Investigating the complexities of school funding

by Deborah Nusche
Senior Analyst, Directorate for Education and Skills

Back in 2013, when we launched the OECD’s first international review of school resource policies, we may not have been fully prepared for the detective-type work we were getting into. The OECD Review of School Resources covers 18 school systems and aims to shed light on a part of education policy that has been surprisingly left in the dark.

Today, we publish our first thematic report on the funding of school education. The research conducted for this study involved intensive field visits to 10 countries, which made tangible the challenges of reviewing school funding policies.

In several systems, information on the formulas used to calculate funding levels for schools was not readily available. In a range of countries, including Denmark, Iceland and Sweden, school funding policies are a local responsibility and there may be as many different funding formulas as there are local authorities.

But even in more centralised systems, authorities could rarely point us to a single document providing all elements considered in the national funding approach. Several times, we were told that only a handful of people in the system actually understood the funding scheme. Luckily, in most cases we were able to meet these rare funding master minds.

The many actors we spoke to in schools, education administrations and representative organisations also helped us understand the funding mechanisms from their perspective. In one country, we analysed a sample of letters received by schools from the ministry on their funding allocation, and deduced from these the main school funding principles.

The funding approaches we uncovered in countries as diverse as Austria, Belgium, Chile, the Czech Republic and Estonia were of greater or lesser complexity. In some systems, fragmented governance structures are reducing the clarity, co-ordination and transparency of funding flows. In others, the formulas used to calculate per-student funding are so complicated that they effectively prevent those who use them from fully understanding them. Such complexity makes policy discussions difficult, if not impossible.

Moreover, countries typically supplement the main funding streams with additional targeted funds. In Uruguay, there are over 130 different programmes targeted at improving equity in education, which involve the funding of specific groups of students or schools. The use of targeted programmes can help convey policy objectives, promote greater equity and allow better steering of the use of public resources. But a multiplication of such programmes risks generating inefficiencies, greater administrative costs and a lack of long-term sustainability for schools.

Comparing funding approaches across countries adds another layer of complexity. Definitions vary across countries, and describing complex policies in simple comparative tables may betray the logic of individual systems. In close collaboration with its Group of National Experts on School Resources, the OECD study produced a set of country profiles for the participating systems, as well as internationally comparative tables for several aspects of their funding systems. These are analysed based on findings from international research, narrative reports collected from participating countries, and the conclusions of individual country visits.

The resulting synthesis report, which was co-funded by the European Commission, is the first in a series of thematic reports on school resources, which collectively aim to help improve school resource policies across the OECD. Not surprisingly, one of the report’s main recommendations is for schools and school systems to be more transparent about their funding policies and how resources are distributed. The presentation of clear criteria that can be scrutinised and negotiated can help stimulate public debate and stakeholder support of a given approach as a fair method of funding.

The report also makes a strong case for school funding policies to be connected to educational objectives. This needs to happen at all levels of a school system. Central and sub-central funding strategies need to make explicit the goals that they aim to achieve, and public reporting should present funding information alongside information on the quality and equity of a school system. At the school level, school leaders with responsibility for resources need to be prepared for strategic budgeting in a framework of learning-centred leadership. They also need support in the more technical aspects of budgeting so that they can focus on the strategic aspects of formulating their school’s budget.

The report provides analysis, policy options and examples from around the world on the following aspects of school funding policy:

  • Connecting funding strategies to education goals 
  • Aligning roles and responsibilities in complex funding systems 
  • Building capacity for strategic school funding 
  • Developing a stable and publicly known system for funding allocation
  • Striking a balance between regular and targeted funding 
  • Using adequate indicators to target disadvantage
  • Being transparent about the use of funds 
  • Bringing together evaluative information on inputs, processes and outcomes 
  • Paying particular attention to evaluating the equity outcomes of school funding


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