By
Dr. Vincent K. Fabella
 Background and rationale
 Defining Public-Private Partnership
 Opportunities in PPPs in Education
 Education PPP Models for SHS
 Challenges of structuring education
PPPs
Background
Background
• Deepening partnerships with the private sector
is becoming a reliable way of financing quality
education and making it accessible especially to
the poor. (World Bank)
• The 2013 Philippine Budget has been designed
to enable public-private partnerships
(PPPs) for the delivery of social services.
PPP in Education
 Private investment imperative to expand
infrastructure and provide greater access to all
forms of education
 PPPs a good way to attract private investments
 Concept of PPP and its applicability to
education not new (our ESC program is
recognized abroad)
 Requirement is to accelerate the pace and
develop new models of participation
KEY EDUCATION REFORM AREAS:
• Expanding the basic education cycle from
10 to 12 years,
• Filling the gaps in the system of
classrooms, books and teachers,
• Expanding education service contracting.
• School-community partnerships on the
ground have shown the way forward in
making schools perform better.
• Government and the private sector must
ensure that these islands of excellence
become the norm for all by scaling up these
successful initiatives.
• Public-Private Partnerships or
PPPs must indeed become part of
our education reform effort.
Considerations for PPP in Education:
(Usec Francis Varela)
• Expands access to basic education,
especially in areas not reached by the
public school system
• Promotes the provision of quality basic
education
• Offers cost-effective solution for
government
• Must cater to target clientele of
government
DEFINING PPPS IN EDUCATION
Defining Public-Private Partnership
• Relationship where government contracts out to private
providers the supply of a particular service of a defined quantity
and quality at an agreed priced for a specific period of time.
GOVERNMENT:
PRIVATE SECTOR:
― Enables public sector
―Maximizes the use of its skills,
to focus on delivering
resources and capacities to
other critical
deliver services in a more
functions and
efficient manner;
services;
―promotes certainty
― generates new business.
and predictability in
spending.
Win-win arrangement
PPPs in Education
• Definitions differ in terms of scope and
formality of arrangements.
• Common Elements:
―
―
―
―
Formal arrangement with contractual basis
Involve public and private sectors
Outcome focus
Sharing of risks/rewards between public and private
sectors
― Recognize complementary role of public and private
sectors.
Financing of Education
Provision
Financing
 Private schools
 User fees
 Private universities  Student loans
 Home schooling
 Tutoring




Vouchers
Contract schools
Charter schools
Contracting out
 Public schools
 Public universities
OPPORTUNITIES FOR PPPS IN
EDUCATION
OPPORTUNITIES FOR
PPP IN EDUCATION
• Expanded ESC
• K+12 Senior High
School PPP
Schemes
2013 GASTPE Budget
• Php 7.0 billion in 2013 vs. Php 6.3 billion in
2012
• 2013 budget sufficient for 1 million
grantees (DepEd)
Win – Win Solution
(DepED’s Perspective)
Proper Grantee
Selection
Decongest
Public Schools
Additional Enrollment
for Private Schools
Increased
Revenues for
Private Schools
Source: Usec Varela’s PPt Presentation:
“Enriching PPP in Education”
The Logic
Public
NEED classrooms.
Teachers and
expertise for
Grades 11 and 12
Private
Have classrooms,
teachers and
expertise for Grades
11 and 12
PPPs and the K to 12 Reform
• Senior High School Program
– Projected total enrollment : 1.1 million by 2016
– Offer Senior High School License: enables not
only private secondary schools but also private
high education institutions to participate
 Some public Junior High Schools will expand to offer
Senior High School
 Some public Junior High Schools will become stand
alone Junior High Schools
 Some public Junior High Schools will be developed
into stand alone Senior High schools
The Challenge of Bro. Armin Last
October 26, 2012
• Of the projected 1.1 million SHS students, how
many can the private sector absorb?
– SY 2016-2017: 400,000 (Grade 11)
SY 2017-2018: 800,000 (Gr 11 and 12)
• How many can you absorb during the
transition?
• What are your plans for after the transition?
