Albanian VET Strategy and Action Plan for the period 2013 - 2020
Workshop on VET System Management and Financing
VET System Financing
Werner Heitmann
Senior VET Policy Consultant
Tirana | 13 June 2012
13.04.2015
Seite 1
Basic Challenge of VET System Financing
Society
Government
Government must be interested in
satisfying market and social demand.
Competitiveness
Labour Market Demand
from Enterprises
Voters
Social Demand
from Individuals
VET
System
Ability to Study
Employability
Donor Contribution
13.04.2015
Seite 2
Inter-company
training model
Co-operation
Strategy
Effectiveness
Both are needed for
sustainable
improvement of VET!
Market
model
Partnership
model
Alternating
model
Low
 Efficiency: Input-OutputRelation
 Effectiveness: Impactorientation
High
Efficiency and Effectiveness of VET
Status Quo
Rehabilitation
Strategy
Low
Efficiency
Government
School
model
High
13.04.2015
Seite 3
Key Elements of VET Financing Systems
Vision:
Challenges:





Public funds are
decreasing, but still the
main source
State budget alone is not
sufficient for high-quality
VET offers
Enterprises hardly
contributing
Individuals‘ ability-to-pay
is limited
Donor financing is lacking
sustainability
Control Mechanisms:
Ensuring transparency;
Avoiding misuse;
Monitor & evaluate
progress and impact
Diversification of VET Financing
(State, Enterprises, Individuals)
Strategy:
Generation of
Resources
Efficient and effective
allocation of rare resources
Objective:
Management
Four
Key
Elements
Allocation
Stronger incentive-driven &
output-orientated financing
mechanisms
Result :
Institutions
Replacement of input-driven financing
mechanisms through demand-driven
financing mechanisms (e.g. vouchers, loans)
Organisation:
Establishment of stakeholderdriven VET Funds in Combination
with a National VET Authority
13.04.2015
Seite 4
Four Basic Allocation Models
Decentralised (market)
Approaches
International
Trend
Purposespecific
purchasing
from
providers
Demanddriven
allocation
through
trainees
Traineecentered
Contract
based
Input
Orientiation
Output
Orientation
Budgetorientated
Centrally
planned, inputbased
distribution to
providers
Performancebased
distribution to
providers
Programorientated
Output-oriented allocation motivates VET
providers to increase their internal efficiency.
Three reform models:
1. Financing of VET programmes
(performance-based)
2. Tender-based purchase of VET services
Centralized (regulated)
Approaches
3. Learner-centered financing model
13.04.2015
Seite 5
Strengthening Private Sector Involvement
 Target: Direct contribution | In-Company Training
 Utilization of workplaces for training increases | Efficiency
 In-Company Training is employment-relevant | Effectiveness
 Direct benefit must be recognized ( Cost-benefit analysis)
 Incentive Systems | Indirect Monetary Contribution
 Collective VET Levy
 Levy-Grant-Systems (levy exemption, re-distribution, re-funding)
 Special taxes
A VET Levy System can only be realized in combination with a
National VET Fund.
13.04.2015
Seite 6
VET Levy
 Advantages
 Adequate measure if engagement of companies in VET is weak
 Purpose-specific utilization of funds
 Constant flow of funds | Applicable to all companies
 Disadvantages
 Informal sector | SMEs: Ability-to-pay is negligible
 Companies see levies as a burden, not an incentive
Particularly tax-paying enterprises being engaged in VET
 Mistrust in public institutions | Low acceptance
Clear regulations for purpose-specific utilization of funds, or
combination of levies with pay-back / refunding mechanisms are
necessary!
13.04.2015
Seite 7
Training
cost
Training Levy | 3 Pay-Back Mechanisms
Training
providing
Company
Training
cost
Non-Training
providing
Company
Option 1:
Exemption from Training Levy
Administration cost
VET Funds
Training Levy
Training
providing
Company
National
VET
Fund
Option 2:
Re-funding of training cost
Option 3:
Redistributed levy
Direct Allocation to
Training Provider, etc.
13.04.2015
Seite 8
Management via VET Funds
 Key characteristics
 Budget clearly addressed to VET purposes only, no access
through other state budget positions
 Can be fed by sources of the public and/or private sector, donor
contributions etc.
 Frequently (not necessarily) combined with a levy system
 Advantages





Budgets reserved for VET purposes | Reliable financial planning
Through ‚Funding Windows‘: Adressing special target groups
Cross-subsidisation (between VET sub-systems) easier to control
Private sector engagement in financing and forming VET system
Independent / performance-based distribution of funds to providers
13.04.2015
Seite 9
Common VET Financing Reform Approaches
Grants, Loans, Vouchers
Government / State
Budget Allocation
Subsidies, Matching Grants,
Tax Benefits
Grants /
Loans
National
VET Fund
Donors
VET
Levy
Fees
Enterprises
Trainees
Fees
Target groups:
Trainees, Workers
Fees /
Vouchers
Performance /
Output-orientated
Financing
Public and Private
Training Providers
Additional
Revenues
Income-Generating
Activities
13.04.2015
Seite 10
VET Voucher System | Possible Design
VET Authority: Legislation, Regulation, Coordination, Facilitation
Government
National VET Fund
VET
Budget
Temporary
Budget
Support
VET
Levy
including VET Voucher & Levy Administration
VET Information Center
Innovation
Budget
Levy-based
Grant
Tax
Incentives
Voucher
Schemes
Grants
Donors
Quality
Assurance &
Accreditation
VET
Innovation
Fund
Matching
Grants
Trainees
Tuition
Fees
VET
Vouchers
Enterprises
Employers
Employee
Voucher
Schemes
Public & Private VET Providers
Income
Generation
Cooperative Training;
Partnerships between Industry & VET Providers
13.04.2015
Seite 11
Thank you for your attention…
13.04.2015
Seite 12