1. a review of innovative allocation mechanisms
Jamil Salmi and Art Hauptman
International Conference
Economics of Education:
Major Contributions and Future Directions
Dijon, June 2006

2. key financing questions
resource mobilization
how much should be spent on tertiary education? (macro-level)
income generation at institutional level
who should pay, and what share?
when and how?
is it affordable? (student aid)

3. key financing questions
resource utilization
how should public resources be allocated?
how efficient and effective are institutions?

4. outline of the presentation
typology of allocation mechanisms
which mechanism is more effective?
preliminary lessons from international experiences

5. outline of the presentation
typology of allocation mechanisms

6. allocation mechanisms
from untied funding to
performance-based funding

7. performance-based funding
output-based formula funding
competitive funds
performance contracts

8. allocation mechanisms
from direct funding to
indirect funding

9. Colorado funding model
Old Model
Direct Government Funding
Tuition
New Model
Indirect Gov’t Funding via Stipends
Tuition & Stipends

10. Colorado experience
voucher for an undergraduate education at eligible universities; no cash in students’ hands.
$2,400 per year at public institutions
$1,200 per year for low-income students attending private institutions
degree-seeking, non-degree, and teacher licensure undergraduate students eligible
age, income and financial aid eligibility are irrelevant to qualify

11. Brazil ProUni State purchases seats in private universities
offered to top students from low-income families who don’t get a seat in a public university
no actual payment, but tax exemption

12. Antioquia “access with equity”
partnership among local government, private firms and private universities
low-income students who don’t get a seat in a public university get financial aid to enter a private university
75% scholarship and 25% subsidized loan

13. outline of the presentation
typology of allocation mechanisms
which mechanism is more effective?

14. Alice in Wonderland Lewis Carroll Alice
Would you please tell me which way I ought to go from here?
Cheshire Cat
That depends on where you want to get to.

15. policy objectives pursued
improving access and equity
improving external efficiency
improving internal efficiency and sustainability

16. improving external efficiency
improving quality
competitive funds
merit-based scholarships
increasing relevance
formula with differential weights for high priority fields
grants and scholarships in priority fields
student loans in priority fields
loan forgiveness for students in public service jobs

17. outline of the presentation
typology of allocation mechanisms
which mechanism is more effective
preliminary lessons from international experience

18. themes principles of an appropriate mechanism country context
link to quality assurance
political economy dimensions

19. principles of an appropriate allocation instrument
linked to performance / policy objectives
transparent
flexibility
compatibility
Expansion, efficiency, quality, relevance, equity?
Strengthening the strong or stimulating the weak?
combination

20. which allocation instrument is better?
local circumstances
reform for what?
time dimension
combination

21. link to quality assurance
pro: powerful incentive
con: punitive, rewards stronger institutions
link at the margin?
Argentina: voluntary accreditation gives eligibility for competitive fund

22. political economy dimensions
controversial topics
tuition fees instead of “free” education
targeted scholarships instead of universal
student loans instead of scholarships
private institutions alongside public institutions
dealing with the politics
not an excuse to avoid reforms
Nicaragua Minister of Education