Jordan: Public Expenditure Review Issues in Education

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Jordan Public Expenditure ReviewIssues in
Education

• Ayesha Vawda
• June 18, 2003

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Outline

• Purpose of PER in Education
• Key Questions to be Addressed
• Data Requirements

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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

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Key Questions

• 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 moneys worth?
• How much is enough?

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How does the PER define the sector?

• Basic education only?
• All levels of formal education?
• Does it include training?
• RD operations attached to universities?

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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

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How much does government spend on education (as a
of GDP), 2000
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What share of total public spending has gone to
education in Jordan
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Private expenditure

• ECD 99 private
• Basic and Secondary 14 private, 12 UNRWA
• Tuition fees account for 30 of university
  recurrent expenditures

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Private expenditure as of total
Netherlands
Bolivia France UK
0
50
100
S. Africa Malaysia
Venezuela Ghana USA
Indon. German.
Peru Uganda Sierra Leone
Source Psacharopoulos and Nguyen 1995 Fighting
Poverty the role of government and the private
sector World Bank.
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Private enrollment as of total
Kuwait France
Netherlands Mauritius
0
50
100
Mexico USA Niger Cyprus
Australia Korea
Chile
Belgium
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Is public spending sustainable?

• Macro-economic projections
• Governments sectoral goals that impact costs
• Education Reform for Knowledge Economy
• Demographic projections for school-age
  projections
• Governments goals that affect intersectoral
  allocations

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Education Reform for Knowledge Economy
JD m
450
Baseline Scenario
400
Reform Scenario A
350
300
Reform Scenario B
250
200
1
2
3
4
5
6
7
Years
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2. How does government finance?

• Intergovernmental fiscal relations
• Central vs. local financing?
• Tax rate setting authority for governorate?
• Subventions to governorates? Conditional/unconditi
  onal?
• Local top up in education financing?

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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?

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3. What does government finance? Budget share by
level of Education
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What does government finance? Budget share by
Type of Expenditure (Basic and Secondary, 2000)
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Are wages crowding out complementary outputs?

• of total current education expenditure for
  teachers compensation, 1997
• Jordan 75.0
• Low income 67.5
• Lower-middle income 64.1
• Upper middle-income 47.8
• Higher income 57.3
• Source World Development Indictors, 2001

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4. Should Government Finance?

• Supply and Finance of Education Originally
  Private
• And, why not?
• So why should government intervene?

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Because.Market Failure

• Equity
• Externalities
• Capital market imperfections
• Information asymmetries

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Child Mortality by Education of Mother
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ButGovernment Failure

• Equity
• External Efficiency
• Internal Efficiency
• Sustainable finance

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Disparities between Girls and Boys Enrollment

• 1990, avg 6-year-old girl in low, mid-income
  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

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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

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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

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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

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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

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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
• Promote Equity
• Achieve Externalities
• Overcome Capital Market Imperfections
• Overcome Information Asymmetries

• Avoid Government Failure
• Promote Equity
• Avoid Inefficiency
• Achieve Sustainable Finance

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Financing and Provision
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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

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Distribution of Expenditures by Income Quintile
Poor get less education
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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

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6. Is the public getting its moneys worth?

• Measuring educational outcomes
• Improving quality of public spending
• Spending on the right thing
• Correcting for market failures
• Demand vs. supply side interventions
• Efficiency in spending
• Absorptive capacity
• Leakages and ME

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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?

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Education Expenditure and Achievement
TIMSS Ranking
Maths
Science
United States Switzerland Austria Canada Norway De
nmark Japan Netherlands New Zealand Spain Czech
Rep. Korea Hungary
28 17 8 25 12 8 18 18 26 20 27 34 3 3
9 6 24 22 31 27 6 2 2 4 14 9
0
2,000
4,000
6,000
8,000
Expenditure/student
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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

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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

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School Size of MOE Schools in Jordan
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Cost Efficient School Size

• Amortized cost of Capital and Equipment
• New Schools for student sizes Vertical
• 1,200 720 360 Extension
• Construction 58,539 42,040 29,666 608
• Furniture Equip 13,558 12,549 11,791 80
• Computers 7,914 7,914 7,914
• Total 80,011 62,503 49,371 688
• Per Student (JD) 67 87 137
  19

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School Construction Alternatives
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Cost-Effectiveness Analysisof Inputs for
Portuguese Achievement, Brazil
Achievement change by input (coefficients) 3.513
-5.650 7.228 8.969 6.403 4.703
4.864 0.055 -0.160 3.594 3.17
7 2.383
Achievement gains per US spent 1.94 - 0.82 0.56 3
.88 2.67 1.43 0.14 - 1.95 1.44 0.43
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
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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

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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
• Governments goals for the sector that affect
  spending
• Mobilization of private resources (e.g., private
  provision, cost recovery)

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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