PPP MODELS FOR SHS
Three Models
• Expansion of Current ESC Program
• Voucher System
– Variant: tiered vouchers
• “Concessions:” Individual contracts with schools
– Government will pay per student, may provide capital
– schools deliver enrollment and quality targets at
agreed-upon price
3 Models, Con’t
Expanded Education
Service Contracting
• Flat grant to selected
non-DepEd schools
• Government allocates
the number of grants
allocated per school
based on need
• Eligible schools are
selected based on
certain enrollment and
quality targets.
Tiered Voucher
System
• 100% Demand: free
exercise of market
choice by students and
their families.
• Universal: all public
elementary graduates
receive a voucher which
will be honored in any
DepEd or non-DepEd
school.
• Tiered: amount of
government subsidy
linked to students’
capacity to pay.
Concessions
• 100% Supply:
individual
negotiations with
non-DepEd
schools
• Government
provides lump
sum capital and
operating funds,
and schools
commit to deliver
certain enrollment
and quality targets
Source: DepED’s PPt Presentation to Congress, 15 Oct 2012
3 Models, Con’t
Option 1:
Education Service Contract
(ESC) scaled up and improved
Option 2:
Vouchers
Country
Description
Philippines
Government contracts directly with
private schools to pay for agreed
volumes of places for low income
students in areas where there is a
shortage of public school places
Netherlands (no top-up) Chile (top-up)
Government directly subsidises private
schools according to enrolment numbers.
Private schools allowed selective student
admissions. All education publicly
financed (Netherlands); Universal
vouchers, switching between public and
private schools (Chile)
Market
effect
"Managed Market – school by school" "Managed market – funding follow pupil”
Case study
ESC-FAPE
“Bijzondere “or special schools (N)
Sectarian PPP schools (Chile)
Pros
• DepEd retains control over
supplier base & student volumes
• Existing governance structure &
political consensus in place
• Allows free market response to
demand
• Consumer choice drives quality
competitiveness
• Increases access and new creation
Cons
• DepEd has to contract with every
single supplier
• Implies existing school base, not
new place creation
• No consumer choice
• Not means-tested, so not optimising
benefit to lower-income families, but
also benefiting those who could afford
to pay anyway
• Race to the bottom on price amongst
private suppliers
Option 3: Concessions
• Infrastructure PFI- Service
• Management Contract
UK/USA
Government gives concession to private
consortium to build, finance and maintain
school buildings over long time frame.
Separate school management and
educational delivery contracts are
tendered, which are competitively bid on
over much shorter time frames.
"Private build-operate-concession,
government owns"
• UK: Building Schools for the Future Private finance initiative
• USA: Seattle school district
management contract to EMOS
• PFI off balance sheet pre-finance &
improves overall quality of
infrastructure
• Management contract competitive &
shorter term to raise quality standards
• Separates management from asset
generation (2 different contracting
streams)
• No Primary quality levers
27
• No consumer choice
CHALLENGES IN IMPLEMENTING PPPS
IN EDUCATION
KEY CHALLENGES IN STRUCTURING
EDUCATION PPPs
1. Initial structure and prioritization of
objectives
1. Government priorities (meets DepEd
mandates)
2. Private participant priorities (price,
demand stability, financial viability,
performance targets)
2. The bidding process
3. Capacity building
4. Regulatory and legal issues
SELECTION CRITERIA OF
PPP PROJECTS
1. Project Readiness/Preparation
2. Responsive to the Sector’s Needs
3. High Implementability (bankable, no major
issues)
Thank You
SCHOOL VOUCHER
(also called an education voucher)
• is a certificate issued by the government, which parents can apply toward
tuition at a private school (or, by extension, to reimburse home schooling
expenses), rather than at the state school to which their child is assigned.
• An alternative to the education voucher is the education tax credit, which
allows individuals to use their own money to pay for the education of their
children or to donate money towards the education of other children.
• Under non-voucher education systems, people who currently pay for private
schooling are still taxed for public schools; therefore, they fund both public
and private schools simultaneously. Via offsetting the cost of private school
tuition, vouchers and tax credits are intended to allow students and families
to choose the school that best fits their needs. Opponents of school vouchers
say allowing families the option of both public and private schools
undermines the public education system through threatening its funding and
enrollment.
Source: Erica Cordova. "School Choice:
Vouchers". Ncsl.org. Retrieved 2011-08-11.
