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 10.3.3. Capital expenditure A preferable alternative for capital construction costs would be to change the legal structures to allow provincial or certain forms of local governments (e.g., municipalities) to incur their own debt. With the authority to borrow directly from private capital markets, these LEA’s and governments could finance their own long-term capital projects, with the debt service payments included as part of the recurrent budget. These features would impose a more rational framework on capital investments decisions. In addition, the full financial responsibility for capital construction projects would lie with the government units closer to the assets and their use, and thus in better position to make investment decisions and to manage asset use and proper maintenance. Another advantage of financing capital construction through borrowing in private capital markets is to insulate long-term capital investment decisions and construction projects from the effects of short-term budget problems. Cutting sharply on construction spending can exacerbate recessionary trends or result in added costs of suspending construction as well. 10.3.4. Finance allocations for private schools a. The finance provisions for the private schools should encourage maintaining organizational diversity, mobilizing private resources, and options for experimentation and innovation. To meet these objectives, the private educational sector should be relatively free of the framework of rules and regulations that apply to the government schools, but at the same time be held to high standards of integrity and performance. Consequently, a separate finance scheme is required. b. Equal per-student subsidies should be provided to all recognized private schools, at a lower level than for the government schools, coupled with incomeindexed scholarships to maintain equity and access to private education for students from low income families. To qualify for the subsidy, or to enroll scholarship students, the school would have to be registered by the OPEC. This would be the primary government quality control mechanism. The size of the subsidy would be set at 35 % of the per-student subsidy amount for the government schools, with an amount equal to an additional 35 % of the perstudent government subsidy as a fund for scholarships to students from lowincome families. Those schools enrolling higher proportions of poor students would receive higher support, improving the educational opportunities for those children. The private schools would continue to depend on private resources to finance the full program, thus maintaining incentives for mobilizing these resources for education. 10.4. Related reform issues 10.4.1. The issue of mobilizing private resources In current discussions of finance system reforms, considerable rhetoric has been addressed to the topic of mobilizing increased flows of private resources into education. In fact all government resources come, in the first instance, from the 18
Final Report, Volume II/3 Anthony. Cresswell: Educational Finance UNESCO-PROAP TA 2996-THA Education Management and Finance Study July 1999 private sector. Therefore the implications of a proposal to mobilize more financial resources from the private sector really hinge on whether the mechanism of mobilization is compulsory, as in a tax increase, or voluntary. To be effective voluntary mechanisms require some incentive for the private individual or organization to contribute resources to education. Government policy is not likely to have much impact on the non-financial incentives, so is not analyzed here. The tax-based incentives in the current new policy proposals (Education Bill) do not represent a savings to the government since they are tax credits, i.e., each Baht of contribution represents a Baht of revenue loss. These incentives simply shift the control over where the government resources are allocated from the government itself to the individual contributor. This can be an effective incentive, since it allows a person or organization to allocate government resources in a way to produce personal benefits. It is also a disequalizing mechanism, since richer persons have more discretionary funds to take advantage of this incentive, and may be taxed at higher rates than the poor. Relying on private resources also introduces potentially high levels of uncertainty into the financing of essential government services and may not a be a sound foundation for provision of education. 10.4.2. Supply-side vs. demand-side finance of education a. There has been much discussion of what has come to be called "demand-side" as opposed to "supply-side" financing of education. The apparent issue involved in this discussion is whether the flow of resources to education should be determined by or controlled by the "supply-side" (i.e., the suppliers of education, schools and their administrative structures), or the "demand-side," (i.e., those demanding educational services, parents and students). In this discussion, the current state of education in Thailand is characterized as dominated by the "supply-side," i.e., the government providers of schooling. Any reforms undertaken should increase the responsiveness of the schools to the "demand side," i.e., the consumer. This would presumably improve quality as well. It is also implied, though not necessarily stated, that the amount and types of schooling supplied should more closely match demand. It is also argued that the demands of the consumers will lead to more effective or more rapid reforms as well. b. These demand side initiatives in other countries have taken the same form as many of the reform initiatives in progress in Thailand: targeted subsidies, vouchers, student loans, community grants, and other forms of public assistance to private schools. Demand side financing has also used stipends directly to students and some forms of community-level financing. There is some evidence that these mechanisms can have the desired effects, but the pattern of success is not strong or consistent (Patrinos and Ariasingam, 1997). Therefore there is some basis to pursue the demand-side financing initiatives proposed for Thailand, but they should be initiated gradually with careful evaluation of their effectiveness. c. A much more detailed discussion of the nature and potential for demand-side financing is found in the paper by Dr. Sirilaksana Khoman in the Appendix 1. 19
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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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