1. Introducing Budget Norms for
the Education Sector
-A Concept Note-
Jean-Marc Lepain
Intergovernmental Fiscal Advisor
Manilay Thiphalansy
Research Consultant
2. Objective of the Concept Note
• To define the policy framework for budget
norm implementation in the education sector;
• To define budget norm formula structure
• To identify technical issues associated with
budget norms implementation (linkage with fiscal
policy, integration with school block grants, user fees, etc.)
• To identify issues with the expenditure
assignment,
• To streamline the budget formulation process
3. Types of Budget Norms
• Non-wage Norms for the Central Budget
• Non-wage Norms for the Provincial Budget
• Non-wage Norms for school block grants
5. MTFF Fiscal Planning Process
Sector Ceiling Provincial Ceilings
MTEF Budget Norms Provincial Budget
Sector Provincial Plan Cost Units
6. Parameters and Indicator for
setting non-wage budget norms
• International standards for non-wage expenditures
• Fiscal capacity of the Government: fiscal envelope
• Equalization needs,
• Education Development Index
• Provincial disparities in enrolment rate
• Provincial disparities in the number of student per
teacher
• Remoteness
• Poverty
7. Education Development Index
The Education Development Index (EDI) reflects four of the six
“Education For All” goals: universal primary education, adult
literacy, quality of education and gender parity.
• Universal primary education is measured by the total primary
net enrolment ratio (NER) which reflects the percentage of
primary school-age children who are enrolled in either
primary or secondary schools.
• Adult literacy is measured by the Adult Literacy Rate (ALR)
measuring the percentage of people over the age of fifteen
who can read.
• Quality of education is measured by the percentage of
students who complete grade 5.
9. Macro Fiscal Parameters for the
Fiscal Envelope
• International standards for non-wage expenditure:
between 20% and 35%. The higher the share of total education
in GDP the lower the ratio is.
• Present ratio Non-Wage Exp. /Recurrent Budget:
9.4% in FY2009/10
• Equalization requirement for 14 provinces: 12%
• ISDF Requirements: 35%
• Short term objective: 22%-26%
• Medium term objective (3 to 5 years): 30%
10. EDI Expenditure Need Ratio
p1, p2 and p3 are expenditure need ratios based on the
Education Development Index (EDI). Provinces have
been grouped in three categories:
• p1 for more advanced provinces with an EDI above
0.87
• p2 for intermediary provinces with and EDI between
0.87 and 0.81
• p3 for less advanced provinces with an EDI below
0.81
11. Scope of Budget Norms and
Programme Grouping
• First component (St): pre-schools, elementary
schools and lower and upper secondary
schools and informal training programmes
• Second component(StU): all higher education
institutions under the authority of MOE
including teacher training
• Third component(StV): all vocational training
schools
12. Budget Norm Formula
PEA is the provincial allocation for the education sector
PEA = p(St x A) + (StU x B) + (StV x C)
A, B and C are fix amount per student
13. School Block Grant
• Will ensure that the funding through the
Provincial Education Allocation (PEA) is
allocated to school on a fair and equitable
basis.
• Will be available for financing line-item
expenditures of chapter 12 and 16 plus line-
item 13.03.01.
• Will pave the way for the complete
relinquishment of user fees.
14. Development Grant
• Earmarked grant not included in the Provincial
Education Allocation
• Target: poor districts
• Purpose: school feeding programme,
scholarship programme and other actions for
poverty reduction or education quality
improvement
• Not exclusive of other grants
15. Expenditure Assignment four
dimensions
• Dimension 1: Responsibility for delivering services
• Dimension 2: responsibility for administering the
service,
• Dimension 3: responsibility for financing a service
• Dimension 4: responsibility for setting standards,
regulations or policies guiding the provision of
services
16. Revision of the Expenditure
Assignment
• Dimension 3 (Financing) will be affected by the introduction
of block grants;
• New regulation must be issued for user fees. Some user fees
(not all) must be integrated in the provincial budget as
revenue and accounted for.
• Respective responsibilities of central ministries and provinces
must be clarified in respect to planning.
• Regulatory mechanism must be introduced to link local plan
to national plans and to budgeting.
• Reporting responsibilities must be completely revised.
17. Revision of the Budget Formulation
Procedures
• Bring the central budget formulation cycle and
the provincial budget cycle closer;
• Introduce a sector approach of budgeting;
• Introduce elements of programme budgeting;
• Ensure a better linkage between planning and
budgeting, using quantitative and qualitative
objectives.
