Financing Elementary Education Kathrin Bock-Famulla

1. Financing Elementary Education Kathrin Bock-Famulla 7th Meeting of the OECD Network on Early Childhood Education and Care Paris, 21st June 2010

2. … requiring effective investments in ECEC ECEC in the German context Increasing … demandforinstitutionalEC CARE … importanceof EC Education Enforcing … quantitative extension … qualitative improvements ofthe German ECEC system(s)

3. Central hypotheses Education and development of children Professional pedagogical practices in facilities Structuresand rangeofservices Fundingstructures & mechanisms affect effect impact Allocationofresources

4. Basic assumptions and mission of the project Funding mechanisms and structures govern the quantity and quality of services Desired ECEC quality should be the main starting point for the design of a funding approach Heterogeneous educational needs of children require different and diverse educational practices Needs-based educational practices are based on unequal allocation of resources

5. Requirements on the funding approach • Politics, administration, providers, centersaretiedto definedgoals • Transparent criteriaareusedfordeterminingthebudget of eachfacility • Differences in thefundingarebased on comprehensibleandlegitimatereasons • Differences in thecenterfunding on thelocallevelare transparent and well-founded

6. Project steps Pedagogical mission and goals Developing an approach of ECEC practice of good quality Defining the pedagogical & supporting activities of ECEC facilities Quantity and value structure of necessary resources for ECEC facilities a) Specifing all relevant human and material resources for ECEC facilities b) Identifying additional resource requirements c) Determining operating costs (typical & special cost structures & levels) Methodsand procedures a) Developing a formula funding approach for ECEC facilities b) Generating a cost-calculation tool c) Designing a simulation model for testing purposes

7. The formula funding approach … can be described as a function of the operating costs of an individual ECEC facility … is composed of multiple mathematical formulae by which the financial resources to be made available to an ECEC facility are calculated

8. Key components of the formula funding approach Base rate I … is dependent on the size of the facility (approved slots) but not dependent on the number of children enrolled … provides the coverage of fixed costs

9. Key components of the formula funding approach Base Rate II • … is dependent on the number of children enrolled in the facility • … provides the coverage of the facility‘s variable costs

10. Key components of the formula funding approach Base Rate II • … funds are disbursed per child (c) weighted - by the child‘ s age (ac) - by the time the child spends in facility (tc)

11. Key components of the formula funding approach Indicators (i) … correlating to variations in the intensity of the children‘s and facilities‘ resourcing needs (child-, group- or facility-related) … that recompense providers for these relative needs Formula with child-based & facility-based indicators

12. Key components of the formula funding approach Indicators (i) Child- and/or group-related weighting factors (ic and/or ig) • …represent factors applied to Base Rate II to account for a child‘s individual situation (i. e. migration background; socio-economic background) Formula with child-based & facility-based indicators

13. Key components of the formula funding approach Indicators (i) Child- and/or group-related weighting factors (ic and/or ig) • …represent factors applied to Base Rate II to account for a child‘s individual situation (i. e. migration background; socio-economic background) Facility-related weighting factors: if • … can be lump sums in addition to Base Rate II funds that reflect local and regional conditions affecting the facility (i. e. in a area of deprivation) Formula with child-based & facility-based indicators

14. Key components of the formula funding approach Rent … as a lump sum r covers the rent and depends on the size of the facility

15. Key components of the formula funding approach Lump sums … can create incentives to promote specific government policy objectives, e.g. to stimulate innovation or to foster certain educational programs. One or more lump sums lf are possible.

16. Key components of the formula funding approach Function … represents the total funding an ECEC facility receives for financing its operating costs

17. Main characteristics of presented formula funding approach: • The funding of an ECEC facility shows a - moderate - dependence on the use of its capacities. • Planning reliability for the providers in case of small short-term spare capacities – fundamental to ensure a desired level of quality • Reduced provider‘s total budget in case of long-term spare capacities – calculated resource management for preventing a waste of public funds (base rate I will be reduced; base rates II will be cancelled

18. Thank you for your attention! Bertelsmann Stiftung Germany kathrin.bock-famulla@bertelsmann-stiftung.de