DOCUMENT RESUME El 008 037 Zymelman, Manuel

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El 008 037

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PUB DATE NOTE

Zymelman, Manuel Financing and Efficiency in Education: Reference for Administration and Policymaking. Agency for International Development (Dept. of State), Washington, D.C. 73

322p.

EDRS PRICE DESCRIPTORS

MF-$0.83 HC-$16.73 Plus Postage Cost Effectiveness; Delivery Systems; *Educational Finance; *Efficiency; Elementary Secondary Education; Expenditures; *Financial Policy; Financial Support; Higher Education; *Models; National Programs; *Resource Allocations

ABSTRACT This book examines the advantages and disadvantages

cf various methods of financing education and discusses the basic issues related to increasing efficiency in education. Section 1 offers a short history of educational finance and discusses many of the traditional approaches to financing education. Section 2 presents methods for distributing funds to different levels of formal education and to various types of nonformal education. Section 3 describes different arrangements for raising educational funds and controlling their use. Section 4 examines different methods for forecasting educational resources and describes the Index of Educational Funding, a model for measuring national effort in educational spending. Section 5 discusses concepts of efficiency in education and develops a general approach for improving efficiency through intervention in the educational system. Section 6 deals with ways of increasing overall efficiency and decision-making in national educational systems. Section 7 presents ways of increasing educational effiCiency, with emphasis on educational contracting. It also describes the Index of Educational Expenditures, a model for comparing different nations' educational spending. (AuthorM)

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Financing and Efficiency

in

Education

Reference for Administration and Policymaking

N

Cv:

0

MANUEL ZYMELMAN

HARVARD UNIVERSITY

2

This book was produced as part of a project sponsored and funded under a contract with theAgency for International Development. The views expressed herein are, however, those of the author and are not necessarily those of the Agency. All rights reserved.

Composed and printed at The Nimrod Press, Boston, 1973

3

To Nancy

4

ACKNOWLEDGMENT

A work covering so many varied topics in the financing and efficiency of education mu,st necessarily rely on the assistance of many people. Foremost, I acknowledge with thanks the help of my three research assistants: Dr. Jose Dominguez, who developed the idea of a Student Loan Development Bank; Mrs. Elaine Gould; and Mrs. Adele Neuringer. They collaborated

tiringly in all phases of this project.

* I wish to thank Dr. Robert McMeeckin for his assistance in the formution of the chapters on planning, data for decision-making, and admin,tration; Dr. John Simmons for his assistance in the formulation of-the hapter on the economic valuation of educational outputs; Professor Donald M. Levine for his assistance in the formulation of the chapter on PPBS; Professor John Anderson for his assistance in the formulation of the chapter on self-help in education; and Mrs. Jeanne Henn for her assistance in the formulation of the chapter on distribution of funds.

My thanks to Professors John Anderson, Roy Bahl, Charles Benson, Curley Bowen, Andre Daniere, Russell Davis, Werner Hirsh, Donald M. Levine, Selma Mushkin, Richard Speagle, and John Vaizey for specially preparing research papers that deal with various topics related to this book.

I am grateful to the members of the Task Force in Educational Finance and Measurement of the Agency for International Development, and to all

the participants of the International Conferences on the Financing of Education held in Cartagena and Malta in 1973 for their many basic and relevant comments on early drafts of this book.

Lastly, I am especially grateful to Mrs. Helene Tuchman for her efficiency in compiling the index; to Dr. Martin Robbins who worked closely with me in editing the manuscript and providing invaluable criticism; and to Miss Dolores Tirnbas for her indispensable critical editing of the final manuscript in close collaboration with me and for supervising the book through all stages of publication.

Although help, information, and advice were received from these and many other sources, responsibility for this book rests solely with the author.

Manuel Zymelman Cambridge June, 1973

TABLE OF CONTENTS

INTRODUCTION

1

Part I: THE SOURCES AND FINANCING OF EDUCATION

Chapter

Section 1

I

EDUCATIONAL FINANCE IN HISTORICAL PERSPECTIVE

7

t..

