a review of innovative allocation mechanisms Jamil Salmi and Art Hauptman International Conference Economics of Education: Major Contributions and Future Directions Dijon, 20-23 June 2006

key financing questions resource mobilization how much should be spent on tertiary education? (macro-level) income generation at institutional level who should pay, and what share? when and how? is it affordable? (student aid)

key financing questions resource utilization how should public resources be allocated? how efficient and effective are institutions?

outline of the presentation typology of allocation mechanisms which mechanism is more effective? preliminary lessons from international experiences

outline of the presentation typology of allocation mechanisms

allocation mechanisms from untied funding to performance-based funding

performance-based funding output-based formula funding competitive funds performance contracts

allocation mechanisms from direct funding to indirect funding

Colorado funding model Old Model Direct Government Funding Tuition New Model Indirect Gov’t Funding via Stipends Tuition & Stipends

Colorado experience voucher for an undergraduate education at eligible universities; no cash in students’ hands. $2,400 per year at public institutions $1,200 per year for low-income students attending private institutions degree-seeking, non-degree, and teacher licensure undergraduate students eligible age, income and financial aid eligibility are irrelevant to qualify

Brazil ProUni State purchases seats in private universities offered to top students from low-income families who don’t get a seat in a public university no actual payment, but tax exemption

Antioquia “access with equity” partnership among local government, private firms and private universities low-income students who don’t get a seat in a public university get financial aid to enter a private university 75% scholarship and 25% subsidized loan

outline of the presentation typology of allocation mechanisms which mechanism is more effective?

Alice in Wonderland Lewis Carroll Alice Would you please tell me which way I ought to go from here? Cheshire Cat That depends on where you want to get to.

policy objectives pursued improving access and equity improving external efficiency improving internal efficiency and sustainability

improving external efficiency improving quality competitive funds merit-based scholarships increasing relevance formula with differential weights for high priority fields grants and scholarships in priority fields student loans in priority fields loan forgiveness for students in public service jobs

outline of the presentation typology of allocation mechanisms which mechanism is more effective preliminary lessons from international experience

themes principles of an appropriate mechanism country context link to quality assurance political economy dimensions

principles of an appropriate allocation instrument linked to performance / policy objectives transparent flexibility compatibility Expansion, efficiency, quality, relevance, equity? Strengthening the strong or stimulating the weak? combination

which allocation instrument is better? local circumstances reform for what? time dimension combination

link to quality assurance pro: powerful incentive con: punitive, rewards stronger institutions link at the margin? Argentina: voluntary accreditation gives eligibility for competitive fund

political economy dimensions controversial topics tuition fees instead of “free” education targeted scholarships instead of universal student loans instead of scholarships private institutions alongside public institutions dealing with the politics not an excuse to avoid reforms Nicaragua Minister of Education