FORMS OF PUBLIC-PRIVATE PARTNERSHIPS
Service Delivery
Initiatives
• Private management of
public schools
• Contracting with
private schools for
education delivery
• Before and after school
care
• Private information/
testing services
• Private sector review
• Outsourcing of noncore functions
• Outsourcing of delivery
by public tertiary
institutions
Infrastructure PPPs
Demand Side
Finance Initiatives
Strategic
Partnerships
• Private Finance
Initiatives - finance,
construction and
maintenance of core
and non-core
educational assets
• Private leasing of
public school/
tertiary institution
facilities
• Equipment and
maintenance of IT
laboratories
• Publicly financed
vouchers and
scholarships
• Privately financed
vouchers and
scholarships
• Publicly provided
student loans
• Subsidies for private
schools
• Private involvement in curriculum
development
• Private sector
involvement in
quality assurance
• Adopt-a-school
initiatives
• Research
collaborations
• On-job-training
• Public/private
tertiary institution
affiliations
• Social marketing
Typology of Forms of Contracting in Education
Two other contract types
• Auxiliary Services/Professional Services:
involve contracting the private sector to undertake
education-related functions such as school review,
schooling improvement or curriculum development.
• Public Private Partnerships (PPPs) for
educational infrastructure: involve contracting
the private sector to design, build, finance and
operate educational infrastructure such as
classrooms and school hostels.
Regulatory Differences Among Charter Schools, Contract
Schools and CPS Performance Schools, Chicago Public Schools
Source: http://www.ren2010.cps.k12.il.us/types.shtml
Five Types of Contracts in Education
TWO WAYS OF GIVING PUBLIC FUNDS
FOR PRIVATE OPERATION
Supply side financing
Demand side financing
Examples
Aided schools, India
Concession schools, Columbia
Charter Schools, US
Voluntary Aided schools, UK
Voucher schools, Colombia
Voucher schools, USA
Voucher schools, Chile
Voucher schools, New Zealand
Funding of
school
By public sector
By public sector
Operation
By private sector
By private sector
Who receives
the resource
The schools directly
Families, as a voucher
Is funding
provided on a
per pupil basis?
Not necessarily:
Block grants in India
Per student grant in UK, USA
Necessarily per student
Six Models – Three for Discussion
• Improved ESC
• Vouchers – Universal
• Vouchers – Targeted
• Concessions
• Charter Schools
• Others
41
Some PPP Models for SHS Provision
in the Philippines
Option 1:
Education Service Contract (ESC)
scaled up and improved
Option 2:
Vouchers – Universal
Option 3:
Vouchers – Targeted
Country
Philippines
Netherlands (no top-up) Chile (top-up)
Colombia
Description
Government contracts directly with
Government directly subsidises private Vouchers made available to students
private schools to pay for agreed volumes schools according to enrolment numbers. from low income families attending
of places for low income students in
Private schools allowed selective student public schools but who have been
areas where there is a shortage of public admissions. All education publicly
accepted into private schools.
school places
financed (Netherlands); Universal
Renewable contingent upon students
vouchers, switching between public and academic performance
private schools (Chile)
Market effect
"Managed Market – school by school"
"Managed market – funding follow pupil” “Managed market – funding follow pupil”
Case study
ESC-FAPE
“Bijzondere “or special schools (N)
Sectarian PPP schools (Chile)
Pros
•
•
Cons
•
•
•
DepEd retains control over supplier •
base & student volumes
•
Existing governance structure &
political consensus in place
•
DepEd has to contract with every
single supplier
Implies existing school base, not
new place creation
No consumer choice
•
•
Allows free market response to
demand
Consumer choice drives quality
competitiveness
Increases access and new creation
PACES – Plan de Ampliacion de la
Coberatura de la Educacion Secundaria
• Increase access to secondary
schooling for children from low
income families
Not means-tested, so not optimising •
benefit to lower-income families,
•
but also benefiting those who could
afford to pay anyway
Race to the bottom on price
amongst private suppliers
No quality lever
Demand for vouchers can outrun
their supply
42
Some PPP Models … continued
Option 4: Concessions
• Infrastructure PFI- Service
• Management Contract
Option 5:
Charter school license
Option 6: Others
(CSR, payment by results)
Country
UK/USA
USA
Philippines, UK
Description
Government gives concession to private Government provides funding to schools, a. Addopt-a-school: corporation
consortium to build, finance and
attended out of choice, without direct
support public schools
maintain school buildings over long time control
b. Dept. for Work and Pensions- back to
frame. Separate school management
work schemes by NGO providers
and educational delivery contracts are
(social enterprise)
tendered, which are competitively bid on
over much shorter time frames.
