Launch Seminar, 26 June 2017, Brussels with Deborah Nusche & Thomas Radinger, OECD, Directorate for Education and Skills School systems have limited financial resources with which to pursue their objectives and the design of school funding policies plays a key role in ensuring that resources are directed to where they can make the most difference. As OECD school systems have become more complex and characterised by multi-level governance, a growing set of actors are increasingly involved in financial decision-making. This requires designing funding allocation models that are aligned to a school system’s governance structures, linking budget planning procedures at different levels to shared educational goals and evaluating the use of school funding to hold decision makers accountable and ensure that resources are used effectively and equitably.

1. The Funding of School Education
Connecting Resources and Learning
Launch Seminar
26 June 2017, Brussels
Deborah Nusche & Thomas Radinger
Directorate for Education and Skills

2. • Purpose: to explore what policies best ensure that school
resources are effectively used to improve student outcomes
• Context: A range of global developments have increased
attention to school resource use
– Global financial crisis
– Demographic developments
The OECD School Resources Review (2013 - )
Background: Why Look at School Resources?

3. Source: OECD database, Historical population data and projections (1950-2050)
Historical and projected development of school age population 1990-2020 (1990 = 100)
50
60
70
80
90
100
110
120
1990 1995 2000 2005 2010 2015 2020 2025
50
60
70
80
90
100
110
120
1990 1995 2000 2005 2010 2015 2020 50
60
70
80
90
100
110
120
1990 1995 2000 2005 2010 2015 2020
0 to 4 years 5 to 9 years 10 to 14 years 15 to 19 years
Lithuania BelgiumEU (27 countries)
The OECD School Resources Review (2013 - )
Background: Why Look at School Resources?

4. 4
Financial
resources
Physical
resources
Human
resources
Other
resources
The OECD School Resources Review
A comprehensive approach

5. The OECD School Resources Review
Methodology
Analysis
Analytical framework
Review of research
Qualitative data collection
Country background reports
(following a common
framework)
Country
reviews
OECD-led review visits
Stakeholder interviews
External experts
Tailored policy advice for
individual countries
Synthesis
Policy conclusions based on
comparative and country-
specific work
3 synthesis reports
- School funding - 2017
- School offer - 2018
- Human resources - 2019
All documents are available at:
http://www.oecd.org/education/schoolresourcesreview.htm

6. 6
The OECD School Resources Review
Participation and collaboration
• 18 countries are currently participating in the project
• Additional country reviews are still possible. The project has
capacity to conduct further reviews in 2018 and potentially 2019.
• A partnership with the European Commission was established
for this Review. The financial support of the EC:
– Covers part of the participation costs of countries which are part of the
EU’s Erasmus+ programme
– Contributes to the preparation of the series of thematic comparative
reports to the benefit of all countries

7. 7
The OECD School Resources Review
Current participation levels

8. The Funding of School Education:
Connecting Resources and Learning

9. • The Review looks at resource issues from an educational
perspective
– Taking account of broad educational goals, different governance contexts
and the importance of institutional arrangements in change processes
• The focus is on achieving efficiency alongside quality and
equity goals.
– Investing early, reducing educational failure, enhancing teacher quality,
matching demand and supply
The Funding of School Education
How does the study look at school funding?

10. Source: OECD (2012) PISA 2012 Database, Tables IV.1.6 and IV.2.2
The cost of grade repetition
0
2
4
6
8
10
12
14
0
10000
20000
30000
40000
50000
60000
Japan0.0
Norway0.0
Estonia3.5
Iceland1.2
Israel1.9
UnitedKingdom2.7
Slovenia3.4
Poland4.2
CzechRepublic4.9
Korea3.6
Sweden4.0
Finland3.8
Denmark4.7
NewZealand5.4
SlovakRepublic7.6
Australia7.5
Canada8.0
Ireland8.6
UnitedStates13.3
Austria11.9
Italy17.1
Portugal34.3
Germany20.3
Spain32.9
France28.4
Netherlands27.6
Belgium36.1
Total annual cost per repeater (USD, PPPs)
Total annual cost, relative to total expenditure on primary and secondary education (%)
Achieving efficiency & equity objectives
Avoiding the high costs of educational failure

11. Achieving efficiency & equity objectives
Avoiding the high costs of educational failure
Change in grade repetition rates between 2009 and 2015

