This book examines the advantages and disadvantages comparing different nations' educational ...

322 Pages·2007·3.4 MB·English

DOCUMENT RESUME
El 008 037
ED 119 383
Zymelman, Manuel
AUTHOR
Financing and Efficiency in Education: Reference for
TITLE
Administration and Policymaking.
Agency for International Development (Dept. of
INSTITUTION
State), Washington, D.C.
73
PUB DATE
322p.
NOTE
MF-$0.83 HC-$16.73 Plus Postage
EDRS PRICE
Cost Effectiveness; Delivery Systems; *Educational
DESCRIPTORS
Finance; *Efficiency; Elementary Secondary Education;
Expenditures; *Financial Policy; Financial Support;
Higher Education; *Models; National Programs;
*Resource Allocations
ABSTRACT
This book examines the advantages and disadvantages
cf various methods of financing education and discusses the basic
issues related to increasing efficiency in education. Section 1
offers a short history of educational finance and discusses many of
the traditional approaches to financing education. Section 2 presents
methods for distributing funds to different levels of formal
education and to various types of nonformal education. Section 3
describes different arrangements for raising educational funds and
controlling their use. Section 4 examines different methods for
forecasting educational resources and describes the Index of
Educational Funding, a model for measuring national effort in
educational spending. Section 5 discusses concepts of efficiency in
education and develops a general approach for improving efficiency
through intervention in the educational system. Section 6 deals with
ways of increasing overall efficiency and decision-making in national
educational systems. Section 7 presents ways of increasing
educational effiCiency, with emphasis on educational contracting. It
also describes the Index of Educational Expenditures, a model for
comparing different nations' educational spending. (AuthorM)
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OWNER
Financing and Efficiency
in
Education
Reference for Administration and Policymaking
N
Cv:
0
MANUEL ZYMELMAN
HARVARD UNIVERSITY
2
This book was produced as part of a project spon-
sored and funded under a contract with theAgency
for International Development. The views expressed
herein are, however, those of the author and are not
necessarily those of the Agency.
All rights reserved.
Composed and printed at The Nimrod Press, Boston, 1973
3
To Nancy
4
ACKNOWLEDGMENT
A work covering so many varied topics in the financing and efficiency
of education must necessarily rely on the assistance of many people. Fore-
,
most, I acknowledge with thanks the help of my three research assistants:
Dr. Jose Dominguez, who developed the idea of a Student Loan Develop-
ment Bank; Mrs. Elaine Gould; and Mrs. Adele Neuringer. They collaborated
tiringly in all phases of this project.
I wish to thank Dr. Robert McMeeckin for his assistance in the formu-
*
tion of the chapters on planning, data for decision-making, and admin-
,tration; Dr. John Simmons for his assistance in the formulation of-the
hapter on the economic valuation of educational
outputs;
Professor
Donald M. Levine for his assistance in the formulation of the chapter on
PPBS; Professor John Anderson for his assistance in the formulation of the
chapter on self-help in education; and Mrs. Jeanne Henn for her assistance
in the formulation of the chapter on distribution of funds.
My thanks to Professors John Anderson, Roy Bahl, Charles Benson,
Curley Bowen, Andre Daniere, Russell Davis, Werner Hirsh, Donald M.
Levine, Selma Mushkin, Richard Speagle, and John Vaizey for specially
preparing research papers that deal with various topics related to this book.
I am grateful to the members of the Task Force in Educational Finance
and Measurement of the Agency for International Development, and to all
the participants of the International Conferences on the Financing of
Education held in Cartagena and Malta in 1973 for their many basic and
relevant comments on early drafts of this book.
to Mrs. Helene Tuchman for her
am especially grateful
Lastly,
I
efficiency in compiling the index; to Dr. Martin Robbins who worked
closely with me in editing the manuscript and providing invaluable crit-
icism; and to Miss Dolores Tirnbas for her indispensable critical editing of
the final manuscript in close collaboration with me and for supervising
the book through all stages of publication.
Although help, information, and advice were received from these and
many other sources, responsibility for this book rests solely with the
author.
Manuel Zymelman
Cambridge
June, 1973
TABLE OF CONTENTS
INTRODUCTION
1
THE SOURCES AND FINANCING OF EDUCATION
Part I:
Chapter
Section 1
EDUCATIONAL FINANCE IN HISTORICAL PERSPECTIVE
7
I
Delineation of Educational Needs
7
t..
