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 The details of how this municipal-level decentralization is eventually decided will not materially affect the operation of the finance scheme described here. 3.2.2. Allocation issues a. The Basic Educational Support Program is intended to provide a foundation of financial resources across institutions. Thus the amount of the allocation for each level of the education system will be different, depending on the determination of the appropriate amounts for each. The Basic Education Support allocations within each level should be in the form of block grants to each institution based on the number of students in effective attendance. The issue of how to determine effective attendance is taken up in a later section. The base amount of the support will be calculated as 80 per cent of what is judged to be the appropriate level of recurrent expenditure per student for each level or type of educational institution (primary, lower secondary, upper secondary, higher education, etc.). The section on per-student expenditure analysis describes the recommended approach to setting an appropriate level of basic per student support. Since this basic support level will not be sufficient for program operation in most cases, and is not responsive to local needs and circumstances, there should be additional allocation and revenue generating mechanisms to make up a comprehensive finance system. Part of this additional funding is dealt with through the Educational Equalization Program. Other resources are provided for through local revenue raising. These mechanisms are described in Section 3.2.3 below. b. Before describing the details of the allocation mechanisms, the nature and implications of the block grant approach require some discussion. This kind of mechanisms is, in some respects, a major departure from the current budget allocation and control method (the line item budget). As the term is used here “block grants” to the institutional level mean that the discretion and control of resource allocation to the various programs and objects of expenditure are transferred from the national to the local level. It also means, therefore, that the major responsibility for the efficient and effective use of those resources shifts to that level as well. This approach means that the educational finance policy issues at the national level shift as well. Instead of attention to distribution across Ministries, Departments, and agencies, the policy debate will necessarily focus on the appropriate levels of support for education, the operation of the allocation mechanisms, and the priorities for assessment, research, and improvement. That is, the importance of the role of the national government does not diminish, but rather shifts more directly to allocative and performance issues. c. In one respect, the block grant approach is not as large a departure from the status quo as it might appear on the surface. The existing budget allocations are based in large part on incremental adjustments to the allocations requested by the lower levels of the system. Therefore what emerges as the line item budget for any particular institution reflects important inputs from that local level. So the original allocation is quite likely to reflect, at least in some ways, the allocation decisions and preferences of the local administrators. The main difference under the block grant scheme is that the local authorities have the discretion to adjust their local budget from the block grant to more closely fit local needs and circumstances. 90
Final Report, Volume II/3 Anthony. Cresswell: Educational Finance UNESCO-PROAP TA 2996-THA Education Management and Finance Study July 1999 3.2.2.1. Overall education budget and expenditure patterns The overall level of financial allocation from the Government and private sources appears to be roughly in line with other countries in the region. But there is still a gap between Thailand’s level of investment in education and that of more developed countries. Longer term planning should include goals of increasing the allocations to education to at least 5 per cent of GDP, which would be achieved by maintaining the recent upward trend. The balance among types of expenditure for the current and recent past budgets seems tipped in favor of heavier investment on the capital side. It is not clear whether this is a result of specific policies to enhance infrastructure, or just the accumulated effect of uncoordinated decisions. The new finance policies, especially expanding opportunities for secondary education may require continued high capital expenditure in the short run to build the necessary facilities. The Government should conduct a detailed facility capacity study to examine this possibility. Expenditures on central administration also appear to be larger than necessary, and will probably drop as a result of downsizing and consolidation of central Ministries. The level of expenditure on higher education subsidies cannot be justified on either efficiency or equity grounds and should be reduced. Increased investments in pre-primary and primary education quality and access are likely to produce greater returns in terms of overall quality and efficiency. Distribution of financial and teacher resources appears to treat most provinces and regions equally, but does little to compensate for economic disadvantages. The allocation of financial resources to higher education is an exception to this general pattern, since higher education resource allocations tend to be disequalizing, going disproportionately to wealthier provinces. 3.2.2.2 Block grants and salaries a. The block grant approach, if fully implemented, should cover all the school financial resources, including staff salaries. Since these salaries and the staff that go with the salaries are such a large and important component of the operation, they should be subject to managerial control and decision making at the operational (institutional) level. That is, the funding of staff salaries, as well as the financing of other resources, should in effect follow the children. However, allowing local control over salaries and staff employment is a major departure from the current arrangements. To implement the block grant approach to staffing and salaries in a short period of time could be very disruptive to morale, overall staffing patterns, and abruptly place a large additional administrative load on the local administrators. The move to the full block grant approach should therefore be planned over a longer time frame and proceed in stages. The description of the finance scheme also raises a number of possible issues of personnel and salary policy. For some of these issues, it is assumed that the existing personnel policies with respect to benefits, pensions, and matters of routine personnel administration will remain unchanged. The main changes will be in the locus of the hiring and retention decision, and the establishment of salary levels. The issues of salary levels and hiring are discussed below. 91
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Table of Contents A. Executive Summ
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Table of Tables Table 1 Adjustments
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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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