9.4 Pillars for central government education transfers to municipalities

TABLE 9.4 Pillars for central government education transfers to municipalities

PILLAR 1

Objectives Maintenance of activities for education and upbringing of children and students Support for equal access to education and personal development Development of kindergartens, schools, and personal development support centers Implementation of national programs for the development of education

PILLAR 2 PILLAR 3

Purpose of grant Basic education services

Students from vulnerable groups Maintenance of protected schools Maintenance of TVET classes providing training in protected professions and professions that are expected to be short of workers in the labor market

Determination of pool UCSs per student, per class, and per institution; additional standards and rates per student Transportation for students Scholarships Free textbooks and educational materials

Full-day organization of educational process and provision of meals Personal development support Recreation and sports Programs to prevent early dropout Support for students with outstanding talent

Additional standards and rates per student and rates per institution Improvement of school facilities

Improvement of quality of education and educational outcomes

Teacher in-service training, development, and support Libraries and information services

Other costs of improving the physical environment and the educational process

Additional standards or rates per student; performancebased funding (not enforced); capital subsidy

Allocation of funds Allocation rule (2007–17) transfer to municipalities: UCS per student X number of students

Allocation rule (since 2018) for transfers to municipalities: (UCS per student X number of students) + (UCS per class X number of classes) + (UCS per institution X number of institutions) For work with students from vulnerable groups, allocation based on the concentration of parents with low educational attainment

Funding for the maintenance of protected schools according to rules adopted by the Council of Ministers For the maintenance of TVET classes providing training in protected professions and professions that are expected to be short of workers in the labor market according to a list of professions, approved annually by the Council of Ministers Terms and conditions for the allocation of resources, including the additional spending standards or rates per student, as set out by the Council of Ministers Allocation of funds for: teacher development as a percentage of personnel costs; performance-based funding based on results of school inspections (not enforced); per student rate for infrastructure and facilities or according to municipal investment program Terms and conditions as set out in the respective national program; school projects are approved by the MoES; municipal governments are involved in transfer of funds from the MoES budget to school budgets but play no decision-making role in the allocation of funds

PILLAR 4

Specific-purpose grants

Scope and amount of funding for each national program determined and adopted by the Council of Ministers

continued

TABLE 9.4, continued

PILLAR 1

Use of funds

PILLAR 2 PILLAR 3 PILLAR 4

Personnel costs, maintenance costs, fixed costs, additional remuneration for work with students from vulnerable groups, and expenses for external services Transportation costs and maintenance of buses, scholarships, expenditures for textbooks and educational materials, personnel costs, maintenance costs, costs of meals, spending on external services, and costs of materials and subscriptions Expenditures for the acquisition of fixed tangible assets, the capital repair of fixed tangible assets, the construction of infrastructure, costs of external services, costs of in-service teacher training, transportation, and rent Expenditures for the implementation of school- based interventions and activities that could not be implemented within the institutional funding

Source: PSEA and state educational standards for financing institutions. Note: MoES = Ministry of Education and Science; PSEA = Preschool and School Education Act; TVET = technical and vocational education and training; UCS = unified cost standard.

The four pillars are categories used in the legal framework to provide a “conceptual model” for the system of school finance. However, budgets are not formally presented according to the pillars, and spending is not tracked by these pillars in the treasury system. Therefore, it was not possible for us to directly quantify the magnitude of funding in each pillar over time or to analyze spending by pillar in our analysis of spending versus outcomes. Different education-related transfers are embedded within the budget classification’s general categories of transfers. The supplementary subsidy for state-mandated activities integrates the funds earmarked to cover the expenses involved in maintaining schools but also contains funding for other mandated tasks. This is the most important transfer, which accounted for 75 percent of transfers across all sectors in 2018. The bulk of education-related funds under this transfer would come under pillar 1.

Targeted transfers for capital expenditures provide schools with funding for capital spending, among all other capital expenditures at the municipal level. Funding under national programs for the development of education is allocated with other targeted transfers from the central budget, including miscellaneous transfers. As a rough estimate, we believe that pillar 3, which focuses on capital spending, makes up about 5 percent of total transfers, with the remaining two pillars accounting for the remaining approximately 20 percent.

How is the system designed to achieve equity?

The model for the public financing of comprehensive school education in Bulgaria is designed to compensate for various naturally occurring inequalities in educational opportunities. It involves different mechanisms for allocating extra resources to municipalities and schools with less fiscal capacity or higher expenditure needs, or both, so that their ability to provide basic education service is increased and equalized.

The specific-purpose grants from the central government to municipalities are intended to cover all the costs of running comprehensive schools, with no expectation that municipalities will top up the resources. Thus, by providing grants that are intended to fully fund the cost of providing comprehensive education, the central government is reducing the risk that poor municipalities will spend less than rich municipalities.