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Understanding present and future public service delivery costs

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Understanding present and future public service delivery costs

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Presentation made at the EWR Workshop on 13 October 2020.
More information: http://www.oecd.org/cfe/regionaldevelopment/rural-delivery.htm

Transcript

  1. 1. Understanding present and future public service delivery costs Ana I More no Monroy (OE CD), Chris Jacobs -C ris ion i (E C -JRC) and Me rt K om pil (E C -JRC) E WR Workshop on Unde rst anding pre se nt and fu t ure pu bl ic se rv ice de l iv e ry cost s in E u rope an re gions The cyberspace, 1 3 Oct obe r 2 0 2 0
  2. 2. The project aims at improving our understanding of: 1. Present costs of public service provision at different geographical levels 2. Future changes in costs of service provision due to population age structure and settlement changes 3. The benefits and viability of integrated and flexible models of service provision Project aims
  3. 3. Pilar 1: Quantitative (in partnership with EC-JRC) Estimate present and future costs of health and education services at different geographical scales Pilar 2: Policy responses Provide a better understanding on policies to present and future provision challenges (focus on education, health, and digital provision) + Case Studies/Parallel projects (Alentejo, Spain, Estonia) Project structure
  4. 4. 1 Preliminary findings Quantitative pillar
  5. 5. Public service provision is challenging for rural areas due to: ✓high transportation costs ✓low economies of scale and scope ✓difficulty in attracting and retaining professionals Currently no available monetary estimates and projections of cost of public service delivery by type of human settlement How much more expensive is it to provide services in rural areas?
  6. 6. Estimation of future school delivery using population projections at grid-cell (1km2) level ✓Demand: Present and future population by age group ✓Supply: Simulated facilities based on optimal access placement Model costs at facility level considering: ✓Costs arise in the facilities (e.g. schools), not in the areas (e.g. school districts) ✓Public services are local, and are provided close to places of residency ✓Additional costs arise as a result of smallness ✓Transport costs are not necessarily born by the government Preparing for future needs
  7. 7. ✓Compare school cost across EU countries driven purely by geographical and settlement structure differences ✓Estimate the impact of changes in teacher compensation and class sizes across areas and settlement types ✓Compare costs of current school network with efficiently placed schools ✓Estimate the increase in school cost by settlement type of future population changes under different policy scenarios ✓Understand the effect of school reorganisation on student travel times in rural areas Decision support system for demographic change
  8. 8. 1. Observe spatial distribution of relevant service users (e.g. children in primary school age) 2. Step by step, distribute facilities based on bounding conditions 3. Allocate users to facilities (e.g. children to schools), measure travel times and estimate school expenditure per user Modelling facility distribution based on population distribution
  9. 9. Estimating school costs We take advantage of well- behaved functional forms to draw likely values for schools ordered by their size Assumed parameters for school expenditure estimation Primary Secondary Mean pupil-to-teacher ratio (s.d.) 13 (1) 12 (1) Mean expenditure on teaching staff per head (s.d.) EUR 43 000 (1 000) EUR 55 000 (1 000) Fixed full-time staff paid at average expenditure levels 1 2 Percentage TAs in total teaching staff (paid at half the average expenditure on teaching staff) 40% 20% Proportion of non-teaching staff to teaching staff 1/4 1/4 Expenditure on non-teaching staff per head EUR 34 000 EUR 23 000 Remaining mean expenditure per student EUR 9 000 (1 000) EUR 20 000 (1 000) We set parameters to EU averages where available or based them on actual school data for England where no EU equivalent was available
