ECONOMICS IN EDUCATION

Presented by:

Ms. Reve Faith F. Bagas

 FINANCING EDUCATION

A. Prioritizing Education

B. Increasing Cost of Education

 Financing Education: An Overview

In all countries, a large portion of national resources,

both public and private, are devoted to education. The rationale
sustaining this fact is compelling. A quality education, beginning
with primary education, is fundamental to endow individuals
with the capacity to successfully pursue their private goals,
while at the same time equipping them with the knowledge and
skills, as well as the values and attitudes, necessary to contribute
effectively to the economic, social and political development of
their societies.
Education not only empowers individuals to live a better
life, and one of their own choice, but also makes an enormous
contribution to the development of a country by, among several
other things, reducing illiteracy, poverty and fertility, while at
the same time improving nutrition and health, the productivity
of labor and the quality of governance (Saavedra 2002)
 Sources of Education Finance

Education funding comes from many different sources. The total level
of funding a country dedicates to education is the result of the total level of
funding provided by each one of these sources. The main sources of education
finance are the following:

• Public finance. They represent, on average, the bulk of national educational

expenditure or about 80% or so of the total. Refers to the total of the resources
allocated and spent in education by the various levels of governments (central,
regional and local) as well as by public educational institutions.

• Private sources of finance. They represent, on average, close to 20% of total

national educational finance. In some countries, however, they represent a significant
share of resources and even the larger portion of total educational expenditures.
Private sources include, in general, mostly households, but also communities, civil
society organizations and the private sector. With few exceptions, households pay for
the overwhelmingly largest share of total private financing.
• International sources. International sources of finance, including loans,
represent, according to data of 1997, about 2% of total educational expenditure by
developing countries. In 1997, the sum of all educational resources provided by
international, bilateral and multilateral agencies, including loans (which actually
account for about close to half of this total), was between 6 and 6.5 billion dollars,
while developing countries spent about 290 billion. Countries thus need, generally, to
look inwards to search for more abundant sources of funds. There are some
exceptions. Small economies and least developed countries may benefit from more
significant external sources of finance. Still, with few exceptions, national resources
are the key to educational spending.
 A. Prioritizing Education

We all know the extent of importance of

education to any country, and with no exemption to
the Philippines. Reason why K12 was created due
to the call for a change in our educational system
that justifies the fact that the government is taking
it seriously. A very serious matter that needs to be
prioritized, in the national budget, in legislation,
and even in the promotion of education to be
globally competitive, the government is doing its
best to ensure that we have the best educational
system and putting it as one of the top on the list of
their priority.
 THE EDUCATION FOR ALL (EFA) 2015 : An initiative of
the government

General Introduction

1.Filipinos have deep regard to for education. Education occupies a central place in Philippine
political, economic social and cultural life. It has always been strongly viewed as a pillar of
national development and a primary avenue for social and economic mobility.

2.A clear evidence of the value placed on education is the proportion of the national
government budget going to the sector. The Department of Education (DepEd), the
country’s biggest bureaucracy 1 , is given the highest budget allocation among
government agencies each year as required by the 1987 Philippine Constitution.

3.The 1987 Constitution likewise guarantees the right to education of every Filipino. It
provided that, “The State shall protect and promote the right of all citizens to quality
education at all levels and shall take appropriate steps to make education accessible to
all.”
.
4.The right of every Filipino to quality basic education is further emphasized in Republic Act
9155 or the Governance of Basic Education Act of 2001. Along with Republic Act 6655 or
the Free Secondary Education Act, these laws reaffirm the policy of the State to protect
and promote the rights of all Filipinos by providing children free and compulsory education
in the elementary and high school level. This pertains to six years of free tuition fees for
children aged 6 to 11, and free four years of secondary schooling for those aged 12 to 15.
4.The right of every Filipino to quality basic education is further emphasized in
Republic Act 9155 or the Governance of Basic Education Act of 2001. Along with
Republic Act 6655 or the Free Secondary Education Act, these laws reaffirm the
policy of the State to protect and promote the rights of all Filipinos by providing
children free and compulsory education in the elementary and high school level.
This pertains to six years of free tuition fees for children aged 6 to 11, and free
four years of secondary schooling for those aged 12 to 15.

5.Along with “Education for All”, the Philippines is also committed to pursue eight
time- bound and specific targets under the Millennium Declaration which it signed
on September 2000. The Declaration, in general, aims to reduce poverty by half
in 2015 (22.65 percent proportion of the population below poverty incidence and
12.15 percent below subsistence incidence by 2015). With the adoption of the
Declaration, the Philippines likewise affirmed its commitment to the Millennium
Development Goals (MDG) geared towards reducing poverty, hunger, diseases,
illiteracy, environmental degradation and discrimination against women. These
goals have been mainstreamed in the country’s Medium Term Philippine
Development Plan (MTPDP) 2004-2010 including policies and plans related to
children, access to primary education and gender equality. Specifically, Part IV of
the MTPDP focused on “Education and Youth Opportunity.”
 Top Benefeciaries of 2015 Budget

The following amounts have been allocated to the following departments:

• Education – P367.1 billion, up 18.6% from 2014

• Public Works and Highways – P303.2 billion, up 37.9% from 2014
• National Defense – P144.5 billion, up 17.3% from 2014
• Interior and Local Government – P141.4 billion, up 3.8% from 2014
• Health – P108.2 billion, up 19.2% from 2014
• Social Welfare and Development – P103.9 billion, up 24.6% from 2014
• Agriculture – P89.1 billion, up 11.4% from 2014
• Transportation and Communications – P59.5 billion, up 21.7% from
2014
• Environment and Natural Resources – P21.5 billion, down 10% from
2014
• Science and Technology – P17.8 billion, up 35.9% from 2014
 B. Increasing Cost of Education

• Campuses had to expand to meet the new

demand. As a result, tuition increased at a
rate somewhat greater than the increase in
the overall cost of living.

• That dramatic increase occurred because

during this period many countries
developed large budget deficits.
• When the public universities increased their
tuition, the elite private universities took
notice. Anxious to maintain their higher
status and simultaneously bring in more
revenue, they raised their tuition as well,
setting off an escalating spiral. The result is
visible today in the eye-popping tuition
rates that now confront students at private
colleges and universities.
• With the budget cuts temporarily neutralized by
tuition increases, college administrators saw the
expanding student population (the market for their
services) as an opportunity to enlarge the size and
standing of their campuses. Universities competed
for prominent faculty by offering larger salaries.
They expanded and modernized their laboratory
space to attract prestigious government grants.
New sports facilities were built along with
dormitories that advertised comforts unheard of
when I was a student. Some schools, to their
credit, responded to the growing demand for
fairness by offering more scholarships to
disadvantaged students. All of these factors played
a role in increasing the cost of tuition, but the main
reason it went up was that legislative
appropriations for higher education went down.
• In addition, it is so sad that nobody has
yet figured out a way to run a university
using drastically fewer professors
without sacrificing some educational
quality . While schools have managed to
restrain their spending by paying
masses of part-time adjunct faculty a
pittance, the cost of instruction is still
going up.