Educational Finance in Thailand - UNESCO Bangkok

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Final Report, Volume II/3 Anthony. Cresswell: Educational Finance UNESCO-PROAP TA 2996-THA Education Management and Finance Study July 1999 designated as uniform for all students in order to simplify the budget calculations at the central level, but does not provide for a fully equitable distribution of resources, however, due to the large differences in provincial and local abilities to support their share of educational finances. That consideration is addressed through the equalizing mechanism described below (Figure 1). b. With respect to enrollment, the policy and procedures for counting effective enrollment would be structured to encourage the schools to maintain high attendance rates. For example, effective enrollment could be defined as attendance in a certain minimum percentage (such as 90%) of the school days, or on average daily attendance, or some similar data. Specific policies and regulations would be needed to establish the procedures and controls for reporting attendance and ensuring accurate data. c. The equalizing portion of the finance mechanism would operate through adjusting the local share of total educational expenditure to reflect local ability to pay. If the local education authority (LEA) decides to increase the local budget, it will receive a subsidy from the province, based on a share (%) of the amount that the local per capita budget exceeds the central subsidy. The actual sharing percentage will be based on the wealth of the LEA and proportion of disadvantaged students. In this way, poorer LEA’s and ones with concentrations of poor students will receive a larger revenue share than richer LEA’s for the same financial effort. The funds available for the provincial subsidy will come from the equalizing grant from the central government, based inversely on provincial wealth, and on provincial tax revenues. d. The central government would have to set the policy for the standard subsidy level, the expenditure level judged necessary to provide an adequate education (subject to adjustment each budget cycle). Then, using the formula for each LEA's equalizing grant, the province would calculate the amount necessary to "top-up" each of its LEA's to the standard "adequate" level. The central government would then provide a fixed proportion of this equalizing subsidy to the province (say 80%), and the remainder would be derived from provincial resources. The central/provincial sharing ratio could also be adjusted to reflect the relative wealth of the province. e. The figure below (Figure 1) illustrates an example, based on a standard for an adequate education is set at 100,000 Baht per student per year. 4 The basic central subsidy is 50,000 Baht per student with an additional average of 30,000 Baht per student allocated as equalization subsidies. Consider two LEA's, one poor, one rich, which decide that they need only the 100,000 Baht per student for an adequate education. If the poor LEA's cost sharing percentage is low, the LEA would only have to raise, say, 5,000 Baht to receive another 45,000 from the provincial equalizing fund. For the rich LEA, the sharing proportion might be higher so that the rich LEA would have to raise 45,000 Baht in local revenue, to receive a 5,000 Baht subsidy and raise the total to 100,000. Thus all LEA's have 4 The amounts used in this example are for illustration only and are not a recommendation about actual expenditure levels. 16
Final Report, Volume II/3 Anthony. Cresswell: Educational Finance UNESCO-PROAP TA 2996-THA Education Management and Finance Study July 1999 an incentive to raise local revenue to support education, but the equalizing portion of the finance system allows poorer schools to provide quality education although local resources are small. Figure 1 - Example of finance flows Poor LEA 5,000 Local tax revenue 35,000 Rich LEA 45,000 Equalizing Grant 15,000 50,000 50,000 Central Subsidy f. The third revenue stream would be for special projects, quality improvement, and capital construction. The basic funding for these projects could be distributed through block grants from the central to the provincial level, using the same formula calculation as for the equalizing grants for basic education. Provincial tax revenues can supplement the grants for quality improvement and related special projects as well. 10.3.2. Measure of need for local educational authorities The targeting mechanism now in use for the student loan scheme may be part of a workable approach to developing such a local need measure. Eligibility for the student loan depends in part on family income, requiring students to report this income as part of their application. For students in secondary schools, the teachers and other school staff who are usually familiar with the student's families school staff can review this eligibility information. 5 A similar approach could be applied at the primary level as well. A system for provincial-level verification of such poverty levels would be necessary. A more comprehensive indicator of local financial capacity is also needed. The value of real property could be included in a local financial capacity measure, if there is confidence in the accuracy and comparability of assessment practices. Some attention would be necessary to adjusting assessed values for variations in local assessment practices. Methods for doing so are common in countries in which real property taxes are a significant portion of local government finances. 6 5 These loan scheme procedures are described in detail in the report on that program (see Vol.II/4). 6 For example, in some jurisdictions assessed values are compared to a sample of actual market transactions in which property changes hands. The ratio of assessed value to market value in this sample is then used to adjust the overall assessed values for the local area. 17
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mission and operations. The term
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The information requirements for fi
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Table 1: Continued Dept. Flow of Re
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Table 1: Continued Dept. Flow of Re
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Description and assessment of compu
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Table 3: Existing computer systems
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Table 3: Continued Current existing
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Description of flows of financial i
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(teachers, facilities, etc) if data
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Table 4: Continued. Content of curr
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Table 5: Assessment of information
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An assessment of information system
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general administration, these syste
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Recommendation for IS Most involved
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6. The nation wide implementation.
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References Office of the permanent
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Office of private education commiss
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Interviews 10 September 1998, 9:00-
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Appendix 2 Projections of Costs of
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Projected Cost Increases for Expand
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Identification of Schools for Sampl
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8. Please place an X in a box below
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enrollment as a whole growing at an
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Figure 1: Thailand’s Development
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Table 5: Crude transition rates of
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and level of education, 1993 and 19
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2.31 Questionable quality of educat
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income inequality between agricultu
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4.1.4. The percentages calculated f
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Table 11: Public and Private sector
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4.3.8. As would be expected, unempl
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5.7 The dilemma is to balance the s
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Table 14: Unemployment and Underemp
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there any activities that would be
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References Chalongphob Sussangkarn
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Appendix 6 BMA Voucher Policy A. Lo
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Appendix 7 Finance Allocation Metho
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Appendix 8 Program Structure of the
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Not all possible flows are show, si
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Appendix 11 Results of Regression A
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