Jordan: Public Expenditure Review Issues in Education

1. Jordan: Public Expenditure ReviewIssues in Education Ayesha Vawda June 18, 2003

2. Outline • Purpose of PER in Education • Key Questions to be Addressed • Data Requirements

3. Purpose of PER in Education • Assess how much is spent on education • Evaluate allocation across levels and inputs • Analyze efficiency of resource use • Gauge whether public financing is being used to minimize poverty

4. Key Questions • How much is spent? • How does government finance? • What does government finance? • Should government finance? • Does public spending protect equity? • Is the public getting its money’s worth? • How much is enough?

5. How does the PER define the sector? • Basic education only? • All levels of formal education? • Does it include training? • R&D operations attached to universities?

6. 1. How much is spent on education? • Public expenditures • as % of GDP and of total public expenditures • Private payments • For public services (informal payments, formal cost recovery by level of education) • For private services • If not integrated into public budget: donor grants and loans

7. How much does government spend on education (as a % of GDP), 2000

8. What share of total public spending has gone to education in Jordan

9. Private expenditure • ECD: 99% private • Basic and Secondary: 14% private, 12% UNRWA • Tuition fees account for 30% of university recurrent expenditures

10. Private expenditure as % of total Netherlands Bolivia France UK 0% 50% 100% S. Africa Malaysia Venezuela Ghana USA Indon. German. Peru Uganda Sierra Leone Source: Psacharopoulos and Nguyen 1995 “Fighting Poverty: the role of government and the private sector” World Bank.

11. Private enrollment as % of total Kuwait France Netherlands Mauritius 0% 50% 100% Mexico USA Niger Cyprus Australia Korea Chile Belgium

12. Is public spending sustainable? • Macro-economic projections • Government’s sectoral goals that impact costs: • Education Reform for Knowledge Economy • Demographic projections for school-age projections • Government’s goals that affect intersectoral allocations

13. Education Reform for Knowledge Economy JD m 450 Baseline Scenario 400 Reform Scenario A 350 300 Reform Scenario B 250 200 1 2 3 4 5 6 7 Years

14. 2. How does government finance? • Intergovernmental fiscal relations • Central vs. local financing? • Tax rate setting authority for governorate? • Subventions to governorates? Conditional/unconditional? • Local “top up” in education financing?

15. 2. How does government finance? contd. • Budget framework and process • Recurrent and capital budgets delinked? • NGO/Donor/IFI financing linkages with government budget • Accumulating arrears? Why?

16. 3. What does government finance? Budget share by level of Education

17. What does government finance? Budget share by Type of Expenditure (Basic and Secondary, 2000)

18. Are wages crowding out complementary outputs? % of total current education expenditure for teacher’s compensation, 1997 Jordan 75.0 Low income 67.5 Lower-middle income 64.1 Upper middle-income 47.8 Higher income 57.3 Source: World Development Indictors, 2001

19. 4. Should Government Finance? • Supply and Finance of Education Originally Private • And, why not? • So why should government intervene?

20. Because….Market Failure • Equity • Externalities • Capital market imperfections • Information asymmetries

21. Child Mortality by Education of Mother

22. But…Government Failure • Equity • External Efficiency • Internal Efficiency • Sustainable finance

23. Disparities between Girls’ and Boys’ Enrollment • 1990, avg 6-year-old girl in low, mid-income country: 7.7 yrs of school; up from 6.7 yrs, 1980 • Gap between boys and girls widest in S. Asia: 1990, girl could expect 6 yrs of school; boy, 8.9 • Middle East: girl 8.6 years, boy 10.7

24. Government Failure: External Efficiency • Over-subsidized higher education • In Africa, spending per student in higher education is 44x that per primary student • Continuing high proportion of secondary education that is supply-driven vocational education • Tertiary more costly than primary

25. Government Failure: Sustainable Finance • Increasingly difficult to meet demand for education, especially where little economic growth (e.g. Africa) • Aid can help, but not sustainable

26. Service Delivery Public schools lack spur for efficiency • Operated by Government • No competition • Teachers paid according to experience and education, not performance • Schools closed or opened depending on demographics, not how well they perform

27. Market has strengths and weaknesses (“failure”) Government has strengths and weaknesses (“failure”) Draw on strengths of both market and government Minimize weaknesses of both Context-specific So What is the Answer?

