Expenditure on Health and Education in Two Districts Centre for Budget and Policy Studies Bangalore Team members: Vinod Vyasulu, Sharadini Rath, Poornima Vyasulu, Madhusudhan Rao B.V., Ganapati Tarase

Purpose and Audience  To track health and education expenditure at the local government level where most of it is accounted – the Zilla Panchayat  Examine the basis for expenditure decisions and trends over years  For whom? – the main audience is the ZP (administrators and elected representatives) and CSOs who work in the area

Methodology  Budgets of past few years and sector related data from two ZPs and Government of Karnataka  Right to Information Act with the State  Establish relationship with district government, interviews (formal and informal), present preliminary analysis to get reaction and identify gaps in knowledge  Focus on processes of decision making and their relationship with numbers

The two districts Census 2001 ChitradurgaUdupi Numbers% % Population Total Workers Main workers  Agricultural  All others Marginal Workers

The two districts Health IndicatorsData YearChitradurgaUdupi % Institutional deliveries Life expectancy at birth Infant Mortality Rate % Complete immunisation % Safe Deliveries Education IndicatorsData YearChitradurgaUdupi Total Literacy Rate Male Literacy Rate Female literacy rate Rural Literacy Rate Urban Literacy Rate SSLC Results (X class)

The two districts  Chitradurga dominantly agricultural, with low literacy rates (especially female), poor health indicators  Udupi dominantly non-agricultural, with better literacy rates, much better health indicators  Study how the two ZPs manage their finances in the crucial areas of health and education services  Are there lessons to be learnt?

ZP accounts analysis  Government remains the dominant provider of both services (especially basic education, upward of 80% of students in classes I to X attend government run or aided schools)  ~ 90% of expenditure on health and education on personnel salaries  All ZP funds for both come entirely from the State; no own revenue  Actual expenditure consistently lags behind intended allocations – promises?

ZP accounts analysis  All expenditure taken into account: running costs of schools and health facilities, salaries, capital, material, scholarships, and all schemes (SSA, etc)  A method for normalising such expenditure for comparison across districts – link to outcomes  Number of patients served, and students enrolled in government run and aided schools

Comparative analysis Year Rs per patient per yearRs per student per year ChitradurgaUdupiChitradurgaUdupi NA Average % Safe Deliveries ( ) Literacy Rate (2001)

ZP function analysis  No system of raising demand based on need assessment at district level  No data based political process to connect ZP with State  Administrative systems with loyalties to the State rather than to the local institution of governance (a deep and systemic feature of all LSGs)  Decision making processes at local level severely constrained by State - finances and personnel

ZP accounts analysis  Line item allocation of funds  Relationship between expenditure and indicators?  Surprising results – perhaps accident of these two particular districts?  Since the State is the sole financier, looked at State accounts for the same years, to estimate how much the State spends in all districts, and relative picture

State accounts analysis  Calculate district-wise expenditure on basic health services and basic education  Many items had to be pulled together – of the total expenditure on health ~40% accounted in ZP, rest spent directly by State (larger hospitals, medicines, etc)  Most expenditure on basic education (class I to X) through ZP  State does not clearly reflect ZP accounts

State accounts results Averages ( ) Rs per student per year3454 Rs per patient per year330 Expenditure and indicators (across 26 districts) Correlation Coefficients (0.01 level confidence) Education Rs per student Literacy rate (2001 census)0.62 Education Index (HDR 2005)0.61 Health Rs per patient % Safe deliveries ( )-0.39

Interpretations  For education: expenditure higher in districts where the indicators are better, such as more literacy and a higher education index – strong result  For health: there is a small possibility that those districts where some indicators are poor might get more funds – weak result  Is there a formula for allocating funds that uses local data on need, such as indicators? – apparently not

Consequences  The State policy for social sector spending is based on principle of equity? Or not?  How do individual ZPs use such data to raise need based demand?  What is the functional relationship between ZP and State?  Who takes responsibility? Accountability?  How do CSOs vet performance?

Recommendations  Remove State from ZP level functioning, hand over funds and functionaries - based on clearly argued demand  ZP decisions on need, spending, hiring  Face the heat of poor performance: transparency and accountability  Local pressure on delivery issues  Strengthen local government (not just administration)