Rosalind Levai, International Consultant, World Bank

Bucharest, April 14 2009

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 Aims of the seminar

To assist in moving forward the discussions

on how further to decentralise education in
Romania by:
y clarifying what is meant by decentralisation
y examining decentralised education systems
in some European countries, in particular
funding methods
y suggesting an implementation path in
Romania

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 Decentralisation
Decentralisation is a process
The degree of decentralisation is the extent
to which functions and competences with
respect to public services are assigned to
lower levels of government, including front
line providers- SCHOOLS
Education in Romania is already partly
decentralised.
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Objectives served by a decentralised system of
public administration
y Local democratic decision making as a political
objective
y Reducing central government fiscal burden by
requiring local governments to provide funding
y Improving efficiency through closer linking of funding
to beneficiaries (per capital funding)
y Improving quality of the service through:
y taking decisions locally based on local information;
y stronger accountability of local decision makers for
outcomes (student learning)

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 What about equity?
Equity refers to equal access to public services for
people with equivalent needs wherever they live in
the country or what ever their social or ethnic
background.
Equity is not necessarily promoted by decentralisation
as it can widen local differences in service quality
and access.
Decentralisation can improve equity if the funding
system is reformed so as ensure equal capacity of
all local governments to provide education that
meets equivalent needs. So poor areas with low tax
revenues and greater needs must have more
funding per pupil or per resident.
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 The different priorities served by
decentralisation
y These objectives are given different priorities by
the different stakeholders central government
ministries, local governments, employee trades
unions, local managers (school principals),
customers (parents and students).
y There have been different priorities in the
different countries which have undergone
decentralisation in the last 25 years.
y Different priorities lead to a different assignment
of powers, competences and accountabilities.

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Decentralisation: different national
priorities
Local democratic decision Poland, Estonia
making
Reducing central fiscal Poland, China
burden
Improving efficiency by Netherlands, Finland,
better cost control New Zealand, Australia
Improving quality by local UK: England
management & stronger
local accountability
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 Current priorities in Romania:
my impressions
Education and Research for the Knowledge Economy
(Strategy Document) notes that decentralisation
should improve systems efficiency, relevance, equity
and quality. (p. 11)

1. Improving quality by local management & stronger

local accountability
2. Improving efficiency by better cost control
3. Local democratic decision making
y Reducing central fiscal burden by requiring increased local
funding may have been a priority in the past

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Assignment of funding and allocation under
a centralised system
Central Local School
government government
funds allocates funds allocates funds allocates
Teachers
Non-
teaching
staff
Goods &
services
Capital

allocates decides how to spend the funding

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 Assignment of funding and allocation under
a fully decentralised state system.
Central Local Schools
government government

funds allocates funds allocates funds allocates

Teachers
Non-
teaching
staff
Goods &
services
Capital
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 Definition of a self-managing school
A self-managing school is a school in a system
of education to which there has been
decentralized a significant amount of authority
and responsibility to make decisions related to
the allocation of resources within a centrally
determined framework of goals, policies,
standards and accountabilities.

Caldwell, B.J. and Spinks, J. M. (1998) Beyond the Self

Managing School, London, Falmer

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 Finland: assignment of funding and allocation
Local governments fund a considerable proportion from
own revenues; choose how to allocate to schools

Central Local government School

government Formula

funds allocates funds allocates funds allocates

Teachers
Non-
teaching
staff
Goods &

services
Capital
Because of fiscal equalisation some local governments receive no grant
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 Netherlands: assignment of funding and allocation
Central School Board: School
government church or
municipality
Formula

funds allocates funds allocates funds allocates

Teachers
Other staff
Goods and

services

Operational Church municip
costs board ality
Capital
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English assignment of funding and allocation
Almost all local government spending on education
funded by central government grants
Central Local government School
government
Formula Formula
funds allocates funds allocates funds allocates
Teachers
Non-
teaching
staff
Goods &

services
Capital
Also central government has some specific grants allocated to schools
via local government
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 England since 1988 Education Reform Act:
decentralisation of resource management and
centralisation of quality control
Parents choose school (if there is a vacant place)
LA must delegate a budget to each school which is
determined by an objective formula
Budgets for most resources delegated to school
Governing Body and school principal determine how to
spend delegated budget
Schools choose own staffing establishment and teachers
and non-teaching staff
Governing Body appoints principal
Central government: ensures information provided and
schools & LAs regulated
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 Organisations involved with state school
funding in England
FUNDING
FLOW
TREASURY

Department for Children,

Schools and Families

150 LAs Local Authority 1 Local authority N

School 1 School 2 School 1 School 2 School 3

22,700 schools; 8 m. students

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 Formula for distributing central
government grants to local authorities

Consists of two parts:

1. An assessment by central government of the
need to spend on each service by each LA.
2. Fiscal equalisation
Grant adjusted to take account of differences
in local authorities ability to raise revenues.
Authorities with low revenue base receive
more grant.
.
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Local authority grant for education in England
Divided into 2 blocks: amount LA is
assessed as needing to spend.
1. SCHOOLS BLOCK (about 85%)
under 5s, primary, secondary, pupils with
additional needs
2.LA BLOCK (about 15%)
LA central functions for education
Youth and community