Market effect
"Private build-operate-concession,
government owns"
Case study
•
•
Pros
•
•
Cons
•
•
•
"Funding follows the pupil"
a. School-by-school; b. results based
financing
UK: Building Schools for the Future - •
•
Private finance initiative
USA: Seattle school district
management contract to EMOS
Edison - For-profit
KIPP - Non-profit
PFI off balance sheet pre-finance & •
improves overall quality of
infrastructure
•
Management contract competitive & •
shorter term to raise quality
standards
Increase diversity of for-profit & not- a. Direct engagement of businesses
for-profit supplier base
b. Risk transfer to provider
Increase consumer choice
Decrease number of failing public
schools
Separates management from asset
generation (2 different contracting
streams)
No Primary quality levers
No consumer choice
•
•
a. Adopt a school (Philippines),
b. DWP (UK)
Slow build-up, marginal system-wide a. Limited Scalability
b. High risk
effects (USA: 15+ years, charters
only about 6% of system)
Failing charters difficult to close
43
Six Dimensions –
Two for Discussion
•
•
•
•
•
•
Quality
Access
Equity
Pricing and Financing
Business Arrangements
Policy Environment
44
Comparing PPP Models for SHS
Dimensions
Indicative Fungible
Mechanisms
Indicative Key Performance
Indicators
Quality
• Performance based
• Student Learning
incentives
Outcomes
• Performance based
contract renewal
• Accreditation of private
providers
Access
• Region based coverage • Transition rate from
• Bundling highly
grades 10 to 11
desirable and less
desirable areas
• Targeting
• Graduation rates for low
• Formula-based funding
income students
Equity
Comparing PPP Models for SHS … continued
Dimensions
Indicative Fungible
Mechanisms
Pricing and
financing
•
•
•
•
Business
Arrangements
•
•
•
•
Indicative Key Performance
Indicators
Tiered pricing
• Sustainable, transparent, and
Formula based pricing
predictable public expenditure
Flat fee plus inflation factor
on non DepEd providers
Private finance with
including whole lifecycle costs
government subsidy
• Pre-finance investment (off • Lifecycle price per student at or
balance sheet)
below agreed price point
• Renewable management
contract with performance
outcomes
Time-bound contracts
Decentralized
Centralized with regulator
One model plus limited
pilots
• PPP administration and
management within DedEd’s
current institutional capacity
• Fair playing field for long-term
investment by private providers
COMPARING PPP MODELS FOR SHS
Dimensions
Indicative Fungible Mechanisms
Indicative Key Performance
Indicators
Quality
• Performance based incentives
• Performance based contract
renewal
• Accreditation of private
providers
• Student Learning
Outcomes
Access
• Region based coverage
• Bundling highly desirable and
less desirable areas
• Transition rate from
grades 10 to 11
Equity
• Targeting
• Formula-based funding
• Graduation rates for
low income students
Comparing PPP Models for SHS … continued
Dimensions
Indicative Fungible Mechanisms
Indicative Key Performance
Indicators
Pricing and
financing
•
•
•
•
Tiered pricing
Formula based pricing
Flat fee plus inflation factor
Private finance with government
subsidy
Pre-finance investment (off balance
sheet)
Renewable management contract
with performance outcomes
• Sustainable, transparent, and
predictable public
expenditure on non DepEd
providers including whole
lifecycle costs
• Lifecycle price per student at
or below agreed price point
Time-bound contracts
Decentralized
Centralized with regulator
One model plus limited pilots
• PPP administration and
management within DedEd’s
current institutional capacity
•
•
Business
Arrangements
•
•
•
•
• Fair playing field for longterm investment by private
providers
DepED PRESENTATION TO CONGRESS
(OCTOBER 2012)
THANK YOU!
