Part V: Education Policy

Present Trends in Public Secondary Education in Western Europe
Education, Credentialling, and the Labor Market in the European Community: An Agenda for Research
The Study of Education as a Pariority
'Goodbye, Mr. Chips': A Proposal for the Abolition of the Lifetime Classroom Teacher
Academia in Anarchy
Private Education
OECD Reviews of Educational Policy
Education for Development
The Utility of Country Case Studies for Educational Planning
Educational Financing and Policy Goals

Source: Harold J. Noah and Joel D. Sherman,
Educational Financing and Policy Goals for
Primary Schools: General Report. Paris:
Organisation for Economic Co-operation and
Development, 1979: 64-69.  Reprinted by permission
of the Organisation for Economic Cooperation and
Development.

EDUCATIONAL FINANCING AND POLICY GOALS

Summary

The preceding report is based on a series of studies of the arrangements used to finance primary schools in ten of the OECD member countries: Australia, Canada (province of Ontario), the Federal Republic of Germany, Italy, the Netherlands, Norway, Sweden, the United Kingdom (England and Wales), the United States of America (California and Florida), and Yugoslavia.

Chapter I describes in summary fashion the variety of approaches used within each of the ten countries to finance primary schools, and connects those approaches to certain key concerns of educational finance policy. Chapter II examines some of the relationships between types of financing instruments and key policy concerns across the ten countries.

In five of the countries (Italy, the Netherlands, Norway, Sweden, and England and Wales) primary school finance is a concern of two levels of government: the central and local (often municipal) authorities. In Australia, local (municipal) authorities for education do not exist, so that there also school finance is the responsibility of two levels of government -- the state governments (with the lion's share of the responsibility) and the Commonwealth government, that provides both direct and indirect assistance. In the United States and in Yugoslavia three levels of government (federal, state/republic, and local) are all directly involved in primary school finance. In Canada (Ontario) and the Federal Republic of Germany, the two remaining countries, the prime direct agents of primary school finance are the provinces/Länder and the localities, but the federal level plays an indirect role via its various programmes of fiscal equalization among the provinces/Länder.

Full central funding at the state level is the hallmark of school finance in Australia. Yugoslavia represents the other pole, with a very high degree (7080 per cent) of reliance on local sources of funds. The other countries are ranged between these extremes. In general, the Netherlands, Italy and Sweden present a picture of relatively high proportions of central funding for schools; the United States, rather low central funding. In Ontario, provincial (central) funding has become more and more important in the last decade, and in the German Länder, too, the Land authorities provide a very substantial (60 per cent or more) share of the total costs of running the primary schools. In England and Norway the sources of finance are, on average, about equally divided between the central and local governments.

School finance is an ordinary and regular part of general governmental finance in all of the countries, except Canada and the United States. In these latter countries local school jurisdictions are usually separate, politically and legally, from general local administration. Separate school taxes are the rule and the local school districts do not usually receive financial support from the local government units.

In most of the countries (Canada, Germany, Italy, the Netherlands, Norway, Sweden, the United States, and Yugoslavia) non-local funds are made available to help support the operations of local school authorities primarily through various education-specific channels. In England. the central government makes a general grant-in-aid to a local authority, which has substantial latitude in deciding how generously it wishes to support its schools, in competition with the claims made by other locally provided services on its revenues. Similar relationships exist between the federal and state/Land/provincial authorities in Australia, Canada and Germany.

Some countries move beyond education-specific taxation and intergovernmental transfers to systems of categorical aid. Thus, in Sweden, the central governments assist municipalities in their school finance on the basis of a set of tightly drawn provisions related to distinct aspects of school operation and, especially, to the costs of teachers' salaries. The Netherlands, too, has a complex set of categorical aid arrangements for calculating transfers from the central government to the local municipal authorities. In the United States, also, federal aid to the states for school purposes has been based on categorical grants, though within the states non-categorical, education-specific transfers have been the norm.

Chapter II of the report explores the relationships between funding arrangements and three major policy concerns: equalization, locus of control, and diversity of provision and parental choice of school.

Three principal approaches to equalization are identified:

- equalization of tax bases to support education

- equalization of per pupil or per capita expenditures

- equalization of physical inputs, particularly teacher services.

England and Wales exemplifies a system that focusses on the equalization of tax bases. In Florida and Ontario, too, there is substantial emphasis in that direction. The same is true at the federal-Land interface in Germany, at the federal-state interface in Australia, and at the federal-province interface in Canada.

Equalization of per pupil or per capita expenditures is a fundamental aim in Florida, and many United States and Canadian jurisdictions approach the aim in part by mandating minimum (foundation) levels of expenditure per child enrolled. Other countries approach the goal indirectly. For example, the effect of full state assumption of school costs in Australia seems to have as a by-product a high degree of equalization of per pupil expenditures.