12. Source: OECD (n.a.) Education at a Glance 2016 Database, Educational finance indicators
Expenditure per student by educational institutions, relative to expenditure in primary
education (Primary = 100)
20
40
60
80
100
120
140
160
180
CzechRepublic
France
Netherlands
Austria
Portugal
NewZealand
Germany
Ireland
Australia
Belgium
Turkey
Spain
Finland
Switzerland
Japan
EU21
UnitedStates
OECD-Average
Norway
UnitedKingdom
Mexico
Luxembourg
Korea
Italy
Sweden
Latvia
SlovakRepublic
Denmark
Slovenia
Lithuania
Poland
Annualexpenditureperstudent(Primaryeducation=100)
Secondary education ECEC
Achieving efficiency & equity objectives
Avoiding the high cost of educational failure

13. • The Review looks at resource issues from an educational
perspective
• The focus is on achieving efficiency alongside quality and
equity goals.
• The design of school funding policies plays a key role in directing
funding to where it matters
The Funding of School Education
How does the study look at school funding?

14. Governing
school
funding
Distributing
school
funding
Planning
and
evaluating
the use of
funding
14
Key elements in school funding policies
Who?
How?For what?

15. • Many actors contribute to raising and managing funds
– Over 90% of funds come from public sources (but private funding is
growing)
– Funds are typically raised by 2 or 3 different levels of governance
– International funds increasingly contribute to funding education
– Schools may contribute to raising their own funds
– Private actors have become important end users of public funding
15
Governance of school funding
Who pays and who decides?

16. On average, sub-central governments are the
most important spenders in school education
16
0
10
20
30
40
50
60
70
80
90
100
Switzerland
UnitedStates
Korea
Japan
Argentina
Canada
Poland
Norway
Australia
Germany
Brazil
Finland
CzechRepublic
Spain
Latvia
Belgium
Lithuania
Iceland
Mexico
SlovakRepublic
Austria
OECDaverage
UnitedKingdom
EU22average
Chile
Estonia
Israel
France
Portugal
Italy
Ireland
Luxembourg
Turkey
Colombia
Hungary
Slovenia
Netherlands
%
Sub-central level transfers to schools Initially transferred from the central level
Source: OECD (2016), Education at a Glance 2016: OECD Indicators, Table B4.3
Share of final funds allocated to schools by sub-central government (2013, ISCED 1-4)

17. But governance arrangements vary across
countries
17
0
10
20
30
40
50
60
70
80
90
100
UnitedStates
Norway
Poland
Finland
Canada
Latvia
Lithuania
Iceland
SlovakRepublic
Korea
UnitedKingdom
Argentina
Australia
Japan
Spain
Mexico
Germany
Belgium
CzechRepublic
Switzerland
Austria
NewZealand
Netherlands
Hungary
Slovenia
Turkey
Colombia
Luxembourg
Ireland
Italy
Portugal
France
Israel
Estonia
Chile
OECDaverage
%
Countries where
regional /state
authorities allocate
most of the funding
Countries where
central authorities
allocate most of the
funding
Countries where local
authorities allocate most
of the funding
Source: OECD (2016), Education at a Glance 2016: OECD Indicators
Proportion of funding allocated to schools by government level, after transfers between
government levels (2013)

18. Municipal fragmentation in international
comparison
18
Source: OECD (2017), "Subnational government structure and finance", OECD Regional Statistics (database).

19. Schools may have considerable responsibility
for managing their own budgets
19
0
10
20
30
40
50
60
70
80
90
100
CzechRepublic
NewZealand
Estonia
Iceland
Latvia
Denmark
UnitedKingdom
Netherlands
Sweden
Australia
SlovakRepublic
Norway
Lithuania
Luxembourg
Finland
France
Spain
Belgium
Slovenia
OECDaverage
Poland
UnitedStates
Chile
Ireland
Canada
Portugal
Switzerland
Japan
Israel
Korea
Mexico
Hungary
Greece
Turkey
Austria
Italy
Germany
%
Percentage of students in schools where the principal has considerable
responsibility for formulating the budget (2015)
Source: OECD (2016), PISA 2015 Results: Policies and Practices for Successful Schools (Volume II), Table II.4.1

20. Private schools receive considerable
amounts of public funding
20
0
10
20
30
40
50
60
70
80
% Lower secondary education Primary education Upper secondary education
Percentage of students enrolled in government dependent private schools (2014)
Source: OECD (n.a.) Education at a Glance 2016 Database, Share of students enrolled by education level

21. Emerging tensions
Decentralisation (Re) Centralisation
Autonomy Capacity
Diversity Equity
Private Public
Governance of school funding
Who pays and who decides?