8
Nature of Sources of Support
Methods of Fund Acquisition
9
14
Methods of Fund Allocation
17
Summary
PUBLIC AND PRIVATE EDUCATION: THE PHILOSOPHIES
II
19
BEHIND THE ISSUES
19
Justification for Government Intervention
20
Financing of and Provision for Education
The Philosophies Behind the Issues
21
25
Conclusion
REVIEW OF TAXES COMMONLY USED TO FINANCE
III
27
EDUCATION
Criteria for Evaluating Taxes in General as Sources of
27
Finance for Education
29
Earmarked Taxes for Education
29
Analysis of Property and Sales Taxes
48
Summary
Section 2
ELEMENTARY AND SECONDARY EDUCATION: PUBLIC
IV
50
AND PRIVATE FUNDING
50
Public Funding
79
Private Funding
82
GOVERNMENT FINANCING OF HIGHER EDUCATION
V
Financing Patterns of Higher Education
82
89
Summary
90
NATIONAL STUDENT LOAN INSTITUTIONS
VI
90
National Student Loan Institutions as Instruments of Policy
91
Effects of Student Loans on the Individual Borrower
Chapter
Possible Effects of Student Loans on Higher Education
92
Effects of Student Loans on Society
93
Operations of a National. Student Loan Institution
93
A Special Type of SLI: The Student Loan Development
Bank (SLDB)
103
Conclusions
108
THE FINANCING OF OCCUPATIONAL TRAINING
VII
110
Difficulties in Categorizing and Comparing Types of
Vocational Training
110
Alternative Types of Training
111
Trainee Differences and Other Variables
112
Financing of Vocational Education
113
Special National Training Institutions and Their Financing
120
Summary
123
VIII
RECURRENT EDUCATION
127
A Recurrent Education System
127
Implementing Recurrent Education
129
Financing Recurrent Education
130
Feasibility of Recurrent Education for Developing Countries
131
FINANCING EDUCATIONAL BROADCASTING
133
IX
Criteria and Forms of Financing
133
Summary
138
Section 3
SELF-HELP AS A METHOD OF FINANCING EDUCATION
140
X
The Philosophical and Economic Perspectives of Self-Help
140
The Cooperative As a Self-Help Institution in
Educational Financing
144
Summary
148
THE VOUCHER SYSTEM
149
XI
Objectives of the Voucher System
149
Different Voucher System Plans
150
Additional Variations of Voucher System Models
154
The Voucher System and Developing Countries
154
EXTERNAL AID TO EDUCATION
156
XII
The Donor-Recipient Relationship
156
The Content of External Aid
157
vi
7
Chapter
Distribution of Aid Within the Educational Sector
158
159
Rationale for Accepting External Aid to Education
160
Issues Faced by Donors of Aid to Education
161
Summary
Section 4
162
FORECASTING RESOURCES FOR EDUCATION
XIII
162
Sources of Resources for Education
.
Forecasting Resources for. Education Supplied by
163
Government
164
Forecasting Education's Share in Government Expenditures
167
Forecasting Contributions by the Private Sector
168
Summary
169
AN INDEX FOR MEASURING EDUCATIONAL FUNDING
XIV
170
The Index of Educational Funding
172
Notes to the Index of Educational Funding
174
Meaning and Uses of the Index of Educational Funding
PROBLEMS OF EFFICIENCY AND FINANCE
Part 11:
Section 5
179
EFFICIENCY IN EDUCATION
XV
179
Efficiency of a Transformation Process
187
Increasing Efficiency
203
AN EVALUATION OF THE OUTPUTS OF EDUCATION
XVI
203
Educational Outputs Related to Stated Goals
209
The By-Products of Education
210
Method of Evaluating Educational Outputs
212
Summary
213
XVII THE ECONOMIC VALUE OF EDUCATIONAL OUTPUTS
213
The Rate of Return Approach
221
The Manpower Approach
224
Correlation Analysis
227
The Residual Approach
229
Regression Analysis Approach
230
Production Function Analysis
232
Summary
vii
8
Chapter
Section 6
XVIII EDUCATIONAL PLANNING AND PROGRAM BUDGETING
235
Educational Planning
235
Planning-Programming-Budgeting (PPB)
247
XIX
DATA FOR ANALYSIS AND DECISION-MAKING
258
The Needs for Data
258
Sources of Data for Ministries of Education
260
XX
THE ADMINISTRATIVE CONTEXT OF PLANNING,
BUDGETING AND IMPLEMENTATION
268
Centralization versus Decentralization of Educational
Administration
269
The Interaction of Administration and Planning
273
Summary
276
A Recent Case of Decentralization
278
Section 7
EDUCATIONAL CONTRACTING
XXI
282
A Brief History
282
Performance Contracting
283
Uses of Performance Contracting in Developing Countries
288
XXII
FINANCIAL DISTRIBUTION FORMULAS AND
INCREASED EFFICIENCY
290
Bases for Allocating Funds
290
Ways of Equalizing and Furthering Desirable Education
Goals
292
Some Observations on Financial Distribution Formulas
299
XXIII AN INDEX FOR MEASURING EDUCATIONAL
EXPENDITURES
301
An Index of Educational Expenditures
301
Summary
304
AFTERWORD
305
INDEX
306
viii
9
Introduction
Everyone has the right to education. Education shall be free, at
least in the elementary and fundamental stages. Elementary educa-
tion shall be compulsory. Technical and professional education
should be made generally available, and higher education shall be
equally accessible to all on the basis of merit.
Universal Declaration of Human Rights, 1948
MOST developing countries are trying to reorganize and expand. their
public educational systems to make these goals of the Universal Dec-
laration of Human Rights a reality. This is an enormous and very expensive
job. There have been financial constraints at every step. Governments now
think that spending on education has reached a ceiling and that they can
no longer meet the educational sector's requests for additional resources.
Governments are insisting that education must first operate more efficiently
before they will grant more funds.
Educationists must, therefore, better understand the ways and the
problems of raising additional resources. ,They must also learn to reduce
current inefficiencies. These are essential steps toward solving the crisis
of education in developing countries.
How did this crisis come about?
rapidly with population
The demand for education has increased
In the last decade, world population has increased at an average
growth.
In developing countries, population
annual growth rate of two per cent.
expanded at approximately 2.6 per cent per year. School age population
grew even faster. The demand for education was also encouraged by the
belief held by educators, economists, and politicians that educating a
society's members is most necessary to further economic progress.
The increased demand for education due to demographic, economic,
and political factors was reflected in increased enrollments. Growth rates
1
10