  10. 10. Education expenditure in England 0% 10% 20% 30% 40% 50% 60% 70% 80% -600 -400 -200 0 200 400 600 800 1000 mostly uninhabited rural dispersed rural villages suburbs semi-dense towns dense towns cities Expenditure per student (difference with country mean, GBP) Share of small schools School size influences cost per student, e.g. because small schools tend to underuse capacities Source: UK Department of education and OECD- JRC preliminary estimations Expenditure per student (mean-centred), England 2019 Expenditure per student vs school size, Actual and simulated
  11. 11. In rural areas, schools are farther Degree of urbanization BE LT PT EU Mostly uninhabited 11.4 12.2 13.6 12.4 Dispersed rural 7.8 9.8 9.8 9.5 Villages 5.7 5.1 6.0 5.6 Suburbs 4.5 4.9 4.7 4.7 Towns 3.7 2.8 3.7 3.5 Cities 2.5 2.3 2.2 2.5
  12. 12. In rural areas, schools are costlier
  13. 13. To retain similar efficiency levels, schools may be even farther! Calculating costs and travelled distances according to three model variants: ❑ Facility placement optimized for now, student allocation for now ❑ Facility placement optimized for now, student allocation for 15 years from now ❑ Facility placement optimized and student allocation for 15 years from now Degree of urbanization Average increase (km)Total increase (km) Mostly uninhabited 0.46 523,814 Dispersed rural 0.27 135,972 Villages 0.24 20,998 Suburbs 0.12 5,418 Towns 0.09 6,585 Cities -0.10 -3,976
  14. 14. 2 Preliminary findings Qualitative pillar
  15. 15. Delivering quality education in rural communities Restructuring school networks Consolidating schools School clusters Digital and comprehensive approaches ICT-based support Service co- location
  16. 16. Delivering quality health care in rural communities Cost • ↓ patient volumes • ↓ scale economies • ↓ scope economies • ↑ financial incentives Access • ↑ unmet medical needs • ↑ distance to care • ↓ access to hospital beds • ↑ hospital closures • ↑ health workforce gaps Quality • ↓ life expectancy • ↑ survival rates • ↑ avoidable admissions and deaths • ↓ prevention Income and education levels + ageing populations + lifestyle factors Comprehensive measures Reinforcing primary care Integrated care Innovative approaches Telemedicine New forms of rural hospital organisation Multi-strategy for workforce attraction & retention
  17. 17. Providing digital services in rural communities • Little consideration of spatial scope in regulation • Limited funding Normative • Substantial gaps • Insufficient training uptake Digital skills • Lower speeds and older technologies • Fewer options/less value • Latency, caps… Internet access • Decoupling of activity and place → Careful balance of migration versus efficiency • Horizontal (broadband) + targeted • Integrate education/health care on digital models • Substantial + smart funding for digital upskilling • Redesign subsidies • Exploit different competition models (cooperatives, publicly- owned entrants, PPPs)
  18. 18. Better governance for better service provision CHALLENGES POLICY OPTIONS Spatial spillovers and externalities - Earmarked transfers to subnational governments - Joint delivery through co-operation agreements - Upscale responsibility Lack of scale economies - Facilitate inter-jurisdictional co-operation or with mergers - Outsource to private entities or other subnational governments Funding, responsibilities and capacity issues - Rely on local revenues to financing their services - Make funding consistent with functional responsibilities - Identify and address overlapping responsibilities - Implement well-designed capacity development programmes Wrong scale of service provision - Plan delivery in functional regions/areas - Promote cross border-region projects by facilitating legal frameworks to enhance collaboration
  19. 19. Thank you! ana.morenomonroy@oecd.org chris.jacobs-crisioni@ec.europa.eu http://www.oecd.org/cfe/regionaldevelopment/rural- delivery.htm