22. • Connect funding strategies to education goals
• Align roles and responsibilities in complex funding systems
• Build capacity for strategic school funding
Governance
Who?
Distribution
How?
Planning/
Evaluation
For what?
22
The Funding of School Education
Main pointers for policy

23. Countries need to consider a set of guiding questions to design funding
models that fit governance structures:
• Which resource categories are we looking at?
• What basis is used to fix amounts allocated to schools?
• What balance to strike between the main allocation mechanism and
additional grants?
• How to determine differential funding needs of schools?
• Which indicators are best suited to meet student needs?
Distribution of school funding
How to design allocation mechanisms?

24. Source: OECD (n.a.) Education at a Glance 2016 Database, Educational finance indicators: Expenditure by resource category
Current and capital expenditure as a percentage of total expenditure in secondary educational
institutions (ISCED 2-3, 2013)
Over 90% of annual spending is for current expenditure
(and 77% of this on staff compensation)
0
10
20
30
40
50
60
70
80
90
100
%
Current expenditure Capital expenditure Current expenditure OECD average
Staff compensation Staff compensation OECD average

25. • Administrative discretion is based on an individual
assessment that each school needs
• Historical costs consider historical expenditure to calculate
the allocation for the following year.
• Bidding and bargaining involve schools responding to open
competitions or making a case for additional resources
• Formula funding involves the use of objective criteria with a
universally applied rule to establish the amount of resources
each school is entitled to
25
What basis is used to calculate the amount
of funding allocated to schools?

26. • Two main approaches
– Including additional funding in the main allocation mechanism
(e.g. through weightings in a funding formula)
– Providing additional resources through targeted programmes
(external to the main allocation mechanism)
How to ensure that funding is allocated equitably
across schools in need of additional resources?

27. • Systems may direct additional funding to certain geographical
areas or to the actual population in each school
Area-based funding aims to address additional
negative effects of a concentration of disadvantage
Student-based funding aims to adapt funding
levels to the needs of the actual population in each
school
How to determine differential funding needs
of schools?

28. • Availability and quality of data is a key concern
• Trade-off between simplicity / transparency and accuracy / fairness
School-based data Census-based data
• National research can be used to choose the best combination of
indicators
Which indicators are best suited?

29. Emerging tensions
Formula Discretionary
Regular Targeted
Student-focused Area-focused
Distribution of school funding
How to design funding mechanisms?

30. • Connect funding strategies to education goals
• Align roles and responsibilities in complex funding systems
• Build capacity for strategic school funding
Governance
Who?
• Develop a stable and transparent system
• Match funds to learner needs
• Strike a balance between regular and targeted funding
Distribution
How?
Planning/
Evaluation
For what?
30
The Funding of School Education
Main pointers for policy

31. Key question: Who should be held accountable and for what aspects?
Factors to consider:
• Division of responsibilities, capacity for financial management, collaboration
across levels of control, comparability of data
• Multiple school accountability and stakeholder involvement in evaluation
Evaluating the use of school funding in
complex governance systems
Horizontal
Bottom-up
Vertical
Accounting
and
Internal control
Reporting
External
control

32. Central level
Sub-central
level
School level
Who can be involved in evaluating the use
of school funding?
- Processes as part of
public governance
- Involvement of
education authorities
- Benchmarking systems
- Public sector reforms
- Performance audits

33. Public availability of budgetary information
Source: OECD (2017), The Funding of School Education: Connecting Resources and Learning, OECD Publishing, Paris.

34. Public availability of budgetary information
Source: OECD (2017), The Funding of School Education: Connecting Resources and Learning, OECD Publishing, Paris.

35. Emerging tensions
Accountability Trust
Focus on compliance Focus on improvement
Equity funding Equity outcomes
Transparency Administrative burden
Evaluation of school funding
For what are funds used?

36. • Connect funding strategies to education goals
• Align roles and responsibilities in complex funding systems
• Build capacity for strategic school funding
Governance
Who?
• Develop a stable and transparent system
• Match funds to learner needs
• Strike a balance between regular and targeted funding
Distribution
How?
• Be transparent about use of funds for system goals
• Bring together information on funding, processes and outcomes
• Pay particular attention to evaluating equity outcomes
• Use evidence for future budget planning
Planning/
Evaluation
For what?
36
The Funding of School Education
Main pointers for policy

37. Connect
funding
strategies to
education
goals
Match
funding to
learner
needs
Evaluate for
continuous
improvement
37
The Funding of School Education
Main pointers for policy

38. 38
Thank you for your attention!
All publications of the School Resources Review can be found at:
www.oecd.org/edu/school/schoolresourcesreview.htm
For further information:
deborah.nusche@oecd.org
thomas.radinger@oecd.org