1. Financing Education in a Federal Framework: Lessons from Brazil

2.  Introduction  Additional Resources for Municipalities  Role of Incentives regarding use of Resources  Impact of Resources : Educational Results Structure of Presentation

3. 1.Public resources act through a framework of incentives for the use of those resources, to ultimate results in the provision of public services. 2.There have been substantial increases in public education expenditures in Brazil together with the introduction of comprehensive measures of policy reform. 3.The policy reforms included the introduction of a simple mechanism that links resources to student enrollment; This mechanism created a powerful incentive for quantitative improvement in educational service delivery. Introduction

4. 4.Municipalities are now assigned with a larger role in the provision of educational services; Municipalities in general are more responsive to the educational needs of the local population, but wide disparities in municipal performance remain. 5.Future policy interventions should seek to build on the previous experience of successful municipalities.

5. Resources 1.There has been a high increase in resource availability for the educational sector in Brazil (4.2% to 5.6% of GDP 1995-2000). Increases in municipal resources have come about mainly from a redistribution of resources from states to municipalities. 2.Increase in Resources led to opportunities for improved teacher salaries, superior pedagogical support and quality investments, with municipalities benefiting the most.

6. Incentives 1.The linking of resources to the number of students provided a clear and strong incentive to municipalities and state governments to enroll more students; The incentive has led to an increase in the ‘municipalization’ of primary education. 2.The allocation of municipal education expenditures and the consequent results point to the benefits of decentralization in the municipal management of resources.

7. Positive Deviants

9. 3.The incentives for improving the teacher workforce have generally been successfully implemented. The expected gains from improvement in mechanisms of social control have not been obtained, suggesting the need for stronger efforts to improve accountability. 4.The incentive for enrollments has not resulted in competitive efforts by states and municipalities to offer higher quality of education and thus attract more students to their respective systems.

10. 5.First, competition relies on the existence of a sphere of common influence that is reduced to the mostly urban areas where both state and municipal schools may co- exist. 6.Second, competitive forces of incentives rely on the presence of information regarding the quality of service provision that usually is not available. 7.Third, effective functioning of the forces of competition depends on the assumption that sub-national entities have the objective to maximize revenue by enrolling more students.

11. 1.The clearest and most discussed result of the recent reforms has been the increase in enrollment in the period from 1996 to 2001. Enrollment for Crèches (0-3 years) went up from 382,000 to 1.1 million Enrollment for Pre-School (4-6 years) from 4.1 million to 4.8 million. Fundamental Education (Grades 1-8) from 33.1 million students to 35.4 million. Secondary Education (Grades 9-11) from 5.7 million students to 8.5 million students. Results

12. 2.Brazil’s experience in meeting the goals of Education for All (EFA) provide a very useful lesson for other countries that seek to achieve the same goals. 3.The reforms have resulted in an improvement in educational quality as measured by indicators such as the repetition rate, the pass rate and the age-for-grade distortion rate. 4.The improvement in efficiency has the potential to lead to a substantial impact on the quality of education.

14. Analysis of Results Three main channels: 1. Municipalization 2. Additional resources 3. Expenditure composition Three outcomes: 1. Dropout rate 2. Age-for-grade distortion rate 3. Passing rate Regression analysis (cross section and first difference), controlling for a set of socio-economic and school- characteristics variables

15. Main Findings: Municipalization Grades 1-4: Degree of municipalization positively related to all outcomes, as opposed to very limited impact of per-student expenditure Grades 5-8: Impact of municipalization varies by outcome School-level analysis needed to better quantify management effect

16. Additional resources, when combined with reform that pays careful attention to the role played by incentives, leads to impressive results The municipalization of education in Brazil was accompanied by a strong role of the Federal Government in defining policy and in implementing the regulatory framework Key Policy Conclusions

17. Even as much remains to be done in Brazil to gain further benefits from the reform, there are tremendous lessons for other countries to learn from a careful study of the example of Brazil Key Policy Conclusions Get a copy of the full report !