A Review of Formula Funding

Highlights

In 2013 the Government of Kazakhstan introduced a national formula funding methodology for central government supported costs of general secondary education schools (covering grades 1-11) on a pilot basis.  The purpose of the pilot was to design and evaluate a national funding methodology based on a unit cost per pupil which would improve the fairness and transparency of national school education funding.  The centrally supported costs covered by the formula included all teaching and teaching related management costs and non-salary costs relating to the process of education, and forms the largest proportion of school costs.  The current formula also includes some of the costs of the education environment including payroll costs of non-teachers, post and telephones and routine repairs and maintenance.   However the formula does not cover costs provided in local oblast and rayon budgets which include most premises related expenses, which are determined and allocated according to the policies of local administrations

The initial pilot run by the government included a sample of 63 schools in 5 oblasts including Aktobe, East Kazakhstan, Akmola, Almaty and South Kazakhstan oblasts. An additional 10 schools in Astana and Almaty cities were included in the sample in 2016. The original pilot sample covered 1-11 grades, but in 2015 at the 1-9 grades were temporarily dropped over concerns about data and the application of the formula and re-incorporated back in the sample in the following year. Since September 2016, the formula has been gradually improved by adding funding for maintenance of equipment and hardware, but it does not currently cover children with disability (CwD), some of whom are taught at home by teachers from the general secondary schools.  The pilot is intended to be expanded to include all general secondary schools in Astana and Almaty cities in 2018 with the purpose of introducing nation-wide coverage of per capita for the 2019 financial year.

Despite the addition of substantial additional funds for the pilot schools in 2017, 5 schools are still net losers under the present pilot formula; however without the additional funding provided under the pilot a far larger group of schools would have been adversely affected.(see Annex 1 for details) .  Conversely a significant number of ‘gaining’ schools have seen increases well over 100% compared to their historic budget allocations.  While the introduction of a fairer funding formula must inevitably involve redistribution of funds with ‘gainers’ and ‘losers’ it is important that the formula weights distribution criteria appropriately particularly to reflect the heavier fixed cost element in lower enrolment schools.  Furthermore the implementation of the national formula while signaling the need for a more efficient and rational distribution of resources, must give time for local governments and their schools to adjust their provision and network to the revised funding system.  This is particularly so as unlike the case of the pilot, the introduction of a national system will not be accompanied by a large net increase in resources.    

Although there is currently no coefficient in the formula to cover children with disabilities (CWD) in the formula, the Ministry have proposed weighting CWD students with a multiplier of 2x the weighting of an equivalent regular student; with a far lower teaching hour load of around 10 hours per week this equates to an effective multiplier of 3x.  The Ministry are unsure as to whether this matches the likely additional recurrent cost of teaching a CWD student at school and seeks international experience on the treatment of formula funding with special educational needs.