Decentralized education finance in china liuPresentation Transcript
Decentralization and Centralization of Compulsory Education Finance in China Mingxing Liu China Institute for Education Finance Research Peking University
Provide an understanding of the evolution of institutional setting for primary and junior secondary levels of the education sector from 1980s to the present day.
Examine the impacts of recentralization reform on school finance and education service delivery since 2002.
Governance of Compulsory Education Sector in China
China has the largest educational system in the world. Total enrollment at regular schools of 9-year compulsory education amounted to 162.85 million in 2007.
The primary and secondary education is overwhelmingly provided by the local government in China.
Roles and Responsibilities
The central government
Policy-making and overall planning role , e.g. determining teaching contents and textbooks.
The provincial governments
Formulating the development plan
Providing assistance to lower-level governments to help them meet recurrent expenditures in education.
Role of County Government
The management and finance of compulsory education sector has been largely the responsibility of the county (or district, county-level city) government.
The education governance system is centralized at county level, or decentralized to the township level, while the degree of centralization differs cross counties.
Governance of Education at County Level
The county government: raising the revenue needed for supporting the staff, building schools, and implementing house restructuring programs.
The county education bureau: the routine management of the education sector and the quality evaluation of schools.
Township government: taking a certain complementary responsibility such as repairing houses, financing the operation cost of schools, and safeguarding the right to compulsory education of school-age children and adolescents.
Governance of Rural Education
No matter what kind of administrative and financial institution exists between the county-level and township-level governments, the task of routine education management is mostly undertaken by township-school-district governor ( 学区校长 , TSDG) in co-ordination with rural school heads at primary and junior secondary levels.
Quality Assurance Mechanism
The objective of such system is to enforce educational responsibilities and commitments of local education units, and contents of the evaluation are mainly concerned about educational works and fulfillment of their designated responsibilities.
At the outset of the semester or academic year, county education bureau signs the ‘education objective-accountability agreement assessment (EOAA)’ with the TSDGs, who also sign the EOAAs with school heads and teachers correspondingly.
The decentralization policy in 1980s reiterated the necessity to raise education funds from a diversity of sources.
Although government budgetary appropriation remains the major source of funding for compulsory education, it should also be supplemented with various channels, such as education surcharges, revenues of school-run enterprises, donations and gifts from society, and so on.
Students receiving compulsory education should be exempt from tuition but must pay necessary school fees.
Impacts of Decentralized Finance Mode
The decentralized framework for revenue collection is accompanied with the decentralized regime for education expenditure.
This funding framework has had its merits.
It established local finance, county-level finance in particular, as the main source of funding for compulsory education.
It fired up grass-roots governments and villagers with enthusiasm to run schools , and made up funding shortages by collecting rural education surcharges, raising school management funds from villagers, charging miscellaneous school fees from students, and tapping the incomes of collective economic businesses.
Shortfalls of Decentralization Strategy in Financial Side
The upper-level government excessively loads the policy mandates on local governments without the corresponding financial subsidy. Then it resulted in vertical imbalance of fiscal responsibilities versus fiscal capacities of governments at various levels.
The decentralization strategy induced the imbalanced funding mode of schools and exaggerated the regional and urban-rural disparity of the compulsory education development.
Schooling became too expensive for poor families.
Centralization Reform from 2001 to 2005
Rural taxation reform
County centered management
Increasing role of central fiscal transfer
Price ceiling reform
Two exemption and one subsidy ( 两免一补 )
Fiscal Appropriation Guarantee Mechanism
Remove extra-budgetary sources of educational revenues for rural schools: rural educational surcharge and rural social donations and gifts.
The responsibility to manage and pay salaries of teachers in rural schools lies with the county government
Rural primary and middle schools in 22 provinces, autonomous regions and municipalities were partially financed by both central budgetary transfer payments
Price ceiling reform
Fiscal Appropriation Guarantee Mechanism
The public expenditure for compulsory education in western and middle region is financed by the central and provincial governments.
From 2006 to 2010, the fiscal appropriation for rural compulsory education totals 218.2 billion yuan, among which 125.4 billion yuan are from the central finance and the rest fund from the local finance.
Evaluating the Ongoing Reform
Impacts of centralization reform
Autonomy of school
Educational Expense and Budgetary Educational Expense per Student
The coefficient of variation for education expense per student at provincial level
The coefficient of variation for budgetary education expense per student at provincial level
Incentive for Local Education Finance
The centralization finance mode has been enforced by the top-down mandate instead of incentive-compatible way, which generates the substitution effect and weakens the motivation of local government to provide the additional budgetary appropriations for schools.
Declining ratio of fiscal education input to total fiscal spending at provincial level from 1998 to 2009.
School Fee per Student (Unit: Chinese Yuan/person, year)
Probability distribution of school fee per primary school student
Probability distribution of school fee per junior middle school student
Family Burden of Education Expenses
The compensation policies by the central government and provincial governments couldn’t fully take the discrepancy of funding structure into the consideration.
Serious fiscal shortage of rural schools in the middle region
Local government takes various tricks to sabotage the central mandates and push the fiscal burden to parents and local communities.
Transform the public school to the school with public-private joint partnership in order to circumvent the fee-control policy.
Withdraw the village and township schools
Quality assurance mechanism weakens in the fee-exemption school
Impacts on personnel autonomy at township school district level
Impacts on quality assessment and incentive schemes
Governance Modes for Deploying Staff in School Districts in 2007
Changes in Jurisdiction for Deploying Staff in School Districts, 2000 - 2007
Negative Impacts of Fiscal Centralization I
When the county government takes the duty for financial input for rural school, it is also likely to control the power of teacher allocation and school head appointment. The autonomy of education masters should be weakened in this process.
Negative Impacts of Fiscal Centralization II
The county government might not be able to sufficiently provide the financial input for the rural education sector, and then the sharing of administration power has to be politically bargained among the authorities in charge of financial responsibilities, such as county government, education bureau, and township government.
This induces the allocation of power and responsibility more inexplicit and indeterminate.
As the education administrative system becomes more unstable, the implementation of quality evaluation scheme will deteriorate unavoidably.
The fiscal subsidy by central and provincial governments is still not sufficient for reversing the increasing disparity of education input cross regions.
The reform has not impelled the incentive of local government to provide the enough shares of the needed funds, while the financial burden of families has not fundamentally alleviated.
The centralization reform also gradually caused the over-centralization or incessant political struggles of educational personnel powers by the various government bodies, which inevitably affected the approaches to teacher management and to the structuring of teachers’ incentives.
Fiscal centralization approach by the current top-down mandate is incompetent to the task of ensuring the adequacy and effectiveness of education finance.
We appeal for the further policy innovation to rebalance the decentralization/centralization approaches for compulsory education development.