Projections of public spending on education in the context of ESP 2010-2020

1. Projections of public spending on education in the context of ESP 2010-2020

2. Ghana Education Financial Simulation Model • Excel-model that projects the development in recurrent and capital costs and compares with a projection of available resources • Projection period: 2007 (base year) – 2020 • All levels of education (but for clarity some details are omitted from this presentation) • Key policy parameters and assumptions can be changed to analyze different scenarios

3. Assumptions about population and economic growth • Population growth (greatly influences results): 2.7 percent per year school-age children and total population • Macro-economic growth (only influences the results very little):5 percent per year in real GDP growth (was 5.1% on average between 1999 and 2007) • Why do growth assumptions affect results so little: when the economy grows, salaries tend to grow by almost as much, eating up most of the increase in available resources

4. Assumptions about public spending on education • As a result of these assumptions, public spending on education would drop slightly from 8.9% of GDP in 2007 to 8.2% of GDP in 2020 Note: Both include on-budget donor spending.

5. How does that compare?

6. Assumptions about private spending on education • Private enrollment share: • Remains at 19% in kindergarten • 17% in primary school • 17% in junior high school • 10% in senior high school • In tertiary education: 13% in base year, and 15% and 20% in 2020 depending on scenario • Fees: no change compared to base year

7. What types of things are costed? • Targets for enrollment (PCR, GAR, GER) • Norms for pupil-staff and pupil-classroom ratios • Internal links, e.g. enrollment in teacher training colleges a function of need for new teachers • Salary growth as a function of growth in GDP per capita • Provisions for textbooks and other non-salary spending • Study leave is assumed phased out • Most of the proposed social welfare spending is not costed yet, so costs are a lower-bound estimate

8. What do capital costs include? • Construction of new classroms needed in basic education and SH as a function of enrollment growth and pupil-teacher or pupil-class ratios • Some funds for rehabilitation/upgrading of schools • Some funds for capital costs in TVET, special education, teacher education, tertiary and administration

9. Scenario 1: “Full” ESP • Enrollment: • All basic education cycles attain a coverage of 99-100% by 2020 • Senior high school attains coverage of 40% • Tertiary intake drops slightly to 30,000 per year • Norms: • PTR of 25 in kindergarten, 35 in primary, 25 in JH, and 22 in SH • Few untrained teachers • Base salaries same as in base year • Proposal for salary top-ups for teachers in deprived areas, licenced teachers, and teachers teaching TVET

10. “Full” ESP • Available resources 8.2% of GDP by 2020 • Cost reaches 11.0% of GDP by 2020, or annual gap of 750 million GHc (in 2007 prices) • Not financially sustainable

11. Two other scenarios • The following two scenarios illustrate how financial sustainability may be achieved, but there could be other ways to achieve the same • They do not reflect any current proposal or policy, only serve as an illustration and input for discussion in the technical groups

12. Scenario 2: “Cost-conscious” ESP • Enrollment: • Same as in “full” ESP • Norms: • Higher PTRs of 30 in kindergarten, 40 in primary, 30 in JH, and 25 in SH • More untrained teachers • Base salaries remain the same • No salary top-ups • Phase-out of subsidies to BECE in JH, reduce by half scholarships to SH students, reduction of non-teaching staff in SH, elimination of stipends to teachers-in-training, a higher share of private enrollment in tertiary

13. “Cost-conscious” ESP • Available resources 8.2% of GDP by 2020 • Cost reaches 8.8% of GDP by 2020, or annual gap of 157 million GHc (in 2007 prices) • Still not financially sustainable and no room for maneuver

14. Scenario 3: “Frugal” ESP • Enrollment: • 90% in kindergarten, 90% in JH, 30% in SH • Norms: • 10% reduction in non-school-level staff • Base salaries: • Base salaries of school-level staff cut by 5% • Base salaries of non-school-level staff cut by 10% • No salary top-ups

15. “Frugal” ESP • Available resources 8.2% of GDP by 2020 • Cost reaches 7.8% of GDP by 2020, or annual surplus of 120 million GHc (in 2007 prices) • Financially sustainable • Surplus available for new programmes/types of spending

16. Comparison of unit costs resulting from the 3 scenarios

17. No or weak relation between per student spending and learning Regression between Africa Student Learning Index (ASLI) and public per student spending for 31 SSA countries (each dot represents a country):

18. Conclusion • The “Full” ESP is not financially sustainable in its current form • Cannot achieve financial sustainability and initiate new programs without addressing the rapidly growing salary costs some way or another • Feedback from technical groups on ways to slim down the draft ESP are welcome