Levelling the Playground: A Review of School Funding

By Russell Wildeman · 5 May 2008

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Picture: www.imrs.ie
Picture: www.imrs.ie

Idasa believes that the time has come for the development and implementation of free quality basic education for all. However, we remain committed to researching key aspects of current education policy and its implementation in order to encourage policy initiatives that will result in better opportunities for poor children in the future.

A major piece of research that Idasa recently undertook was an inquiry into the reforms to the school funding policy. We enquire into whether the present reforms solve the initial implementation, organisational and funding difficulties provinces experienced over the period 2000 to 2006.

Funding norms are guidelines to provincial education departments about how to direct non-personnel and non-capital expenditures to ordinary public schools and independent schools. Because of the explicit need to bring about redress and redistribution, funding allocations have been skewed in favour of the poorest learners.

The policy required that 60 per cent of the available resources be distributed to the poorest 40 per cent of learners. Provincial education departments had to develop poverty instruments that would allow them to rank public schools from the poorest to the least poor. No financial benchmarks were implied and the only clear prescription was that the allocations to learners in quintile 5 (least poor) must be seven times smaller than corresponding allocations for learners in quintile 1 (poorest quintile).

The present reforms are an explicit recognition of the inadequacy of the original school funding policy, but they also invite the view that these reforms are a mere signpost to a better future for poor learners and schools.

The impetus and parameters for reforms to the school financing policy are located in multiple realities and contexts. Arguably, one of the most unsettling images from the initial implementation of the school financing policy was the idea that similarly poor learners in two provinces would receive vastly different financial treatment.

The period after 2000 saw education policies increasingly focused on the non-personnel aspects of budgets. This was a double-edged sword. On the one hand, growth in non-personnel expenditure aided the aggregate resource base for policy implementation. On the other, key technical professionals, who were defined as integral to the successful implementation of the policy, could not be appointed due to the freeze on personnel costs.

In instances where provincial education departments were willing to consider such appointments, rigid bureaucratic procedures made it difficult to employ suitably skilled personnel. Experienced and skilled technical persons could not be recruited to work for below-market salaries and opted to go into the private sector or join the public sector as managers.

Although some provinces have provided evidence of outsourcing of key requirements of the funding norms policy, we believe that the failure to institutionalise the professional standards required in the school funding policy produced unnecessary opportunity costs.

Given the fact that poor schools are destined for the largest sums of redress resources, the education system is in dire need of co-ordinated information strategies and the ability to analyse such information to promote quality causes.

Instead, eight years after the first implementation of the school funding norms, provincial education departments are scrambling to appoint a fraction of the staff they require in terms of the policy.

Between 2005 and 2008, the school allocations grew from R3.5 billion to R6.8 billion. Over this period alone, the total school allocation almost doubled (93 per cent nominal growth), which translates into a real growth rate of 67 per cent.

But while there has been a considerable aggregate impact, most allocations in 2007 for the three poorest quintiles deviated negatively from the nationally set spending levels and poor provinces in particular were unable to meet national targets.

This reflected the fact that the cost of redress was much higher in the traditionally poor provinces because of the demographic compositions of their populations. For the less-poor quintiles, greater heterogeneity existed in per learner allocations, partly reflecting the pushing-out of formerly poor schools into the less-poor quintiles.

The year 2008 saw the full impact of the amended funding norms as negative deviations from national targets in the poorest three quintiles were drastically reduced. The largest number of provinces now achieved parity with the national targets, while positive deviations from national targets dominated allocation patterns in quintiles 4 and 5.

In 2008, levels of inequality continue to rise in the less-poor quintiles because only a set number of schools can be accommodated in the two poorest quintiles. Schools that were traditionally located in the poorest two quintiles and that have now been moved to the less poor quintiles maintained their erstwhile nominal per learner allocations. This increases the heterogeneity of allocations in the less poor quintiles, thus explaining rising levels of inequality in these quintiles.

Overall, the inequality levels in 2008 are five times smaller than the situation in 2002 for quintiles 1 and 2, thus revealing the strong equalisation push across provincial education departments. However, the further away one moves from the poorest two quintiles, the more unequal per learner allocations become, and an increasingly fading consensus exists about how to treat similarly poor learners in less poor quintiles across provinces.

While monetary evidence of the impact of the amended policy is straightforward, efforts at establishing a national targeting framework have run aground. Heterogeneity of households at the ward level has complicated poverty targeting and forced provinces to adopt supplementary measures.

Whereas large differences in per learner funding across provinces provided one reason for the reform to the school funding norms, barriers to access provided the rationale for the idea of no-fee schools.

While no-fee schools were only officially introduced in 2007, their net impact on the present funding of public schools is considerable. No-fee schools attract the best government funding and also receive compensatory funding in areas such as school safety, nutrition, classroom construction and Grade R expansion.

Furthermore, government resources have also been expanded to improve the support given to these schools. However, the clamour to get into the two poorest quintiles has produced negative effects for the funding of other poor public schools.

Demarcation changes, the establishment of new schools, and re-ranking following successful appeals, have pushed out many poor schools into the less-poor poverty quintiles. Such schools suffer non-adjustable per learner allocations and also do not benefit from compensatory spending, leading to the inevitable worsening of the income status of such schools.

Add to this provinces’ reporting of variable fee income collection and it is clear that the so-called “middle-school” problem has now been extended beyond the confines of quintile 3 schools and learners.

The evidence that we have provided is “mixed” in terms of the ability of the new policy framework to address the problems so pervasive in the first implementation of the school financing policy.

By 2006 unequal per learner allocations for the first three quintiles have almost been overcome and it is fair to assume that such gains will continue in the near future. Also, although the allocations are variable in quintiles 4 and 5, over time such differences will become muted.

Thus, the present policy seems to have solved the problem of unequal allocations across provinces, thanks to the aggressive application of the mandatory national spending levels. However, the policy has been less successful in enforcing a national targeting framework and present arrangements are far from this ideal.

Moreover, the second pillar of the changed policy, namely placing similarly poor learners into the same categories, has not been realised. There is insufficient evidence to make the case that the national targeting framework is better than its provincial predecessors.

This has immense implications for scores of poor learners and schools, which continue to be misclassified and who face financial deterioration in the future.

In spite of the personnel gaps that dogged the initial implementation, the new policy has brought only partial relief in the form of dedicated school funding norms units. Schools remain under-staffed and very few provinces can boast substantial successes in the recruitment of technical professionals.

Russell Wildeman is a Senior Researcher within the Economic Governance Programme of Idasa.


You can find this page online at http://sacsis.org.za/site/article/93.1.

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