Educational Finance in Thailand - UNESCO Bangkok

Final Report, Volume II/3 Anthony. Cresswell: Educational Finance UNESCO-PROAP TA 2996-THA
Education Management and Finance Study July 1999
b. Moving the financing of staff salaries from the central to the local level will
require a gradual transition period. One approach to this would be to phase in the
transition over a five-year period. The employment of the staff would shift from
the central to the local level in the first year, but with staff retaining full civil
service rights and salary levels. During that period, the block grant would consist
of two components. The first would be the non-salary component of the basic
support level. The other would be a salary portion to cover the salary obligations
for the existing staff (benefits such as pensions would continue to be funded at the
national level). In the first year, the salary component would cover the full salary
obligation of the existing staff in each school. In each subsequent year, the salary
component of the basic grant would be reduced by 20 per cent, and the non-salary
component would be increased by an amount equal to 20 per cent of the salary
budget the school would have if all it’s teachers were paid at the average for that
type of school. For schools with a relatively high seniority, high salary staff, this
shift would result in a slow decrease in the budget available for salaries, and
require the local school to either raise more local revenues or use staff in more
efficient ways. For institutions with relatively low seniority, low salary staff, the
shift would slowly increase the salary funds available, allowing those schools to
improve programs or compete for higher seniority teachers. When an institution
loses staff during this period, through retirement or other attrition, the salary
component of the block grant would be reduced by the amount of the staff salary,
and the non-salary component would be increased by the average amount
described above.
c. Over such a phase-in period, the local institutions would have ample
opportunity to plan for staff changes and shifting resources to adjust to the budget
changes. With normal staff turn-over and careful planning, the extent of the
disruption or negative impact on institutions or individual staff should be kept to a
minimum. However in some local areas the existing staffing patterns may be such
that the phase-in process causes serious problems. To deal with this contingency,
the phase-in period should include a special budget allocation for a staff
adjustment fund at each province. If administrators in a local institution need short
term financial assistance to manage the transition period, they would apply to the
provincial education office for a temporary allocation from this fund. The fund
would be available for the five-year phase-in period, but would expire at end of
that time period.
3.2.2.3 Appropriate expenditure and cost sharing levels
a. In developing a method for determining appropriate expenditure levels the
recommendations presented here deliberately avoid the use of a cross-sectional
production function or historically based calculation of what are usually called
“unit costs”. Of course, any block grant or student count-driven approach to
educational finance requires a way of setting per-student amounts or guidelines. In
the current policy-making setting for educational finance in Thailand, this is
commonly referred to as the “unit cost” issue. In these recommendations,
however, it is referred to instead as the issue of per-student amounts or guidelines.
This is done to emphasize the distinction between a policy decision on per-student
amounts that is based on a mix of analytical and political factors versus a true
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