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 Schools block formula
For under 5s, primary & secondary students
Basic entitlement: for standard cost students
Top- ups for:
Social disadvantage
Areas with higher wage costs
Low population density (rural areas)
High cost pupils (those with special needs)
HCP = (0.01 + 0.07* % households on welfare benefits
+ 0.21* % low birth weight babies)* no. pupils 3-15
years old

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 Local authority school funding formulae
Each local authority has its own formula:
Must comply with Dept. CSF guidelines.
Must allocate at least 80% of the aggregate budget for
schools according to the number and ages of pupils.
5% of this can be for social disadvantage indicators.
The rest may be delegated in relation to:
y a fixed amount regardless of size of school;
y objective indicators of social and/or educational
disadvantage;
y indicators which relate to the costs of operating the
school building and grounds (size, condition, split-
sites, special facilities, etc).
Special schools & units may in addition be funded in
relation to the number of places.
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Milton Keynes LA formula: a primary school budget
Year group cash unit No. of units Funding
Nursery 1,444 20 28,878
Reception 1,286 25 32,147
Year 1 (5+) 1,286 30 38,576
Year 2 (6+) 1,286 29 37,290
Year 3 (7+) 1,295 31 40,150
lump sum 43,982
Designated nursery class 20,006
26 place nursery unit 4,588
Premises related Funding per unit
by floor area 76 600 45,720
grounds area 1.57 1500 2,355
Free School Meals 146 60 8,755
English 2nd language 73 40 2,918
Turnover 73 30 2,188
Property tax 7,600
TOTAL BUDGET SHARE 315,152
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 Two approaches (are equivalent) to
calculating how much to allocate to a
local unit (authority or school)
1. Formula expression: consisting of several
(even many) indicators
Examples: Netherlands, England
2. Unit price per student: weighted for students
with higher/lower costs or at schools with
higher/lower costs than the base unit
Examples: Finland, Poland
Romania: standard cost
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Netherlands: background to formula funding
Since 1917 system of religious foundation school boards (70%
students) and municipal school boards. A school board may
manage many schools but almost half manage 1 school only.
Parents have right to establish schools: many small schools.
538 municipalities from 1,000 to 590,000 inhabitants.

Main aim of formula funding (1990) was to contain costs by:

(a)state no longer reimbursing school board costs;
(b)reducing number of school boards and schools through pressure of
per capita funding and financial inducements.

From 1997-2002, number of school boards fell from 2,800 to

2,000 and schools became larger.
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 Netherlands: centre to school
I1 students grades 1-3: weight = 1*unit cost
students grades 4-6: weight = 1.1*unit cost
students grades 7-9: weight = 1.3*unit cost
I2 supplement for minority language (Friesian)
weights for different secondary school types
I3 parents educational level indicator
student born abroad indicator
students with special educational needs indicator
I4 fixed amount for every school
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 Finland
Long tradition of strong local government
Strong fiscal equalisation between municipalities
1993 introduced central government formula to replace
grants based on reimbursing municipalities costs
Education grant is not earmarked
Calculated and distributed by National Education
Board.
Sets a unit price for a student in each municipality
school or private provider school in the municipality.

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 Finland: unit price per student
I1 students grades 1-6: weight = 1
students grades 6-9: weight = 1.75
upper secondary students weight = 2.5
I2 additional weights for:
no. small schools in municipality
population density; islands
I3 weight for % students taught in Swedish
Special educational needs (SEN) students: weight=2
severe SEN weight = 3.5
Above expressed as a single price per student: varies by
municipality
Additional grants for secondary schools with a special
mission and for immigrant students.
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 Romania: current assignment of funding and allocating
Central Local Schools
government government

funds allocates funds allocates funds allocates

Teachers

Non-
teaching
staff
Goods &
services
Capital
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 Romania: probable assignment of funding and
allocating after decentralisation implemented
Central Local School
government government (own budget)

funds allocates funds allocates funds allocates

Teachers

Non-
teaching
staff
Goods &
services
Capital

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Application of standard per student cost to
the determination of local level budgets

MOPF CNFIPS

Formula: standard cost

Special
schools
Formula: standard cost

Formula: standard cost with adjustment

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Issues for Romanian decentralisation
1. Will dual funding streams (staff and goods& services)
continue as it is not equitable?
2. Will the standard cost per student include all costs or only
salaries, textbooks and scholarships?
3. Can a central formula for 3,000 communes and towns be
sufficiently sensitive to local needs?
4. How will increased cost efficiency by reducing number of
teachers and rationalising school networks be achieved
without harming access and quality?
5. Ensuring county inspectorates monitoring and evaluation
supports quality improvement
6. Can governments implement the proposed measures
(curriculum, assessment, teacher training and quality,
accountability) so as to raise education quality over the next
10 years?

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Will dual funding streams (staff and goods&
services) continue as it is not equitable?

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Will the standard cost per student include all costs or
only salaries, textbooks and scholarships?

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Can a central formula for 3,000 communes and
towns be sufficiently sensitive to local needs?

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 Additional costs of implementing
decentralisation measures
Central implementation technical team
Training of principals in school resource management
and using it to support school improvement
Recruiting and training accountants in municipalities
and schools
Training administrators at county and municipal level
Support for school network rationalisation
Compensation packages for redundant or early retiring
teachers

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 QUESTIONS FOR DISCUSSION
y What kind of education decentralisation do
you consider best for Romania?
y What challenges is decentralisation likely
to face and how can they be best tackled?
y What is the best timetable for
implementation of formula funding and
school financial autonomy?

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