Major Research Project on Tracking the Flow of Resources in Education Sector: An Application of System of Education Accounts

Major Research Project on Tracking the Flow of Resources in Education Sector: An Application of System of Education Accounts

Dr Mahesh E

Assistant Professor,

Department of Economics

CHRIST (Deemed to be University) Bangalore – 560029

 

Co-Investigator

Joshy K J

Assistant Professor,

Department of Economics

CHRIST (Deemed to be University) Bangalore – 560029

 

 

Abstract:

 

 The present study marks a modest attempt in conducting a comprehensive assessment of public and private financing for secondary education in the State of Karnataka in the structure of system of education accounts (SEA) framework. The SEA can be described as a ‘transparent method for collecting and analyzing data on actual allocations and expenditures of resources in the education sector and linking those allocations and expenditures system reforms’. It involves the identification of the actors (financing sources, financing agents, education providers and inputs) in the sphere of education system, the relevant activities, and the many financial transactions between the actors, aimed at carrying out the designated activities. In short, the SEA can be described in an integrated way as: ‘Where?’ ‘To?’ and ‘What for?’.

Drawing on a wide variety of data sources pertaining to secondary education in Karnataka, the present study attempts to examine:

 

1) The pattern of public expenditure on education in general and secondary education in particular over a period of time (1980-81 to 2012-13);

 

2) The flow of resources from different sources and presenting them in a form using the accounting principles;

 

3) To develop a matrix format which facilitates the users to understand the sources of finances and the uses of such finances on different items of expenditure.

 

E.2 The examination of the trends in public financing of secondary education in Karnataka shows that the budgetary allocation to general education has gone up by 29 times in a little over two decades. While expenditure for the whole period (1980 to 2006) shows a 13.76 per cent growth rate, there is, however, decline in general education expenditure growth from 14.97 per cent in pre-reforms period to 11.89 per cent during reforms period. The share of expenditure on general education to total revenue expenditure and SDP are 19.15% and 3% respectively during the period. The total revenue expenditure and SDP have a positive and statistically significant effect on general education expenditure and is marginally greater than one (elastic) implying that expenditure on education is seems to be responsive to changes in the total revenue expenditure and the SDP.

E.3 The intra-sectoral analysis of educational budget of the state reveals that during the 90’s, the average share of expenditure on primary, higher and other levels of education has declined, while the share of secondary education, however, witnessed an increase of 3% during 1991-2006 over the previous decade (1980-90). Even in the case of five-year plans also on the whole the share of secondary education has increased constantly from IV Plan onwards to till IX Plan, from 21.27 per cent in the IV Plan to 30 per cent during the IX Plan. But when one observes the proportion of secondary education in the state income it is found that the state is spending less than one percent on secondary education whereas it has been recommended by the CABE Committee on Financing Education that out of 6% GDP which should be devoted to education, 1.5% should be towards secondary education.

E.4 The total revenue expenditure on secondary education presents an impressive increase of over 42 times the initial level. However, in order to provide true picture it is necessary to adjust the nominal resource flows for inflation. The resulting plan, non-plan and total revenue expenditures show that total expenditure in constant prices increased just six times over the initial expenditure level compared to a 42 times increase in current prices. The growth rate of total expenditure in real terms is only 6.6% about 8.2% lower than that in current prices. The decadal trend points to an important finding that the growth rate of expenditure declined from 9.1% in the pre-reforms period to 5.6% in the reforms period. A similar impact of inflation on the growth of expenditure is seen in the plan and non-plan component as well.

E.5 The per-student expenditure on secondary schools increased sharply at current prices, signifying an almost 7.3 per cent growth hike over the years. However, much of the spectacular rise in per-student expenditure disappears when adjusted for rising prices. The per-student expenditure in constant prices increased just one times over the initial expenditure level compared to a three times increase in current prices. The growth rate of total expenditure in real terms is only 1.5% compare to 7.3 per cent in current prices. Distribution of secondary expenditures by activities and items reveal that grants to government schools, grants to private schools and grants to local bodies and corporations together account for more than 90 per cent of the budget expenditure. Besides, major proportion of this expenditure goes to meet salaries of the teachers and other staff. Important quality items like teachers’ training, direction and inspection, textbooks and scholarships received only 3.28 per cent of the total expenditure. The revenue expenditure on government secondary schools increased about 22 times compared to an increase of just 2 times in constant prices. The grants-in-aid to private schools increased almost 10 fold and the compound growth rate works out to 8.4% for the whole period. Assistance to local bodies, corporations etc., registered a growth rate of 34%.

 

E.6 Another interesting development is the role of the Centre in financing secondary education. Much of the Centre’s contribution is essentially towards Navodaya Vidyalayas and Kendriya Vidyalayas leaving meager resources towards the improvement of mainstream secondary education. About detailed data relating to the expenditures incurred at local level on education are not available. Absence of reliable information on the revenues and expenditures of local bodies is a striking weakness in the decentralised fiscal management in the State.

