Assessing the evidence Can per student financing in education help to consolidate the network of schools? Assessing the evidence Lars Sondergaard February 24,

Yes, it can help but it is not enough  Per student finance is a sensible thing to do on its own merits…  …but, by itself, it will not solve the oversized school network  Rationalizing the school network and staff is really difficult…  …and you need several instruments to tackle the problem 2

Financing results (not inputs) makes sense  Good management: tying resources to desired results makes sense Primitive result: a student enrolled More sophisticated result: a student graduating – or a student graduating with a desired level of competencies  Greater transparency  Greater predictability 3

Per student financing alone will not fix an oversized school network  Intuition  Empirical evidence 4

What are the limits of per student financing?  The costs to close down a school may be substantial and much bigger than the “rewards” built into the per student financing scheme.  The financing formula may not necessitate school closures Too generous per student amounts Too generous annual increases in per student amounts  Design flaws 5

How can the costs exceed the rewards? Look at costs  Political costs Parents’ opposition to close village school Teachers’ opposition to lose jobs  Financial costs Cost of transporting children (and looking after them) Cost of refurbishing school  Human cost Who likes to be the bad guy? 6

What is the opportunity or “reward”? No changeConsolidated network = “200” = “200” The butter is spread thinly. On many teachers, with low salaries. To maintain lots of buildings Better use of resources Pay fewer teachers more Have more resources for books and computers

The formula may not necessitate closures Example 1: too generous amounts Funding to school = X 8 What if allocation is more than costs for all schools?

The formula may not necessitate closures Example 2: too generous increases Funding to school = X 9 What if annual increases offset declines?

Design flaws (we are still learning…)  It is not a good idea to allow local authorities to top up education budget by diverting resources from other areas  It is not a good idea to have a formula that provides additional financing to small schools  It is probably not a good idea to introduce per student financing directly to schools in the first year of reforms IF a lot of school consolidation is needed. Perhaps it is wiser to introduce per student financing to local authorities first. 10

Empirical evidence  Three countries with elements of per student financing in place: Bulgaria, Estonia and Moldova  Lessons: Per student financing by itself is insufficient When adding additional instruments to per student financing, the results can be impressive 11

All three countries have experienced large declines in student numbers 12

Especially Estonia and Moldova have struggled to downsize 13 Bulgaria didn’t! Moldova and Estonia had money following students

Why wasn’t per student financing “enough” in Moldova? (1/2) The financing formula did not necessitate school closures Very generous annual increases in amounts allocated per child (in kindergarten) and districts could re-allocate from kindergartens to primary and secondary Design flaws Districts received per student amounts but financed local authorities based on inputs Districts could re-allocate from other priority areas 14

Why wasn’t per student financing “enough” in Moldova? (2/2) Costs of closing schools outweigh benefits Cost of busses (incl. costs related with bussing) Cost of refurbishing classrooms in the receiving school Cost of retraining teachers Cost of closing down a school  Local actors didn’t have flexible financing to pay for these costs 15

Very generous class size norms sent the wrong signal to all actors  In Moldova, (until recently) there was no minimum class size and the maximum class size was 20.  In Estonia, the maximum allowed class size was lowered from 36 in 2002 to 24 in grade 1 in 2003/04 24 in grade 2 in 2004/05 24 in grade 3 in 2005/06 etc 16

Bulgaria undertook sweeping reforms, starting on Jan 1, 2007  Good example of country that introduced per student financing as part of a comprehensive reform to the way schools are managed  Good example of a country that recognized that additional measures are needed to accelerate school consolidation  Visible evidence that their reforms worked 17

2005 status: Quality had fallen and was seen as unacceptably low

2005 status: More money wasn’t (yet) buying better quality

The reforms 1) Finance: Introduce per student finance 2) Autonomy: expand autonomy of principals 3) Accountability: introduce external assessments to monitor the quality of education Implementation: “Safe-guards”: support municipalities in the transition process and ensure that access is not jeopardized. Autonomy Financing Accountabilit y

Number of school closures rose sharply 21

Resulting in fewer staff and improved student-teacher ratio 22

More resources spent on non-staff costs 23

Why did the reforms result in school closures in Bulgaria? Introduce per student financing with low per student amounts to “underfund” many schools 2. Make receipt of large sums of (additional) money to local authorities conditional on making progress with school consolidation. 3. Strong political leadership 4. Comprehensiveness of reforms made “selling” the reforms easier

National performance-based programs to support municipalities Conditional on progress with school consolidation, municipalities could receive financing for Refurbishing school buildings (to reduce heating costs) Pay severance payments to laid off teachers Busses 25

Summary of messages: does per student financing help? Yes, it can help but it is not enough  Per student finance is a sensible thing to do on its own merits…  …but, by itself, it will not solve the oversized school network (e.g Moldova, Estonia)  Rationalizing the school network and staff is really difficult (e.g. Moldova)  …and you need several instruments to tackle the problem (Bulgaria ) reforms 26