Urgent Challenges of Education Finance in Ukraine:

February 2015

Jan HerczyńskiInstitute of Educational Research, Warsaw

Kiev, February 5, 2015

• Difficult financial situation of the country• Lack of good data on the functioning of the

education system at all levels• Financial data• Statistical data• Data on teachers and other staff

• Lack of strong analytical capacities at the central level

• Decentralizazion process in Ukraine

Context of education reform in Ukraine

• Adoption of the strategy for decentralization• Transfer of significant responsibilities to

democratically elected local governments• Plans for radical consolidation of gromadas and

rayons• Ammendments to the Budget Code of Ukraine• Serious reform of local public finance system• New financial instruments: grants for equalization,

for education and for health

Has the process begun?

• Reform of education needs to be designed to fit decentralization reform

• This includes:• The new framework law on education,• Financing of education,• Monitoring of the use of resources, including

financial resources• Need for alignment of managerial and financial

responsibilities

What this means for education?

A. Design education reforms in harmony with decentralization reforms• Clarifications of responsibilties of all stakeholders• Scheduling of reforms

B. Design the allocation formulasC. Safeguard the operations of the school system

during the reform periodD. Manage the process of learning across the sector

Main challenges for Ministry

• Education reforms must be harmonized with decentralization process

• But many sectoral issues remain open:• Degree of autonomy of schools, • Procedures for the selection of school directors, • Procedures for the determination of school budgets, • Setting of wages in the sector• Rationalization of school networks

• The scheduling of reforms is very sensitive and must be carefully planned

A. Design of reforms

• The Concept for development of education 2015-2025 needs to be updated to reflect decentralization reforms:• To include strategy for decentralization of education• To include the decentralization schedule

• The strategy for decentralization of education needs to be embedded in new framework law on education

What needs to be done?

• As of 2016, MES will be responsible for design of allocation formulas for education grants to local governments

• Presently, MES has no experience of monitoring the allocation of funds

• Design of the allocation formula will be especially difficult in period of financial constraints

B. Design of allocation formulas

• MES should develop a unit to analyze data, to review different models and to design the allocation formula,

• It is necessary to: • Obtain from Treasury disaggregated expenditure data• Collect statistical data (students, teachers), • Link the data and do simulations of allocation scenarios.

• Draft allocation formulas should be discussed with all stakeholders

What needs to be done?

• Decentralization reforms should be introduced in phases

• The changes to financial allocation should be gradual, not radical

• MES needs to monitor of the use of resources• MES needs to prepare allocation of grant

reserves according to relative local needs

C. Safeguarding the operation of schools

• The allocation formulas should include buffers to prevent radical decrease – or increase – of allocation for any local government

• MES should establish good monitoring procedures at national and oblast level

• Monitoring should be independent of the MES• Allocation of grant reserve should be

conducted in dialogue with stakeholders

What needs to be done?

• Decentralization will be a learning process for all concerned: MES, the cities, the school, the school directors and teachers

• Constant dialogue with social partners is necessary to minimize mistakes and to correct them as soon as possible

• MES must provide information, guidance and support during the reform process

D. Managing the learning process

• MES should establish institutions for dialogue to understand concerns of stakeholders:• Local governments• Trade unions• Professional associations

• MES should issue guidelines and methodological materials

• A help desk should be established to address urgent issues and questions

What needs to be done?