Demand-Side Financing: International Experience

Harry Anthony PatrinosWorld Bank

hpatrinos@worldbank.org

Government and Non-Government Participation in Education: A Regional Symposium, Kuala Lumpur, Malaysia, 13-15 July 2004

ConceptsConcepts

School choice for efficiency (learning)

Universal and targeted school choice

Equity outcomes (access and learning)

Market forces

Government regulation

ExamplesExamples

Capitation funding in Holland

Private schools in Denmark

Choice in the Czech republic

Subsidies for poor in Côte d’Ivoire

Financing and ProvisionFinancing and Provision

Provision

Financing Private Public

Private

Private schools Home schooling

User fees

Public

Vouchers Charter schools Contracting out

Traditional public schools

Capitation Funding in HollandCapitation Funding in Holland

Oldest school choice system 1917 ‘schools to the parents’ Freedom of education Private delivery, public finance Schools profiles, published information

Holland: Primary SchoolHolland: Primary SchoolEnrollments (%)

0

20

40

60

80

100

1840 1860 1880 1900 1920 1940 1960 1980 2000

Public Private

Holland: Secondary SchoolHolland: Secondary SchoolEnrollments (%)

0

20

40

60

80

100

120

1840 1860 1880 1900 1920 1940 1960 1980 2000

Public Private

Holland: OutcomesHolland: Outcomes

Choice and Accountability Achievement Efficient Equity

TIMSS Math Performance by GNP per capita

0

100

200

300

400

500

600

700

0 5000 10000 15000 20000 25000 30000 35000

GNP per Capita

Mat

h S

core

Netherlands

Korea Taipei Japan

Singapore

Hong Kong

USAFinland

Belgium

UK

IsraelItaly

AustraliaCanada

South Africa

Chile

Slovenia

CyprusNew Zealand

Hungary

CzechRussia

Turkey

Philippines

Lithuania

Private Schools in DenmarkPrivate Schools in Denmark

Long tradition of freedom in education Only 28 parents needed to start school Funding follows students – taximeter 12%+ private; increasing

Danish Voucher – TaximeterDanish Voucher – Taximeter

Activity-based allocation system Introduced gradually

Open University in 1990 Upper secondary technical, business colleges in 1991 Private primary, lower secondary schools in 1992 Higher education in 1994 Adult vocational training centers in 1995 Folk high schools, production schools 1996

Advantages of TaximeterAdvantages of Taximeter

Demand-driven, result-oriented Economically rational Demographic changes reflected Administrative simplification Collaboration and coordination

Denmark: Local ControlDenmark: Local Control

Compulsory education municipal responsibility Schools set curriculum, most follow MOE

guidelines Financed by municipality, block grant from

state

Denmark: OutcomesDenmark: Outcomes

System does not create problems (OECD) Teacher unions not opposed Disappointing performance TIMSS, PISA No mechanism for disseminating results Demand for information is growing

School Choice in Czech Rep.School Choice in Czech Rep.

After 1989, system reformed so demand for secondary schools could be satisfied: Funding reflects demand – normatives Increased school autonomy, supply change Direct support for private schools

Czech Republic: Upper Secondary Enrollments: Proportion Non-State

0%

2%

4%

6%

8%

10%

12%

14%

16%

1989

/90

1990

/91

1991

/92

1992

/93

1993

/94

1994

/95

1995

/96

1996

/97

1997

/98

1998

/99

99/20

00

2000

/01

Czech ResultsCzech Results

Private schools in response to incentives More common where public are poor Competition improves performance of

public

(Filer and Munich 2002)

Private Schools in Côte d’IvoirePrivate Schools in Côte d’Ivoire

Legal foundation for private participation Public service, but private may be granted right Government is contracting out education Public support to private schools:

$26 million in 1993 to $39 million in 2001 116,210 students in 1993 to 223,244 in 2001, 92%

Cote d'Ivoire: Distribution of Public Subsidies by Quintile, Public Schools:

Primary Level

9.410.6

19.4 18.9

41.7

0

5

10

15

20

25

30

35

40

45

Q1 Q2 Q3 Q4 Q5

Quintile

Per

cent

Cote d'Ivoire: Distribution of Public Subsidies by Quintile, Private Schools:

Primary Level

10.9

17.3

31.1

15.1

25.6

0

5

10

15

20

25

30

35

Q1 Q2 Q3 Q4 Q5

Quintile

Perc

ent

A Few LessonsA Few Lessons Targeting

Holland: Minorities get 1.9x basic amount; low-income, 1.25x

Côte d’Ivoire: scholarships for poor to private Privatization

Holland: No significant elite school sector; few for-profit schools (1%)

More LessonsMore Lessons

Accountability Holland: 86% of parents choose schools (50%

influenced by religion); MOE standards, rights of parents; establishment of schools

No Absence of Government Holland: central control over public & private; large

central staff: 3,000 (82 in 1919); strong inspectorate; stringent regulations

Czech Republic: 1992: 26 normatives – or formulas; 2000: 361pp, 2000 normatives

MessagesMessages

Increase effectiveness of public finance

Investigate market for education

Demand-side financing may: Improve equity & reduce poverty; learning outcomes

Rationale not always efficiency, rather political Information, evaluation, transparency