28. Emerging Role of Government Draw on Market Strengths • Matching of Demand and Supply • Competition • Willingness to pay Draw on Government Strengths • Broad National Vision • Capacity to redistribute and promote equity • Information Avoid Market Failure • Promote Equity • Achieve Externalities • Overcome Capital Market Imperfections • Overcome Information Asymmetries Avoid Government Failure • Promote Equity • Avoid Inefficiency • Achieve Sustainable Finance

29. Financing and Provision

30. 5. Does public spending protect equity? • Check for variations by level in: • Enrollment ratios • Completion rates • Learning outcomes • Between: • Poverty quintiles • Regions (rural/urban) • Genders • Minorities vs. majorities

31. Distribution of Expenditures by Income Quintile Poor get less education

32. What else to check • Fiscal decentralization • Formal and informal private payments by level and poverty status • Public subsidies/transfers to students by level and poverty status • Public subsidies of nonpublic schools

33. 6. Is the public getting its money’s worth? • Measuring educational outcomes • Improving quality of public spending: • Spending on the right thing • Correcting for market failures • Demand vs. supply side interventions • Efficiency in spending • Absorptive capacity • Leakages and M&E

34. Outcomes • What are the trends in: • Enrollment rates • Completion rates • Expected years of education and training during lifetime • Average learning outcomes • Variance in learning outcomes • Employment rates and wages for recent graduates • Are trends going in the right direction? Fast enough? • Compare outcomes to those for regional neighbors and countries at similar incomes. If major differences, why?

35. Education Expenditure and Achievement TIMSS Ranking Maths Science 28 17 8 25 12 8 18 18 26 20 27 34 3 3 9 6 24 22 31 27 6 2 2 4 14 9 United States Switzerland Austria Canada Norway Denmark Japan Netherlands New Zealand Spain Czech Rep. Korea Hungary 0 2,000 4,000 6,000 8,000 Expenditure/student

36. Efficiency • Cost implications of curricula structure (e.g. specialized teachers, textbooks, IT) • Efficiency of ratios between quantities of different inputs (e.g., schools, classes, teachers, students, textbooks) • Estimated savings/costs of reducing/increasing quantities of different inputs • Estimated costs of achieving savings • Estimated savings of reducing repetition rates/dropout rates

37. Efficiency • Cost/benefit and cost/effectiveness analyses • Prices for teachers and non-teaching staff • Facility design and construction materials (best cost per year over lifetime) • Consolidation of facilities • In-service training options • Textbook printing standards • Utility use • Maintenance schedules • Rough estimates of savings/costs from adopting different standards and policies

38. No.of Students Per School No. of Schools % of MOE Schools Cumulative % Less than 100 706 25.2 25.2 101 – 200 478 17.0 42.2 201 – 400 710 25.3 67.5 401 – 600 375 13.4 80.9 601 – 800 254 9.1 89.9 More than 800 282 10.1 100.0 Total 2805 -- -- School Size of MOE Schools in Jordan

39. Cost Efficient School Size Amortized cost of Capital and Equipment New Schools for student sizes: Vertical 1,200 720 360 Extension Construction 58,539 42,040 29,666 608 Furniture & Equip 13,558 12,549 11,791 80 Computers 7,914 7,914 7,914 Total 80,011 62,503 49,371 688 Per Student (JD) 67 87 137 19

40. School Construction Alternatives

41. Cost-Effectiveness Analysisof Inputs for Portuguese Achievement, Brazil Achievement change by input (coefficients) 3.513 -5.650 7.228 8.969 6.403 4.703 4.864 0.055 -0.160* 3.594 3.177 2.383 Achievement gains per US$ spent 1.94 - 0.82 0.56 3.88 2.67 1.43 0.14 - 1.95 1.44 0.43 Input Water School furniture School facilities Hardware Textbook usage Writing materials Software Teacher salary Training Logos II 4 year primary 3 years secondary Cost (US$) 1.81 5.45 8.80 16.06 1.65 1.76 3.41 0.39 2.50 1.84 2.21 5.55

42. 7. How much is enough? • Using comparators: • Compare expenditures to: • Regional neighbors • Countries at similar income levels • But: comparators are imperfect benchmarks, no matter how selected • Number of students differ, prices differ

43. Is public spending adequate? On the basis of country context, depends on: • Thoughtput volume (# of school age hildren and their enrollment rates) • How efficiently resources are used • Government’s goals for the sector that affect spending • Mobilization of private resources (e.g., private provision, cost recovery)

44. Date Requirements • Measures of outcomes: existence of assessment system, household surveys • Measures of inputs and costs: school and household surveys with expenditure data, program data, administrative data on budget allocations and spending • Impact evaluation data to estimate program effectiveness