Demand-Side Financing : International Experience Harry Anthony Patrinos World Bank Government and Non-Government Participation in Education: A Regional Symposium, Kuala Lumpur, Malaysia, July 2004

Concepts  School choice for efficiency (learning)  Universal and targeted school choice  Equity outcomes (access and learning)  Market forces  Government regulation

Examples  Capitation funding in Holland  Private schools in Denmark  Choice in the Czech republic  Subsidies for poor in Côte d’Ivoire

Financing and Provision

Capitation Funding in Holland  Oldest school choice system  1917 ‘schools to the parents’  Freedom of education  Private delivery, public finance  Schools profiles, published information

Holland: Primary School

Holland: Secondary School

Holland: Outcomes  Choice and Accountability  Achievement  Efficient  Equity

TIMSS Math Performance by GNP per capita GNP per Capita Math Score Netherlands Korea Taipei Japan Singapore Hong Kong USA Finland Belgium UK Israel Italy Australia Canada South Africa Chile Slovenia Cyprus New Zealand Hungary Czech Russia Turkey Philippines Lithuania

Private Schools in Denmark  Long tradition of freedom in education  Only 28 parents needed to start school  Funding follows students – taximeter  12%+ private; increasing

Danish Voucher – Taximeter  Activity-based allocation system  Introduced gradually  Open University in 1990  Upper secondary technical, business colleges in 1991  Private primary, lower secondary schools in 1992  Higher education in 1994  Adult vocational training centers in 1995  Folk high schools, production schools 1996

Advantages of Taximeter  Demand-driven, result-oriented  Economically rational  Demographic changes reflected  Administrative simplification  Collaboration and coordination

Denmark: Local Control  Compulsory education municipal responsibility  Schools set curriculum, most follow MOE guidelines  Financed by municipality, block grant from state

Denmark: Outcomes  System does not create problems (OECD)  Teacher unions not opposed  Disappointing performance TIMSS, PISA  No mechanism for disseminating results  Demand for information is growing

School Choice in Czech Rep.  After 1989, system reformed so demand for secondary schools could be satisfied:  Funding reflects demand – normatives  Increased school autonomy, supply change  Direct support for private schools

Czech Results  Private schools in response to incentives  More common where public are poor  Competition improves performance of public (Filer and Munich 2002)

Private Schools in Côte d’Ivoire  Legal foundation for private participation  Public service, but private may be granted right  Government is contracting out education  Public support to private schools:  $26 million in 1993 to $39 million in 2001  116,210 students in 1993 to 223,244 in 2001, 92%

A Few Lessons  Targeting  Holland: Minorities get 1.9x basic amount; low-income, 1.25x  Côte d’Ivoire: scholarships for poor to private  Privatization  Holland: No significant elite school sector; few for-profit schools (1%)

More Lessons  Accountability  Holland: 86% of parents choose schools (50% influenced by religion); MOE standards, rights of parents; establishment of schools  No Absence of Government  Holland: central control over public & private; large central staff: 3,000 (82 in 1919); strong inspectorate; stringent regulations  Czech Republic: 1992: 26 normatives – or formulas; 2000: 361pp, 2000 normatives

Messages  Increase effectiveness of public finance  Investigate market for education  Demand-side financing may:  Improve equity & reduce poverty; learning outcomes  Rationale not always efficiency, rather political  Information, evaluation, transparency