Demand-Side Financing: International Experience

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Demand-Side Financing International Experience

• Harry Anthony Patrinos
• World Bank
• hpatrinos_at_worldbank.org
• Government and Non-Government Participation in
  Education A Regional Symposium, Kuala Lumpur,
  Malaysia, 13-15 July 2004

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Concepts

• School choice for efficiency (learning)
• Universal and targeted school choice
• Equity outcomes (access and learning)
• Market forces
• Government regulation

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Examples

• Capitation funding in Holland
• Private schools in Denmark
• Choice in the Czech republic
• Subsidies for poor in Côte dIvoire

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Financing and Provision
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Capitation Funding in Holland

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

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Holland Primary School
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Holland Secondary School
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Holland Outcomes

• Choice and Accountability
• Achievement
• Efficient
• Equity

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TIMSS Math Performance by GNP per capita
700
Singapore
600
Korea
Japan
Taipei
Hong Kong
Belgium
Hungary
Canada
Netherlands
Russia
Australia
Slovenia
Finland
Czech
500
USA
New Zealand
Lithuania
UK
Italy
Cyprus
Israel
Turkey
400
Chile
Philippines
Math Score
300
South Africa
200
100
0
0
5000
10000
15000
20000
25000
30000
35000
GNP per Capita
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Private Schools in Denmark

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

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Danish 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

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Advantages of Taximeter

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

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Denmark Local Control

• Compulsory education municipal responsibility
• Schools set curriculum, most follow MOE
  guidelines
• Financed by municipality, block grant from state

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Denmark 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

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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

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Czech Results

• Private schools in response to incentives
• More common where public are poor
• Competition improves performance of public
• (Filer and Munich 2002)

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Private Schools in Côte dIvoire

• 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

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A Few Lessons

• Targeting
• Holland Minorities get 1.9x basic amount
  low-income, 1.25x
• Côte dIvoire scholarships for poor to private
• Privatization
• Holland No significant elite school sector few
  for-profit schools (1)

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More 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

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Messages

• 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