Equalization of physical inputs, particularly of teacher services, is the hallmark of school finance arrangements in the Netherlands and in Sweden. There are also strong elements of this approach in Norway, where the system goes beyond mere equalization to achieve substantial compensatory effects for children in isolated, rural and poor communes.

Limitations and Potentials

In the field of school finance, this study breaks new ground by combining a focus upon policy concerns with a comparative approach via ten countries. As far as the present report is concerned, the authors are painfully aware of its limitations. Questions concerning the true comparability of formally equivalent arrangements that have developed in different national contexts remain worrisome.

Country study authors were not always able to fit their data gathering and analysis into the agreed common framework that best suited the ultimate comparative purpose. The authors of the comparative paper have, no doubt, been sometimes unaware of important nuances of meaning, misunderstanding the precise importance of a particular term, or phrase; and the sheer volume of data to be considered must have produced some error in the final instance.

But, in spite of these, and perhaps other shortcomings, the entire project demonstrates that a comparative study of this kind is indeed possible and that it can produce some results of value: description of what exists in ten countries by way of the many different financing arrangements for primary schools; classification of those arrangements and their association with certain major policy concerns; and the possibility of using the data assembled to test the validity crossnationally of a number of commonly accepted generalizations.

Conclusions

1. In whatever particular terms it is formulated, equalization can be successfully approached via either full central funding or mixed central-local funding, given certain conditions. Full or nearly full central funding is an obvious option, illustrated by the Australian and Netherlands systems. Mixed central-local funding using categorical grants is another, especially when the support is directed toward the financing of teacher costs, as in Germany, Norway and Sweden. And mixed central-local funding using block grants can be arranged so as to have marked equalization effects, especially where differences among localities in fiscal capacity are low and/or the proportion of central funding is high (for example, Florida, Ontario, and England).

2. Many countries have improved outcomes in terms of equalization by instituting changes of emphasis and intensity of financial assistance and intergovernmental grants; they have not found it necessary to recast radically their school financing systems. Rather, a continuous process of reappraisal and modification of financing arrangements, to take account of shifting demographic patterns and changing socioeconomic structures, is the norm. While it is clear that none of the countries has succeeded completely in attaining the goal of equalization in all its aspects, most of them have made considerable progress in their recent past, without having had recourse to measures that represent fundamental breaks with traditional modes of financing schools.

3. A corollary conclusion is that search for a "perfect" or "ideal" system of school finance is likely to be not only unnecessary, but futile. The very variety of school financing arrangements that is observed leads to a strong suspicion that there can be no one best way to organize these matters, and that each country has adopted its particular pattern of school financing as the result of a long process of adjustment and compromise to its particular national context and to the major policy goals it has favoured over the long term. This conclusion tends to be reinforced when we recognize that some of the important goals set for a school finance system are likely to be mutually inconsistent, at least over certain ranges. Thus, equalization goals may conflict with the goal of expanded parental choice; tax equalization and expenditure equalization may also be difficult to achieve fully at the same time; and efforts to achieve satisfactory levels of service for those with special needs may encroach on desires for greater local autonomy. In such a situation, the "worth" of a particular set of school financing arrangements depends heavily on the relative values placed on each of the goals involved, as well as on the extent to which a particular financing mechanism is able to promote them.

4. Unitary states do not, ipso facto, attempt or achieve more equalization than do federal countries. Partly because school finance and equalization mechanisms are generally more complex in the federal countries (if only because of the presence of an intermediate level of government), and partly because federal countries generally exhibit wider ranges of socioeconomic differences within their borders than do the unitary states, it might seem reasonable to suppose that unitary states attempt, and even achieve, more equalization than do the federal states. The ten countries in the present study comprise five unitary states (England and Wales, Italy, the Netherlands, Norway, and Sweden) and five federal countries (Australia, Canada [Ontario], Germany, the United States [California and Florida], and Yugoslavia). Yet an examination of each set of countries does not reveal a relationship between type of political structure and equalization of school revenues or expenditures.

5. The concept of equalization has been broadened in many countries to recognize that certain categories of children have handicaps that justify compensatory, and not just arithmetically equal, treatment. In terms of the financial instruments used to satisfy this goal, two approaches were identified and discussed: the use of programmes of categorical aid, and the use of pupil-weighting systems. Both are in widespread use and each has its particular set of advantages and disadvantages. Categorical programmes tend to reinforce standard, often centrally-devised and regulated, approaches to special provision. At some stages of educational development this may be considered an advantage, at other stages a drawback. Pupil-weighting systems, on the other hand, tend to leave the school-providing authority with more freedom of action, but they also bring with them severe problems associated with the identification of children in need of special services. Such systems are also open to abuse if school authorities seek to inflate the number of children for whom they will "earn" larger weightings.

