b1    b2 * ac * tc *  ic  *  i f  r   l f
k
c
 j
c 
21. Juni 2010
Seite 16
Main characteristics of presented formula funding approach:
 The funding of an ECEC facility shows a - moderate - dependence on the use of
its capacities.
 Planning reliability for the providers in case of small short-term spare capacities
– fundamental to ensure a desired level of quality
 Reduced provider‘s total budget in case of long-term spare capacities
– calculated resource management for preventing a waste of public funds
(base rate I will be reduced; base rates II will be cancelled
21. Juni 2010
Seite 17
Thank you for your attention!
Bertelsmann Stiftung
Germany
kathrin.bock-famulla@bertelsmann-stiftung.de
21. Juni 2010
Seite 18