Delineation of Educational Needs

7

Nature of Sources of Support

8

Methods of Fund Acquisition

9

Methods of Fund Allocation

14

Summary

17

II PUBLIC AND PRIVATE EDUCATION: THE PHILOSOPHIES

BEHIND THE ISSUES

19

Justification for Government Intervention

19

Financing of and Provision for Education

20

The Philosophies Behind the Issues

21

Conclusion

25

III REVIEW OF TAXES COMMONLY USED TO FINANCE

EDUCATION

27

Criteria for Evaluating Taxes in General as Sources of

Finance for Education

27

Earmarked Taxes for Education

29

Analysis of Property and Sales Taxes

29

Summary

48

Section 2

IV ELEMENTARY AND SECONDARY EDUCATION: PUBLIC

AND PRIVATE FUNDING

50

Public Funding

50

Private Funding

79

V GOVERNMENT FINANCING OF HIGHER EDUCATION

82

Financing Patterns of Higher Education

82

Summary

89

VI NATIONAL STUDENT LOAN INSTITUTIONS

90

National Student Loan Institutions as Instruments of Policy 90

Effects of Student Loans on the Individual Borrower

91

Chapter

Possible Effects of Student Loans on Higher Education

92

Effects of Student Loans on Society

93

Operations of a National. Student Loan Institution

93

A Special Type of SLI: The Student Loan Development

Bank (SLDB)

103

Conclusions

108

VII THE FINANCING OF OCCUPATIONAL TRAINING

110

Difficulties in Categorizing and Comparing Types of

Vocational Training

110

Alternative Types of Training

111

Trainee Differences and Other Variables

112

Financing of Vocational Education

113

Special National Training Institutions and Their Financing 120

Summary

123

VIII RECURRENT EDUCATION

127

A Recurrent Education System

127

Implementing Recurrent Education

129

Financing Recurrent Education

130

Feasibility of Recurrent Education for Developing Countries 131

IX FINANCING EDUCATIONAL BROADCASTING

133

Criteria and Forms of Financing

133

Summary

138

Section 3

X SELF-HELP AS A METHOD OF FINANCING EDUCATION 140

The Philosophical and Economic Perspectives of Self-Help 140

The Cooperative As a Self-Help Institution in

Educational Financing

144

Summary

148

XI THE VOUCHER SYSTEM

149

Objectives of the Voucher System

149

Different Voucher System Plans

150

Additional Variations of Voucher System Models

154

The Voucher System and Developing Countries

154

XII EXTERNAL AID TO EDUCATION

156

The Donor-Recipient Relationship

156

The Content of External Aid

157

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Chapter

Distribution of Aid Within the Educational Sector

158

Rationale for Accepting External Aid to Education

159

Issues Faced by Donors of Aid to Education

160

Summary

161

Section 4

XIII FORECASTING RESOURCES FOR EDUCATION

162

Sources of Resources for Education .

162

Forecasting Resources for. Education Supplied by

Government

163

Forecasting Education's Share in Government Expenditures 164

Forecasting Contributions by the Private Sector

167

Summary

168

XIV AN INDEX FOR MEASURING EDUCATIONAL FUNDING 169

The Index of Educational Funding

170

Notes to the Index of Educational Funding

172

Meaning and Uses of the Index of Educational Funding

174

Part 11: PROBLEMS OF EFFICIENCY AND FINANCE

Section 5

XV EFFICIENCY IN EDUCATION

179

Efficiency of a Transformation Process

179

Increasing Efficiency

187

XVI AN EVALUATION OF THE OUTPUTS OF EDUCATION

203

Educational Outputs Related to Stated Goals

203

The By-Products of Education

209

Method of Evaluating Educational Outputs

210

Summary

212

XVII THE ECONOMIC VALUE OF EDUCATIONAL OUTPUTS

213

The Rate of Return Approach

213

The Manpower Approach

221

Correlation Analysis

224

The Residual Approach

227

Regression Analysis Approach

229

Production Function Analysis

230

Summary

232

vii

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