SA education finance after apartheid: features, donor support, and capacity building

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SA education finance after apartheidfeatures,
donor support, and capacity building

• A biased practitioners notes

Luis Crouch Draft version as of January 10
EDUCATION FINANCE AND DECENTRALIZATION
CONFERENCEWashington D.C.,  January 13-14, 2005
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The task at the end of apartheid - 1

• Re-unify something like 18 racial ministries
  put together all the administrative systems,
  policies and procedures, information systems,
  exam systems, etc., into 9 provincial
  ministries
• Begin to equalize funding in a system where some
  15 of the children had 5X to 10X more funding
  than the other 85
• Do this without losing the top 15 to the
  private sector

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The task at the end of apartheid - 2

• Where teachers cost 4.5 X GDP per capita, yet
  there is large-scale coverage, so the majority
  (the poor) get covered with a tax based paid to a
  large extent by a minority (the rich)
• And where there is also a modernization agenda
• Similar reforms needed in all non-financial
  areas curricular reforms to get rid of racism in
  curriculum, language policy reforms, etc.
• And in all other sectors health, electricity,
  water, etc.

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Elements of the fiscal solution

• Three tiers, only three actors involved nation,
  province, and school
• national to provincial fiscal transfer system
• provincial to school resource transfer system
• No role for local or district government in
  education a conscious decision (educational
  districts exist, but as administrative
  convenience only, no governance or finance role)
• National policy
• Province important role (contractual employer)
• Schools, also powerful
• Municipalities no role
• Take each in turn

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National to province the equitable shares
system

• Vertical division between national and provincial
  spending non-formula, driven by expenditure
  assignment, negotiation, analysis
• Horizontal division Largely block allocations to
  provinces
• Horizontal division of the provincial portion
  via a formula that transfers SHARES of the
  funding, does not produce bottom-line amounts
• Allows for fiscal neutrality and more flexibility
  in the vertical division, since it makes no
  promises in terms of absolute amounts
• Not really built on cost basis or adequacy
  source of debate

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National to province the equitable shares
system

• Some earmarking for education - infrastructure
• Formula very simple 9 components, one or two
  fixed, most population-driven
• Each component or sector has a simple weight
  that represents a notional sense of how much each
  province might spend on the sector educations
  is 41 and actual spending has been 35 to nearly
  50
• Each component also has drivers in education
  the driver is 1/3 enrollment, 2/3 population
• Aimed at reducing repetition (very high
  enrollment, E/P in Grade 1 was 166!!!)
• Coordinated with policy on age-for-grade
• Very successful

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Some problems and concerns, mostly resolved (?)

• Unfunded mandates and provincial authority P/T
  ratio mandated nationally by Dept of Ed,
  provinces all too happy to hire. But funding
  from equitable shares might not cover a low P/T
  ratio.
• Not just unfunded mandates but plots between
  sub-sectoral interests at provincial and national
  level to create mandates to protect turf
• Debate around costed norms and adequacy as
  opposed to a shares approach
• Increase in data requirements (enrollment,
  population of school-going age), not
  satisfactorily resolved surprising lack of
  concern, no real audits

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2nd level province to school fiscal transfers

• Considerable school autonomy
• Can hire extra teachers at market wages (using
  standard employment Act, not Teacher Act)
• Have some vetting power over state-paid teachers
• School councils have majority parents (by 1)
• Public schools allowed to charge fees, fees not
  considered fiscal revenue, are set at, and stay
  completely at school level
• Autonomy is statutory and universal (unlike
  Nicaragua or El Salvador)

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2nd level province to school fiscal transfers

• Two main types of resource transfers
• Non-teacher, non-capital costs
• Allocated according to an incidence table
• The incidence goal is the allocation principle
• 35 of resources must go to poorest 20, 25 for
  next 20, 5 for richest quintile
• Teachers
• Allocated physically, not as a budget for schools
  to hire teachers (unlike, say, Nicaragua)
• At first, not pro-poor
• Then, 20 of teacher fund is top-sliced and
  distributed preferentially to the poor with same
  incidence table as non-personnel costs

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2nd level province to school fiscal transfers

• Pro-poor targeting is internal to each province,
  out of respect for provincial power (?)
• This has led to problems in horizontal equity
• Provinces allowed to determine their own
  intra-province targeting approach, recognition of
  a practical targeting reality
• Targeting is 50 based on existing
  infrastructure, 50 on poverty of community, but
  provincial leeway in what variables to use
• To compensate for withdrawal of public resources
  from rich schools, public schools allowed to
  charge fees.
• This has been most controversial innovation

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2nd level province to school fiscal transfers

• Private schools also subsidized
• Subsidy calculated to somewhat equalize funding,
  but to put private schools at a bit of a
  disadvantage
• Simple system (2 pages or so)
• School with fees school gets subsidy 60 cost of a public school
• Schools with fees 2.5 X public cost of public
  schools get no subsidy - This caused a lot of
  controversy
• Fee level grandfathered in to prevent gaming
  causes a bit of a problem
• In spite of subsidy availability, existence of
  fee option in public schools has done much to
  prevent middle class flight to private schools
  this was an important goal prevent US inner
  city or Latin America syndrome.

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Donors role

• Pre transition preparation
• Transition well planned in many respects
  (compared to Eastern Europe)
• Advisors started arriving 1991
• Many provided ongoing continuous support with
  lots of institutional memory, through to
  elections in 1994 three years of preparation,
  dialogue
• Many then came invited by new government as
  long-term advisors
• Donors typically funded advisors, particularly in
  early days, and NOT the usual kitchen sink
  donor projects
• Advisors typically selected by GoSA, not donors,
  and often given nearly line-staff senior roles

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Donors role

• Later, after policy environment defined (roughly
  1994 to 1997 or 1998) there were more typical
  donor projects to drive pilot projects that
  exemplified the policy designs
• Advisors then often turned to a capacity-building
  role
• Many of the advisors provided training
• My case two years advising, then two years
  training (40 officials in 2 groups, 190 hours
  contact time per group, with certification by
  Univ of Witwatersrand)
• In my view, this is a nearly ideal sequencing for
  policy reforms advice, then reform and pilots to
  exemplify the reform and capacity building in how
  to implement the reforms, all done by the same
  people of course this sequence not always poss.

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Themes of advice, capacity-building

• A series of topics
• Setting up the actual fiscal transfers and
  explaining their rationale to those that had to
  actually implement
• Setting up the budgeting and tracking systems,
  e.g., expenditure tracking down to school level
• Setting up and providing advice and training on
  how to target
• Tying funding to quality control and notions of
  output/input tracking, simple notions of
  value-added analysis, etc. Setting up
  league-table sorts of exercises,
  performance-oriented prizes, etc.

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• Admissions (bias?)
• I am hardly an unbiased academic analyst I was
  a guest bureaucrat and played role in design of
  all these systems
• Ive lost touch a bit in last year or two
• SA not borrowing from Bank, at least for
  education, so not much interaction with me since
  Ive been at Bank
• There may have been some changes not reflected in
  this presentation
• There has been discussion of not allowing
  fee-gathering at school level among the poor
• There has been discussion of using a national
  poverty targeting list, rather than allowing
  province-specific targeting
• Not sure where this has ended up