6. The proposition that a high degree of non-local funding produces a more standardized, uniform structure of schooling or is negatively associated with local autonomy was not supported by the evidence of the country studies. The mere fact that more money is supplied by one level of government to another level does not guarantee that the grantor level will exercise more control over the activities of the grantee level.

7. However, a corollary proposition, that the mode by which non-local funds are made available will influence the degree of local autonomy permitted, is substantiated. For example, the greater the reliance on non-categorical modes of funding, such as the use of block grants or service-specific non-categorical grants (for schools, housing, or roads, for example), the greater the degree of overt discretion enjoyed by grantee authorities. Conversely, greater reliance on categorical grants (for teachers' salaries, school building construction, or school programmes for the disadvantaged), is associated with less local autonomy. This is explained by the need to build regulatory controls and limits into categorical funding programmes that would otherwise turn into blank cheques issued to the grantees.

The report concludes that the erosion of local autonomy, where it has occurred, has not happened as the result of deliberate moves on the part of either the local or the non-local authorities. Rather, ever higher levels of service have been demanded, at all levels of government, and the costs of provision have tended to outrun the localities' financial powers.

8. The study noted that, in most of the countries, some public funds are made available directly to some non-government schools. In particular, the financing arrangements used in Australia and the Netherlands to support nongovernment (mostly, church-related schools are described, and are contrasted with arrangements in Ontario, where public money is not given to private schools, but is available to both the non-denominational public school system and to the predominantly Roman Catholic separate school system. It is probable that provisions for supplying public funds to non-government schools will support a greater degree of diversity of provision and effective parental choice than is the case in countries where such arrangements are absent. But, a concluding cross-national analysis shows that there does not seem to be any systematic relationship between the "standardization" of schools provision (lack of opportunities for parental choice) and particular aspects of school financing, such as the proportion of non-local funding provided.

9. Finally, some countries place a great deal more weight on financing instruments to "steer" primary school policy and administration than do others. For example, in Canada, the Netherlands, the United States, and Yugoslavia, financing mechanisms play quite a large role in school affairs. In Germany, Italy, and Sweden, less so. But there are no clear correlates of this choice: greater reliance on financing instruments (as distinct from direct, detailed regulation) does not appear to affect systematically any important outcomes of school policy.

Suggestions for Further Comparative Work

Further comparative work dealing with school finance would seem to be justified, and three main approaches, at least, are worth consideration.

First, there is the possibility or replicating the present project for another sector of the school system, for example, secondary schools, vocational schools, or pre-school institutions. Such a study might well be of value in its own right, as well as serve to validate the approach used here.

Second, the importance of teachers' salaries in school finance is obvious, and we have noted that in some countries the reimbursement (or assumption) of teacher costs plays a major role in the system of school finance. A comparative study that examined the consequences of basing school finance on teacher cost reimbursement or assumption might have quite substantial policy implications, as well as serving an important informative function.

Third, the present report deals in a somewhat summary manner with some aspects of financing schooling for children with special needs. This topic requires particular attention and comment here. The present report pursues at greater length three approaches to equalization -- of the tax bases for education, of per capita expenditures and of physical inputs such as teacher services. However, such measures fall far short of the demand to provide an equally effective education for all the different and often greater needs of many groups of children. Thus, along with general measures, including financial ones, aimed at equalising opportunity governments have also increasingly provided extra resources for children with special needs. A number of countries view the demand to continue in this direction as the current major challenge to national educational policy, and a comparative study that took this as its central theme could be of greatest utility at the present juncture.

However, the present report well illustrates that the value of an inter-country study lies in the opportunity it affords to deal with underlying principles. Thus, while a general notion of "handicapped" is often used to define children with special educational needs, this term should be recognised as an aspect of a more general differentiation among school populations. The general principle is that policies are being directed toward school populations which are differentially recognised for educational purposes and for whom higher levels and different modes of financing are required. A whole range of school populations, however they are delineated by country authorities, according to various social, cultural, linguistic, racial, ethnic, geographic, physical and mental characteristics, are the subjects of special educational attention. A new comparative study could usefully follow the precedent established in the present report to examine the general principles in this field in which policy is related to finance.

Finally, it has been recognised in this report that financing instruments may not of themselves be the major means for effectuating policy but that they may provide a key element along with other instruments in the larger organisational context. Therefore it is suggested that in future enquiries this organisational context be made more explicit.