Financing Elementary Education Kathrin Bock-Famulla 7 th Meeting of the OECD Network on Early Childhood Education and Care Paris, 21st June 2010

21. Juni 2010Page 2 ECEC in the German context … requiring effective investments in ECEC Increasing … demand for institutional EC CARE … importance of EC Education Enforcing … quantitative extension … qualitative improvements of the German ECEC system(s)

21. Juni 2010Seite 3 Funding structures & mechanisms Allocation of resources impact Structures and range of services effect Professional pedagogical practices in facilities affect Education and development of children Central hypotheses

21. Juni 2010Seite 4 Basic assumptions and mission of the project Funding mechanisms and structures govern the quantity and quality of services Desired ECEC quality should be the main starting point for the design of a funding approach Heterogeneous educational needs of children require different and diverse educational practices Needs-based educational practices are based on unequal allocation of resources

21. Juni 2010Seite 5 Requirements on the funding approach  Politics, administration, providers, centers are tied to defined goals  Transparent criteria are used for determining the budget of each facility  Differences in the funding are based on comprehensible and legitimate reasons  Differences in the center funding on the local level are transparent and well-founded

21. Juni 2010Seite 6 Project steps Pedagogical mission and goals a)Developing an approach of ECEC practice of good quality b)Defining the pedagogical & supporting activities of ECEC facilities Quantity and value structure of necessary resources for ECEC facilities a) Specifing all relevant human and material resources for ECEC facilities b) Identifying additional resource requirements c) Determining operating costs (typical & special cost structures & levels) Methods and procedures a) Developing a formula funding approach for ECEC facilities b) Generating a cost-calculation tool c) Designing a simulation model for testing purposes

21. Juni 2010Seite 7 The formula funding approach … can be described as a function of the operating costs of an individual ECEC facility … is composed of multiple mathematical formulae by which the financial resources to be made available to an ECEC facility are calculated

Key components of the formula funding approach Base rate I … is dependent on the size of the facility (approved slots) but not dependent on the number of children enrolled … provides the coverage of fixed costs 21. Juni 2010Seite 8

Key components of the formula funding approach Base Rate II  … is dependent on the number of children enrolled in the facility  … provides the coverage of the facility‘s variable costs 21. Juni 2010Seite 9

Key components of the formula funding approach Base Rate II  … funds are disbursed per child (c) weighted - by the child‘ s age (a c ) - by the time the child spends in facility (t c ) 21. Juni 2010Seite 10

Key components of the formula funding approach Indicators (i) … correlating to variations in the intensity of the children‘s and facilities‘ resourcing needs (child-, group- or facility-related) … that recompense providers for these relative needs 21. Juni 2010Seite 11 Formula with child-based & facility-based indicators

Key components of the formula funding approach Indicators (i) Child- and/or group-related weighting factors (i c and/or i g )  …represent factors applied to Base Rate II to account for a child‘s individual situation (i. e. migration background; socio-economic background) 21. Juni 2010Seite 12 Formula with child-based & facility-based indicators

Key components of the formula funding approach Indicators (i) Child- and/or group-related weighting factors (i c and/or i g )  …represent factors applied to Base Rate II to account for a child‘s individual situation (i. e. migration background; socio-economic background) Facility-related weighting factors: i f  … can be lump sums in addition to Base Rate II funds that reflect local and regional conditions affecting the facility (i. e. in a area of deprivation) 21. Juni 2010Seite 13 Formula with child-based & facility-based indicators

Key components of the formula funding approach Rent … as a lump sum r covers the rent and depends on the size of the facility 21. Juni 2010Seite 14

Key components of the formula funding approach Lump sums … can create incentives to promote specific government policy objectives, e.g. to stimulate innovation or to foster certain educational programs. One or more lump sums l f are possible. 21. Juni 2010Seite 15

Key components of the formula funding approach Function … represents the total funding an ECEC facility receives for financing its operating costs 21. Juni 2010Seite 16

Main characteristics of presented formula funding approach:  The funding of an ECEC facility shows a - moderate - dependence on the use of its capacities.  Planning reliability for the providers in case of small short-term spare capacities – fundamental to ensure a desired level of quality  Reduced provider‘s total budget in case of long-term spare capacities – calculated resource management for preventing a waste of public funds (base rate I will be reduced; base rates II will be cancelled 21. Juni 2010Seite 17

21. Juni 2010Seite 18 Bertelsmann Stiftung Germany Thank you for your attention!