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Executive Summary

With increasing numbers of students at every level of education, the challenges of funding and the pressures upon finances have been steadily growing. Add the global economic crisis and continuing economic instability and the challenges are clear. Education forms at least part of the solution to current economic issues, so reducing provision is simply not an option. Innovative funding mechanisms will need to be found to sustain and develop education. To date, education has been funded in a range of ways, including financing of students by their families, by private organisations and by governments.

 


The influence and impact upon education of new funding methods should also be considered. It seems reasonable to expect that if individuals contribute more they may take a different approach to the purpose of education, the subjects they choose to study and their expectations of the opportunities that will ensue. This session will reflect on the economic case for education, options for financing it at different levels and their impact upon expectations of the benefits of education. It will include examples of policies and practices designed to sustain and develop education systems and institutions.

I. Funding Issues in Education
Irina Bokova

Five years from the Education for All deadline, progress has been made, but much remains to be done. There are 69 million children out of primary school and the same number outside secondary school; fewer than 40% of countries provide girls and boys with equal access to education. Disparities have increased in Africa at the secondary level over the last 10 years: in sub-Saharan Africa, almost 12 million girls may never enroll in school, and there are nearly 800 million illiterate adults, nearly two-thirds of whom are women. The demand for education is rising at the same time, driven by demographics, economic needs and government priorities.
 
Aid disbursements to basic education have stagnated for the first time since 2008, at USD 4.7 billion, and aid to sub-Saharan Africa declined. UNESCO’s 2010 report on education states that even if developing countries maximize their resources, there will still be a gap of USD 16 billion in low-income countries. Aid disbursements to basic education in countries that rely on significant external funding have declined by 4%. Education provides the tools to respond to change and to make the most of it, and it is a common denominator for reaching all eight MDGs.
 
Our first imperative is to urge countries to invest in education: Armenia, Egypt, Ethiopia, Brazil and Nicaragua are doing this. Governments must create stimulating learning environments, incentivizing quality teaching, reaching out to the vulnerable and adapting curricula and pedagogies to a changing world.
 
There was an average gap of 9% between commitments and disbursements in Africa between 2002 and 2008, and the Education Fast Track initiative is severely underfunded. The share of overseas development for education is 12%, as against 17% for the health sector. Governments may review the overall allocation of funds, or earmark taxes on the private sector, but they must reduce inefficiencies and develop a culture of results. However, new sources of financing must be found. Options are new donor countries, public-private partnerships, levies on currency transactions, education bonds in local currencies, venture funds, or debt-for-education swaps.
 
II. Innovation in Fundraising
Steen Jorgensen
The main funder of education is and should be government, but as there are important cross-border benefits to education, there should also be cross-border funding resources and thus a regional agenda: hence the adoption of the Doha Declaration and the generous contributions to the Education for All – Fast Track Initiative. Since there is a market for carbon credits, there could also be one for education credits. An alternative model would be US municipal bonds. We could issue a global educational bond which is exempt from tax, enabling the cost of funding to be lowered. UNITAID benefits from taxes on airline tickets to the tune of over USD 700 million. The International Financing Facility for Immunization raises funds on capital markets which are then used to pay for vaccines. RED is a voluntary consumer contribution scheme whereby consumers and retailers contribute a percentage of the purchase price to the fight against AIDS.
 
While it is important to leverage at the level of the global private sector, more could also be done at national level, such as adjustment of policies to allow more private investment. Secondly, a lot of past educational reforms have relied on engineering approaches, and this has worked quite well in terms of access. However, the focus has shifted to quality and efficiency, and the way forward entails incentives and accountability, requiring innovative mechanisms for disbursing funding. There also needs to be direct funding for students and parents, such as in the form of vouchers or conditional transfers. We have seen that even parents in poor countries are willing to contribute funding if they can control it and hold the school accountable. We need to learn from our colleagues in the health and environmental sectors in raising funding globally and spending it locally.
 
III. The Citizens Foundation
Mushtaq Chhapra

The TCF has managed to achieve 50% female enrollment. The focus on female student enrollment is made possible by a 100% female faculty. The funding model was primarily based on contributions from Pakistanis living in the country and those in the diaspora. Participation is at a high level, and the volunteer program has been a great success in creating awareness. USD 10 allows education to be provided to one child for a month, including books and uniform. One school can be run for USD 15,000 a year, and can be built for USD 150,000, so it would take a comparatively moderate effort to alleviate educational deprivation worldwide.

IV. The New K-12 Model
Scott Cowen
The future of higher education in the US and worldwide depends primarily on the effectiveness of K-12 education, because the higher education system can be no better than the system that feeds it. Educational failures do not result from a lack of desire or vision, but are caused by the inability to convert thought into action effectively. An investment in education can yield outstanding returns and is the primary driver to building sustainable and vibrant communities. Firstly, a more educated population generates additional earnings, leading to increased economic development, and reduces unemployment rates.
 
Secondly, how funding is used is as important in affecting student outcomes as the amount of funding, and US federal funding of elementary and secondary education is a small fraction of the total cost. These issues are primarily the responsibility of individual states and local school districts. Thirdly, there needs to be a focus only on funding the policies and practices that increase student achievement. The key principles for rebuilding the New Orleans K-12 system after Hurricane Katrina were setting superior standards and expectations, empowering schools and holding them accountable, fostering competition among schools, aligning resources and practices that enhance achievement, investing in high-quality human capital, and engaging parents to support student success. New Orleans now has a greater percentage of charter schools than any other state.
 
Finally, transformation requires hard work, commitment, and courage to make difficult decisions. There must always be a clear strategy and effective funding allocation, and we must rigorously monitor results.