Educational Finance in Thailand - UNESCO Bangkok

are financed and thereby involves broader concerns of determining how much of the
economy's total resources are devoted to education, how much should be spent by the
government, and how much burden non-government sources should bear. Low cost
recovery means that the burden is passed on to non-users through reliance on general tax
revenues. And the taxes needed to pay for such subsidies often create distortions
elsewhere in the economy. Stark differentials between costs and fees also lead to
misleading signals to both provider and user. Low fees result in excess demand, creating
an incentive to resort to non-price methods as an allocative device instead of the price
mechanism. Users begin to seek preferential access to services through personal
connections, position and clout, leading to greater inequity. In addition, the quality of the
services tends to be driven down due to the lack of resources.
5.3 Low fees and charges are supposed to help the disadvantaged groups. But several
studies have shown that the clearly disadvantaged groups are often denied access
especially from the secondary level upwards. On the other hand, low fees in the (heavily
subsidized) public schools and the control on fees of private schools prevents both school
expansion, quality improvements, as well as quality-enhancing competition. The highest
fees charged by the public schools had been less than 20 per cent of the maximum fees
allowable at the corresponding levels in the private schools. Such controls have in the
past limited the ability of the private sector to expand. Many private schools have now
had to close down altogether as the economic crisis takes its toll on household incomes
and purchasing power. The easing of controls on private initiative and the infusion of
private-sector discipline into public schools and universities that has already begun
should not only enhance quality, but should serve equity and efficiency goals as well. But
in mid-crisis, such reforms have to been carefully spelled out and explained.
5.4 The financing of education needs to be overhauled so that social benefits and costs are
more closely aligned. This would mean a whole package of differential fee structures to
reflect social costs and benefits, and deregulation, with student loans taking the place of
current government control. The current policy direction is towards a direct subsidy
through vouchers to the student rather than the school, and student loan programs have
begun. But tackling the problem calls for three types of public finance reform: redirecting
spending toward activities in which government participation is most critical, increasing
reliance on user and other benefit-related charges to finance such spending, and
decentralizing some public responsibilities to those in closer touch with local needs and
conditions. Thus the whole spectrum of measures needs to be considered as a package
program: increased user charges, student loans, scholarships for the truly needy, and/or
bonding (which, in effect, is a subtler kind of loan), and training in management.
5.5 Educational institutions that are given greater financial and administrative autonomy
have to be accountable as well. But many schools may not be ready for autonomy so
perhaps school networks can be encouraged through fiscal incentives, whereby high
quality schools can help less advantaged schools in the network. Such financial and
administrative reform should improve access, quality as well as resource use.
5.6 The potential functions of the state to lie in the areas of distribution, correction of
market failures, counteracting the absence of futures and insurance markets, dealing with
externalities, public goods, and merit wants. Any services provided by the state have to
meet these criteria. Apart from that, cost-based criteria should be used, regardless of who
the provider may be.
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