EXTRA SLIDES
Background
DETERMINING THE RIGHT MIX OF PUBLIC AND PRIVATE
INVOLVEMENT IN INFRASTRUCTURE FINANCING AND DELIVERY
Role of Government in Education
• Rationale for government involvement in education:
–
–
–
–
–
Externalities
Capital market imperfections
Agency concerns
Equity
Information asymmetries
• Government has a variety of policy instruments at
its disposal in order to meet its policy objectives:
– Ownership/Delivery
– Funding
– Regulation/Information
• PPPs recognize that governments can meet their policy
objectives using different service delivery models – not
just ‘traditional’ public finance/public delivery model.
Challenge for 2013 and Beyond:
Will there be a 20% increase in the
enrollment of private schools?
Issues in the GASTPE Expansion
• Demand vs. Supply Issues
• Distribution among schools
• Appropriate grantee selection process
• Will it increase enrollment in private
schools?
Source: Usec Varela’s PPt
Presentation: “Enriching
PPP in Education”
• Decongest public schools
• Minimize cost of expanding education services
• Improve quality of education for beneficiaries
• Improve quality of education for nonbeneficiaries by improving conditions in the
public schools.
Source: Usec Varela’s PPt
Presentation: “Enriching
PPP in Education”
HOW IS THIS PUBLIC-PRIVATE
PARTNERSHIP PROGRAM BEING DONE?
The public-private partnership program of the government will help
solve the shortage of classrooms in our basic educational system.
Question is:
• how is this PPP modality being done and implemented?
• How is the distribution of the school buildings being done—will it be
concentrated in the urban centers like Metro Manila and others to
the prejudice of the rural areas which need more of these
classrooms as those in Metro Manila?
• The urban centers are being provided with assistance by the local
government units which have some resources/some remittances to
augment the funding of the Department of Education for the basic
educational requirements of our students.
• Inappropriate grantees are those students who
would have enrolled in a private school, even
without government subsidy.
• If subsidy is given to these students, the
enrollment in private schools will not increase.
• The revenue to the school will remain the same.
Gov’t subsidy will be enjoyed by private
households.
Source: Usec Varela’s PPt
Presentation: “Enriching
PPP in Education”
Critical Factors for Success
• Quality advantage of private schools
• Appropriate Amount of Grant
– Calibrated to target household belonging
to certain income groups.
Source: Usec Varela’s PPt Presentation:
“Enriching PPP in Education”
PPP Objectives
(as articulated by DepED Usec. Varela)
• Minimize the burden for expanding the public
schools.
• Provide opportunity for HEI’s to make use of available
capacity that would be underutilized as a result of the
loss of college students during the transition years.
• Provide opportunities for other private schools to
expand programs and increase enrollment.
• Allow for greater diversity in program offerings,
particularly in the context of the varied curriculum
tracks for senior high school.
ISSUES TO BE RESOLVED
• Which schools can participate? How will they be
selected?
• Which students would be entitled to benefit from the program?
Among those who will enroll in private senior high schools, who
among them will receive government support?
• How will the students be divided between those who will remain in
the public schools and those who will be encouraged to go to the
public schools?
• What price will we set for these arrangements? Will this price be the
same for all or will it vary depending on the place, type of school, and
income background of the beneficiary?
• What will happen to the current GASTPE program?
• How do we ensure that the participating private schools deliver high
quality programs?
THE AIM OF PPPS
(i) to promote improvements in the financing and
provision of services from both the public and
private sectors but not to increase the role of
one over the other; and
(ii) to improve existing services provided by both
sectors with an emphasis directed on system
efficiency, effectiveness, quality, equity and
accountability.
PURPOSE OF PPP TYPOLOGY
With this knowledge of the typology of PPPs in
education, practitioners and policy-makers can
make informed choices about whether a public
private partnership might help meet their
resource needs to ensure high-quality education
for those served.
Benefits
of
Public-Private
Partnerships
Benefits of Public-Private Partnerships
• Benefit from economies of scale regardless of the size of
the government entity
•
Allow government agency to focus on functions where it
has a comparative advantage
•
Increase access, especially for groups who have been
poorly served under traditional forms of service delivery
•
Increase transparency of government spending by making
the cost of services more visible.