Description

Presentation made at the EWR Workshop on 13 October 2020.
More information: http://www.oecd.org/cfe/regionaldevelopment/rural-delivery.htm

Transcript

  1. 1. Understanding present and future public service delivery costs Ana I More no Monroy (OE CD), Chris Jacobs -C ris ion i (E C -JRC) and Me rt K om pil (E C -JRC) E WR Workshop on Unde rst anding pre se nt and fu t ure pu bl ic se rv ice de l iv e ry cost s in E u rope an re gions The cyberspace, 1 3 Oct obe r 2 0 2 0
  2. 2. The project aims at improving our understanding of: 1. Present costs of public service provision at different geographical levels 2. Future changes in costs of service provision due to population age structure and settlement changes 3. The benefits and viability of integrated and flexible models of service provision Project aims
  3. 3. Pilar 1: Quantitative (in partnership with EC-JRC) Estimate present and future costs of health and education services at different geographical scales Pilar 2: Policy responses Provide a better understanding on policies to present and future provision challenges (focus on education, health, and digital provision) + Case Studies/Parallel projects (Alentejo, Spain, Estonia) Project structure
  4. 4. 1 Preliminary findings Quantitative pillar
  5. 5. Public service provision is challenging for rural areas due to: ✓high transportation costs ✓low economies of scale and scope ✓difficulty in attracting and retaining professionals Currently no available monetary estimates and projections of cost of public service delivery by type of human settlement How much more expensive is it to provide services in rural areas?
  6. 6. Estimation of future school delivery using population projections at grid-cell (1km2) level ✓Demand: Present and future population by age group ✓Supply: Simulated facilities based on optimal access placement Model costs at facility level considering: ✓Costs arise in the facilities (e.g. schools), not in the areas (e.g. school districts) ✓Public services are local, and are provided close to places of residency ✓Additional costs arise as a result of smallness ✓Transport costs are not necessarily born by the government Preparing for future needs
  7. 7. ✓Compare school cost across EU countries driven purely by geographical and settlement structure differences ✓Estimate the impact of changes in teacher compensation and class sizes across areas and settlement types ✓Compare costs of current school network with efficiently placed schools ✓Estimate the increase in school cost by settlement type of future population changes under different policy scenarios ✓Understand the effect of school reorganisation on student travel times in rural areas Decision support system for demographic change
  8. 8. 1. Observe spatial distribution of relevant service users (e.g. children in primary school age) 2. Step by step, distribute facilities based on bounding conditions 3. Allocate users to facilities (e.g. children to schools), measure travel times and estimate school expenditure per user Modelling facility distribution based on population distribution
  9. 9. Estimating school costs We take advantage of well- behaved functional forms to draw likely values for schools ordered by their size Assumed parameters for school expenditure estimation Primary Secondary Mean pupil-to-teacher ratio (s.d.) 13 (1) 12 (1) Mean expenditure on teaching staff per head (s.d.) EUR 43 000 (1 000) EUR 55 000 (1 000) Fixed full-time staff paid at average expenditure levels 1 2 Percentage TAs in total teaching staff (paid at half the average expenditure on teaching staff) 40% 20% Proportion of non-teaching staff to teaching staff 1/4 1/4 Expenditure on non-teaching staff per head EUR 34 000 EUR 23 000 Remaining mean expenditure per student EUR 9 000 (1 000) EUR 20 000 (1 000) We set parameters to EU averages where available or based them on actual school data for England where no EU equivalent was available
  10. 10. Education expenditure in England 0% 10% 20% 30% 40% 50% 60% 70% 80% -600 -400 -200 0 200 400 600 800 1000 mostly uninhabited rural dispersed rural villages suburbs semi-dense towns dense towns cities Expenditure per student (difference with country mean, GBP) Share of small schools School size influences cost per student, e.g. because small schools tend to underuse capacities Source: UK Department of education and OECD- JRC preliminary estimations Expenditure per student (mean-centred), England 2019 Expenditure per student vs school size, Actual and simulated
  11. 11. In rural areas, schools are farther Degree of urbanization BE LT PT EU Mostly uninhabited 11.4 12.2 13.6 12.4 Dispersed rural 7.8 9.8 9.8 9.5 Villages 5.7 5.1 6.0 5.6 Suburbs 4.5 4.9 4.7 4.7 Towns 3.7 2.8 3.7 3.5 Cities 2.5 2.3 2.2 2.5
  12. 12. In rural areas, schools are costlier
  13. 13. To retain similar efficiency levels, schools may be even farther! Calculating costs and travelled distances according to three model variants: ❑ Facility placement optimized for now, student allocation for now ❑ Facility placement optimized for now, student allocation for 15 years from now ❑ Facility placement optimized and student allocation for 15 years from now Degree of urbanization Average increase (km)Total increase (km) Mostly uninhabited 0.46 523,814 Dispersed rural 0.27 135,972 Villages 0.24 20,998 Suburbs 0.12 5,418 Towns 0.09 6,585 Cities -0.10 -3,976
  14. 14. 2 Preliminary findings Qualitative pillar
  15. 15. Delivering quality education in rural communities Restructuring school networks Consolidating schools School clusters Digital and comprehensive approaches ICT-based support Service co- location
  16. 16. Delivering quality health care in rural communities Cost • ↓ patient volumes • ↓ scale economies • ↓ scope economies • ↑ financial incentives Access • ↑ unmet medical needs • ↑ distance to care • ↓ access to hospital beds • ↑ hospital closures • ↑ health workforce gaps Quality • ↓ life expectancy • ↑ survival rates • ↑ avoidable admissions and deaths • ↓ prevention Income and education levels + ageing populations + lifestyle factors Comprehensive measures Reinforcing primary care Integrated care Innovative approaches Telemedicine New forms of rural hospital organisation Multi-strategy for workforce attraction & retention
  17. 17. Providing digital services in rural communities • Little consideration of spatial scope in regulation • Limited funding Normative • Substantial gaps • Insufficient training uptake Digital skills • Lower speeds and older technologies • Fewer options/less value • Latency, caps… Internet access • Decoupling of activity and place → Careful balance of migration versus efficiency • Horizontal (broadband) + targeted • Integrate education/health care on digital models • Substantial + smart funding for digital upskilling • Redesign subsidies • Exploit different competition models (cooperatives, publicly- owned entrants, PPPs)
  18. 18. Better governance for better service provision CHALLENGES POLICY OPTIONS Spatial spillovers and externalities - Earmarked transfers to subnational governments - Joint delivery through co-operation agreements - Upscale responsibility Lack of scale economies - Facilitate inter-jurisdictional co-operation or with mergers - Outsource to private entities or other subnational governments Funding, responsibilities and capacity issues - Rely on local revenues to financing their services - Make funding consistent with functional responsibilities - Identify and address overlapping responsibilities - Implement well-designed capacity development programmes Wrong scale of service provision - Plan delivery in functional regions/areas - Promote cross border-region projects by facilitating legal frameworks to enhance collaboration
  19. 19. Thank you! ana.morenomonroy@oecd.org chris.jacobs-crisioni@ec.europa.eu http://www.oecd.org/cfe/regionaldevelopment/rural- delivery.htm

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