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www.create-rpc.org
Who Pays the Piper?
Can Low Price, Fee Paying Schools
Self Finance
and Enrol the Poorest?
Keith M Lewin
•
Meanings, Markets, Mechanisms and Motives
•Definitions and Concepts
•Setting the Scene for Discussions of Finance and
Effectiveness
•Do Efficient Market Propositions Hold for School Choice?
• How far is affordability a constraint and what are the
prices needed for solvent school financing?
Privatisation of public or publicisation of private?
Outline
• Private school are schools financed wholly by income from fees and chargesfor students (and voluntary donations by others?); to qualify private schools must be or aspire to be legal entities subject to public benefit regulation
• This definition excludes many other types of privately managed but publicly financed schools and community financed schools that are run with CSO type governance and are not for profit.
• Private schools must have a business model (they are businesses); they must be legal entities, they must publish accounts, they must declare beneficial ownership, and it should be clear how they are financed, and what rates of return they generate on invested and borrowed capital
• Private schools must employ teachers and other staff legally at or above minimum wages.
• There is no private schooling (pedagogy, curriculum, examination), only privately financed schoolng, that may or may not emphasise different methods, choice of content, and may elect to take different (public) examinations.
•• There is no private school system in most counties, but a collection of private
sector providers mostly operating independently
Definitions and Key Concepts
0
10
20
30
40
50
60
70
80
90
100
Devt
LDC
GDP
%GDP for
Govt%Govt
Budget
for Ed
%GDP
for Ed
Financing Education: States and Markets – Who Pays for What?
Demographics, Labour Markets and Choice
More workersthan children
Falling numbersenter labour
market
Demographics, Labour Markets and Choice
Fewer workersthan children
Growing numbersenter labour
market
Zones of Inclusion and Exclusion
Where are the Private Sector Providers?
0
10
20
30
40
50
60
70
80
90
100
1 2 3 4 5 6 7 8 9 10
% P
art
icip
ati
ng
Should
Enrol
Unlikely
to Enrol
Zone 3 At Risk
Overage, Low Attenders and Achievers
Zone 4
Primary Leavers
Zone 2
Primary Drop Outs
Primary Grades
Zone 1
Never
Enrol
Lower Secondary Grades
Zone 5 Drop Outs
Zone 6 At Risk
Zone O
No
Pre-
School
CREATE
Zones of Exclusion
www.create-rpc.org
Access
No
Access
No
Access
No
Access
At Risk
Secure Enrolment, Attendance and Achievement
Performance Skews and Implications
0
10
20
30
40
50
60
70
Q1Q2Q3Q4Q5
Quintile of School by Average Score
Perc
en
tag
e o
f S
ch
oo
ls -
Ac
cra
Public
0
10
20
30
40
50
60
70
Q1Q2Q3Q4Q5
Quintile of School by Average Score
Pe
rce
nta
ge
of
Sc
ho
ols
- A
cc
ra
Private
Public
India
Where are the private schools?
• Choice is only determined by price and not constrained by wealth, location, social/religious group, transfer costs, opportunity costs etc
• The universe of possible choices is wide i.e. many viable options
• Information is freely available (e.g. on performance, facilities, fees charges) to all actors in a timely way and is independently verified
• There are no significant barriers to exercising choice (e.g. enrolment fees, calling in of credit, opportunity costs, social exclusion)
• Principal (purchaser) and agent (service provider) share the same goals and motivations and are not displaced by intermediaries; what is sold is what is bought
• Supply and demand are not distorted by public subsidies either open (e.g. capitation, scholarships, teachers salaries) or concealed (teacher training, curriculum development, cost of buildings)
• Markets for capital do not fail, and behave rationally in seeking returns
The Efficient Market Hypothesis
Are the Propositions Valid for LFPS for the Poor
Choice, and Location
High FeeMid FeeLow FeePublic
Constraints on Choice
Costs
Transfer Costs
Distance
Safety
Social Group
Information
Capacity
Choice, Affordability and Perceived Quality
Costs
Perceived Quality
Tanzania - Affordability
Affordability
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
1 5 9
13
17
21
25
29
33
37
41
45
49
53
57
61
65
69
73
77
81
85
89
93
97
101
105
109
113
117
121
125
129
133
137
141
145
149
Total Urban Household Expenditure/ month
Total Rural Household Expenditure/ month
Government School Fees ++ /month
Poorest = GBP 200 week = USD 300 = USD15,600 per year10% on education costs = USD 1560 per year per householdIncome per class PTR 25:1 = 25* 1560 = USD 39,000 No default
Direct cost of qualified teacher = USD 50,000 + on costs = USD 75,000Infrastructure, ancillary staff, overheads = +USD 75,000Building costs/ rent = USD 75,000?Profit/investment = USD 25,000 Total Income needed per 25 students =USD 250,000
Fee per student =USD 10,000Low cost private schools in London charge USD 11,000 = £7,000This is affordable at 10% for income £70,000 = USD 100,000+
Affordable Costs for Households + School Cost Drivers
Self Financing Fee Costs - Simulations
Primary Lower Sec Upper Sec HE + Other Total
Pupil Teacher Ratio 30 25 20
Teacher salaries /GNP/capita 1.5 2 2.5
Non teaching salaries/GNP/capita 0.5 1 2
Non salary expenditure/GNP/capita 0.5 1 2
Teacher salaries as % of total recurrent 60% 50% 38%
Total unit cost % GNP /cap 8% 16% 33%
School age pop as % total pop 20% 6% 5%
% school age pop enrolled (GER) 110% 105% 105%
% budget on higher ed + other education 20%
%GNP Needed 1.83% 1.01% 1.71% 0.91% 5.46%
GDP Primary L Sec U Sec
500 42 80 163
1000 83 160 325
1500 125 240 488
2000 167 320 650
10000 833 1600 3250
50000 4167 8000 16250
• States are failing to met the educational needs of their populations; the private sector can reach the places and people the public sector cannot in ways which are equitable
• The private sector is more efficient and effective than the public sector in delivering educational services to the poor;
• Effective demand generates affordable low cost providers
• Competition between the private and public sector for children, teachers, and other resources promotes improved standards and has no adverse effects
• The private sector has sufficient capacity to meet a substantialproportion of additional demand for educational services
• “Public Private Partnerships” can offer enhanced service delivery with more access, greater efficiency and effectiveness,and positive effects on equity – but for which services, for which purposes, at which levels, under what conditions, and what kind of impact on equity?
Markets and States – Contentious Propositions
Are they True?
www.create-rpc.org
Who Pays the Piper?
Can Low Price, Fee Paying Schools
Self Finance
and Enrol the Poorest?
Keith M Lewin