CHAPTER 7
Identifying inefficiencies in government spending: three examples Europe has made great achievements in the education sector, and education has made a vast contribution to growth and prosperity over the last half century. In the early 1960s, only the privileged benefited from higher education, while today about one in three young adults has a tertiary degree (OECD 2011a). While there are many good things to say about education, this section presents three examples of inefficient government spending on education and highlights policy responses aimed at improving sector efficiency that have been suggested in recent World Bank reports. Moldova: adjusting the school network to changing demographics. Like many of its neighbors, the country has experienced a steady population decline in the past two decades. Lower birthrates combined with high levels of emigration have also led to a sharp aging of the population—particularly in rural areas— resulting in 43 percent fewer students in Moldova’s schools over this period. But the school network has failed to adjust to the demographic changes: the number of teachers employed in 2009 was the same as in 2003, while the number of schools was virtually unchanged from 1994. The average school now enrolls 160 fewer students than it did in the early 1990s, with student–teacher ratios dropping from 14.5 in 2003 to 10.4 in 2009. Shrinking schools and classes have caused education to become a drain on public resources, its spending surpassing 9 percent of GDP by 2009. Recent work at the World Bank examined the expenditures in Moldova’s general education subsector and identified fiscal savings from optimizing the country’s school network. The government will have to do a lot: increase class and school sizes in rural areas by consolidating and closing underutilized schools; raise class sizes in large schools by consolidating small classes; implement nationwide per student financing of general education; and overhaul the legislative framework governing education to allow for a more efficient use of resources in line with actual needs, instead of ensuring compliance with outdated norms. The fiscal savings resulting from the proposed reforms—estimated to exceed 7 percent of the general education budget—can then be used to improve the quality of education by investing in infrastructure, teacher training, technology, learning materials, and so on. Poland: aligning spending with results in a decentralized education system. Poland’s education reforms are considered a great success. By restructuring schooling, deferring tracking in secondary education, launching curriculum reform, and boosting school autonomy, between 2000 and 2009, Poland rose from below to above the OECD average in the OECD Programme for International Student Assessment reading scores. Not all aspects of the reform have worked equally well. The decentralization reforms of the 1990s devolved responsibility for managing primary and secondary education to local governments (Rodriguez and Herbst 2011). In primary education (grades 1–6) most direct financing decisions are now made by the municipality (gmina), allowing for wide variations in funding and other inputs for primary schools across the country’s more than 2,000 municipalities.
379