 

E.7 A comprehensive assessment of public and private financing for secondary education in the State of Karnataka, with sample data from one of the districts of Karnataka (Bangalore Rural district), in the structure of system of education accounts framework reveals that the district of Bangalore Rural has spent a total of Rs 225.9 crores on secondary and higher secondary education in the year 2011-12, which is accounted for 1.98 per cent of Gross District Domestic Product (GDDP). Of this, about 53 per cent was financed from public (government) sources and 47 per cent by private sources.

 

E.8 The details of sources that financed secondary and higher secondary education in Bangalore Rural district for the year 2011-12 reveals that the central government contributed just 0.52 percent, while the contribution of state government was 52.47 percent. The private funds like households contributed 46.98 per cent while total expenditures incurred by other private sectors like managements was Rs 1,30,224 and interest from deposits/endowments was Rs 1,72,212 accounting for very negligible share. The contributions of communities, NGOs and parents – teachers associations stood at Rs 1,92,648, Rs 99,480 and Rs 49,032 respectively.

E.9 The details of total expenditure on secondary and higher secondary education by financing agents in the year 2011-12 shows that out of total secondary educational expenditures, the Central Government through its Ministry of Human Resource Development (MHRD) channelised Rs. 1,16,58,198 to Kendriya Vidyalays (KVs), accounting for just 0.52 per cent. The State Government through its Department of Education channelised Rs. 86,75,40,837 (38.40 per cent) to Department of Elementary and Secondary Education and Rs. 89,68,218 (0.41 per cent) to Department of Social Welfare. The Other Departments of the State Government like Ministry of Labour channelised Rs. 22,80,444 (0.10 per cent), mostly to Vocational Education. The total expenditure channelised by Local Government was Rs. 29,73,05,055, of which Municipal Corporation accounted for 0.21 per cent, the Zilla and Taluk Panchayats accounted for 10.71 per cent and 2.24 per cent respectively.

 

E.10 The data on secondary educational expenditures by public and private providers disclose that of the total spending on education, of the total spending on education, Rs. 77,63,37,567 (34.37 per cent) and Rs. 77,84,45,145 (34.46 per cent) went to State board government schools and private-aided schools respectively, and the 14.86 per cent, or Rs. 33,55,83,681 went to state board private unaided schools. While the Central board public schools and unaided CBSE schools accounted for just 0.79 and 0.23 per cent of total spending on secondary education. This therefore suggests that the Centre is spending very meagre resources towards the mainstream secondary education. The vocational training offered at government and private ITIs accounted for 0.17 and 1.02 per cent respectively. The private tutorials at secondary and higher secondary education accounted for a sizeable Rs. 31,88,92,458, equivalent to 14.12 per cent of total spending on education.

 

E.11 Spending by households and providers across broad categories of expenditures unveil that of the various items of expenditures on secondary education, the teachers’ salaries constitute the bulk, accounting for 48.69 per cent of the total expenditure. The second largest item is on private coaching appears to be a substantial proportion of total household spending (15.87 per cent). Tuition and other fees (9.62 per cent), books and course materials (7.26 per cent), uniforms, footwear etc (4.86 per cent), transportation to schools (4.56 per cent) are also important items. As expected, the important quality items like expenditures on school materials and capital expenditures accounted for negligible share of only 0.09 and 0.06 per cent respectively of the total expenditure. It is interesting to study the linkages between the provision of incentives/subsidies to households and the household expenditure on secondary education. The compiled information about incentives like free uniforms, free text books, scholarships, free bus passes etc from our analysis shows that of the total expenditures on secondary education, 1.3 per cent came in the form of incentives. The remaining 0.83 per cent of the total amount came from ‘other’ sources that could not be identified by any type.

 

E.12 An application of System of Education Accounts (SEAs) in conducting a comprehensive assessment of public and private financing for secondary education with sample data from one of the districts (Bangalore Rural) of Karnataka shows that the SEAs are a powerful policy tool for tracking the flow of funds from sources to all end-users. By mapping the flow of funds from sources to intermediary or financing agents and finally to the providers of services, the SEA facilitates more evidence-based policymaking in the education sector. The estimation of expenditures and financing flows serves as an indicator of the ‘financial health’ of the education and training system, and is therefore a strategic planning tool (Mukesh Chawla et al. 2005). Hence, the present study may be considered as a problem-highlighting one and as the one emphasizing the need for further studies in this field.

 

Year of Publication: June 2014

ISBN:  978-93-82305-60-6

Major Research Project: Vol 8

 

Pages   xiv, 141

Price: available on request

Funded by Centre for Research-Projects-CHRIST (Deemed to be University)

Published by Centre for Publications, CHRIST (Deemed to be University)