Today’s Agenda

1. Issues in Education Public Expenditure Reviews Sue E. BerrymanSajitha BashirWashington, D.C.March 23, 2005

2. Today’s Agenda • Using the PER Guidelines for Education • Modeling the fiscal implications of policies in the HD sectors: example from education • Laying the groundwork for specifying alternative scenarios • Modeling: usefulness, structure and data requirements, policy choices and scenarios, how to use results

3. PER Guidelines for Education • Companion Guidelines to those for health and social protection PERs • Should be used with Common Guidelines for all HD sectors • Available in hard copy, website, and CD ROM • Structure: Brief Guidelines with notes and examples

4. How much is spent—and how much does government spend? How does government finance? What does government finance? Does public spending protect equity? Is the public getting its money’s worth? How much is enough? Is spending adequate & sustainable? The Education Guidelines Cover These Questions

5. Narrow ---------------------------- One level & type of education—e.g., public primary education Broad ---------------------------- All levels and types of education—e.g., public and private, academic and vocational secondary & post-secondary Using the GuidelinesDefine the Sector

6. Use data to isolate issues and issues to focus data collection and analysis • Issue: decentralization. Go after these questions in the guidelines. How does government finance? How does government finance? Does public spending protect equity?

7. Issue: How much is the country spending on education? Not simple. Check question 1 of your Guidelines. • Actual, not planned, expenditures. • Net of social protection expenditures delivered through schools. MoE expenditures Local expenditures Other ministry expenditures Donor funding Private expenditures (households, employers)

8. Issue: Equity Check question 5 in the Guidelines. Public policies and public financing affect equity of education in obvious & subtle ways. Corruption favors rich Merit-based scholarships favor rich Share of consumption poor pay for school is often disproportionate Selection-based progression favors rich

9. Modeling & Selecting Scenarios to Model Modeling lets you: • check the joint implications of government policies for the sector’s fiscal adequacy and sustainability. • show the fiscal implications of alternative policies that government could feasibly adopt.

10. Modeling requires that you have done your PER data homework • Homework Example: is the public getting its money’s worth—i.e., are public resources being used efficiently and effectively? • Four types of efficiency: • Allocative • Technical • Internal • External

11. Allocative Efficiency • Is the marginal dollar better spent on a different sector (e.g., roads)? How would you know? • Is the marginal dollar better spent on a different level of education (e.g., basic rather than tertiary education)? How would you know? (Returns to education? Ratios of unit costs for different levels of education?)

12. Technical Efficiency • Big ticket items: capital expenditures, labor, textbooks • Big drivers: factors that affect enrollment numbers (demography, policies such as universal free primary education or redefining compulsory education from grade 8 to 10). What will these factors save? Cost?

14. Technical Efficiency: Capital • Cost-effectiveness of construction? • Rational basis for constructing new schools? Closing/consolidating under-used schools? • Transparent procurement of civil works? • Efficient use of school network –e.g., class sizes that balance quality instruction with efficient use of capacity? Use of double shifts? • Downstream savings attributable to basic maintenance now?

15. Cost Analysis of School Construction Options

16. Technical Efficiency: Labor • Student/teacher ratios too high/too low? • Student/non-teaching staff ratios too high/too low? • Teacher teaching loads (class hours/week) too high/too low? • Wages adequate to attract and retain teachers of required quality? Comparisons: GDP per capita, average wage for a public sector technocrat, average wage for private sector workers with qualifications similar to those for teachers (labor force or household budget surveys)

17. Technical Efficiency: Textbooks • Look for overloaded curricula that multiply number of required textbooks (and depress learning) • Do textbook policies protect equity and efficiency—e.g., textbook rental schemes? Re-use schemes?

18. Internal Efficiency: Dropout, Repetition, Completion Rates, Learning Outcomes • Dropout rates: usually best measured with household surveys. • Repetition rates: huge and extremely costly in some regions, e.g., LAC. How much could the system save if it got education done right the first time? • Completion rates: share of student cohort that completes a given segment of school (e.g., lower secondary) that should confer a coherent set of skills? • Learning outcomes relative to standards? Check international assessments! Poor outcomes imply need to invest in quality. High variances in outcomes imply need to invest in equitable quality.

19. Comparative Performance of 15 Year Olds on OECD’s PISA (2000)

20. External Efficiency: Labor Market Payoffs Look for: • Learning assessments that are linked to employers’ skill needs (e.g., PISA, IALS) • Returns to education • Employment, unemployment, labor force participation rates • Tracer studies • Poor payoffs may imply a weak economy or the need to invest in realigning competencies that schools produce to the labor market.

21. Data such as these tell you where money should be spent and where it can be saved. They guide the selection of scenarios and of the assumptions that enter into them.