Key policy directions to strengthen the decentralized education finance system

Regressions carried out for this study (World Bank 2021) suggest that lower poverty rates, lower repetition rates, and lower student-classroom ratios are correlated with higher NAPE, Uwezo, and PLE scores at the LG level. The positive correlation between the share of students who are out of school and higher scores suggests selection effects. Analysis using student scores on the most recent Uwezo assessment in government schools also suggests that household wealth quintile and textbook availability have a small effect and that grade progression has a very large effect.69

KEY POLICY DIRECTIONS TO STRENGTHEN THE DECENTRALIZED EDUCATION FINANCE SYSTEM

Although LGs have overseen an expansion in basic education, the analysis in this chapter has shown that the fiscal decentralization framework and systems for primary and secondary education currently in place are not delivering the results that were expected. Specifically:

• Despite extensive political and nominal fiscal decentralization, education trends reveal a sustained learning crisis, inequitable access to secondary education by both gender and socioeconomic status, inefficient distribution of both primary school teachers and classrooms, and inadequate levels of funding for nonwage expenditures. • Fiscal decentralization is largely nominal; conditional grants from the central government to LGs provide virtually all funds for basic education service delivery and their use is centrally conditioned. LGs have few discretionary fiscal resources and little ability to raise them. • After more than 20 years of fiscal decentralization, access to services across and within LGs is inequitable. Grants to cover wages are allocated on the basis of a bargaining process with little transparency between the central government and LGs. As a result, student-teacher ratios diverge sharply among LGs.

The distribution of schools and classrooms is inequitable, and enrollment is linked to the limited availability of classrooms and teachers. • Conditional grants for education are based on the number of students enrolled rather than on the number of school-age children. This is not unusual.

Because enrollment is not independently verified, however, this incentivizes primary repetition and overenrollment and does nothing to improve learning, increase primary school completion, or improve the transition from primary to lower secondary. • Although recent increases have started to reverse the impact of a decade of decline, the level of financing for education services is inadequate. In particular, the central government’s allocation to capitation grants to primary schools remains very small and is inadequate for procuring enough of the instructional materials and other school operational inputs needed to improve learning. • The capacity to implement education decentralization policies is weak because of inadequate funding for routine LG management and oversight of service delivery; insufficient capacity development and technical support to

LGs for in-service or preservice teacher training and inspection officers or

LG officers responsible for education service delivery; an absence of clarity about delegated responsibilities; and a lack of effective data and accountability mechanisms.

• Expanding access to secondary education without fixing systemic issues in primary education will compound inefficiencies in the sector. Policies aimed at achieving universal lower-secondary education are necessary but will sharply increase the education budget. However, expansion of funding for preprimary education is required to reduce early grade repetition, which may deliver subsequent efficiency gains.

There are some promising signs that progress is being made toward creating a finance system that enables LGs to deliver education effectively. The current use of formula-based allocations for the majority of nonwage allocations and safeguards to ensure that grants get to schools in a timely fashion puts Uganda ahead of many other countries.

The existing fiscal decentralization system needs to be better financed to enable adequacy and equity of service delivery and further strengthened with clear goals and incentives for key actors to improve teaching and learning (Pritchett 2015). Enrollment-based nonwage recurrent grants could incentivize access to education if the central government put in place an effective system for checking enrollment figures and incentives were established for the transition from primary to lower-secondary school and grade-to-grade progression. The formula could be revised to give greater weight to nonenrollment factors, which could enhance support for more disadvantaged areas and increase the nonwage resources provided to schools. In parallel, budgetary increases could be focused on teacher recruitment in underserved areas using objective criteria.

Efforts are needed on multiple fronts to improve the quality of early year education and to increase access to preschool education.Education is the engine of broad-based economic growth. The learning deficit evident in the current system cannot be addressed by focusing adequate spending only on those students who can transition to secondary education and on the lucky few who continue on to tertiary education. The education funding formula and teacher rosters should also include allocations for preschool enrollments. Failing to ensure learning quality and accountability costs money. Low attendance rates by primary school teachers and limited time on task together cost perhaps twofifths of the entire primary school budget but yield little benefit. Providing insufficient resources for ECE and failing to effectively implement the curriculum together result in about half of all students repeating P1. Repetition throughout the system results in GERs far above 100 percent and in many children never reaching P7.

Funding for nonwage grants, funding per primary student, and funding for primary teaching colleges must be increased. many aspects of the system remain virtually unfunded, including in-service teacher training and management and oversight of the system. Staffing is lower than is needed for effectiveness, including in primary schools, primary teaching colleges, and school inspectorates. As for the schools themselves, despite large increases since 2017–18, the government’s overall funding levels per primary student remain among the lowest in the region and the world.

The central government must recognize that the greatest returns from resources come from sustained support for what happens in classrooms, rather than from building classrooms, recruiting teachers, and paying for supervisory visits to LGs. For example, the ministry of Public Service must give more attention and support to decentralizing the payroll and to ensuring that teachers are