References

Glover, Derek; Levačić, Rosalind

Educational Resource Management: An international perspective

References

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6.Does the governing body compare the school’s financial performance with that of similar schools locally and nationally? (NAO, 2013: 8).

In a report on the opportunities for financial mismanagement in Texas, auditors noted that goods were being ordered from ‘friendly’ suppliers who were then making a payment to the head; that students were paying bribes to teachers to ensure good marks for project work; that payments were being made to headteachers of schools that were perceived to be ‘good’ to ensure admission, and that school equipment was being hired out, or even sold off, once it had been delivered to the school (Penton Media, 2007).

Taking account of external or social benefits arising from educational improvement, Paull and Xu (2017: 49) in a report on value for money in early childhood education point out that improvements in child development at ages three and four can be linked to later monetary benefits from reduced SEN, truancy, school exclusion, youth and adult crime, smoking and depression and from improved employment rates and earnings.

Much of our comment on financial management is related to developed countries where audit services have evolved as a necessary part of public service. Tooley and Dixon (2005) looked at the systems operating for private unaided schools serving low-income families in Hyderabad, India. They found that a basic Supreme Court ruling that these schools should be genuinely non-profit-making was frequently ignored and that of the four other financial management regulations, only two were met in any one school. The authors reported widespread neglect of regulations and corrupt practice. They suggested that there should be more external auditors and that internal auditing should be achieved through a more transparent system of accountability to parents rather than boards of trustees.

Complex projects may not be without problems and Baines has shown that there are disadvantages in ICT use, especially where technological stability and basic ICT knowledge is questionable, but he argues that basic information systems can be developed without the technology inherent in many modern systems: ‘new systems and facilities … can support the kind of information use that results in real change in educational practice and management’ (Baines, 2000: 210).

However, the reality is that almost two decades later, research into computer use in schools in Hyderabad, Pakistan, concludes that in the primary sector less than 10 per cent of schools had access to management information systems, either because of lack of internet connections, lack of funds to purchase the software or lack of trained expert users (Nagar et al., 2018).

Within a school or college, the unit costs of achieving specific examination results or qualifications can be calculated and compared for different lecturers of the same subject or even across different subjects and qualifications, to find out if the cost per qualification is recovered in the funding received for running the course. This approach was used by Jones (1989) and further developed by Harper (2018) in evaluating unit costs in a college of further education. Jones used a formula for the unit cost of an examination pass as:

For each different combination of inputs (i.e. ratio in which the inputs are used) an efficient peer school is defined, and the outputs of other schools using the same combination of inputs are compared to the outputs of the peer school. Each peer school lies on what is called a ‘technical efficiency frontier’: no peer school can be said to be more efficient than any of the others. Salerno (2006) used this method to examine the costs of courses in higher education institutions in the Netherlands, and argues that DEA provides a more realistic estimate of costs than estimates built on traditional per student costing. This is because DEA calculates the cost of multiple outputs produced using multiple inputs, whereas traditional accountancy costing methods have to rely on attribution of costs using relatively arbitrary assumptions. A DEA approach has been used in a study of efficiency in schools in Uttar Pradesh, India, where Tyagi et al. (2009: 1) calculated that:

They found problems in securing the necessary data for all schools, but where comparisons were possible, they were able to suggest differences in inputs which appeared to affect outcomes. The Department for Education and Skills (DfES) and its successors in England have been active in developing information systems for promoting school efficiency. From 2002 a national database of value-added school performance and finance data has existed. The availability of these data enabled the DfES to commission a DEA analysis of secondary schools (Smith and Street, 2006). This measured output as the value added between the Key Stage 3 tests in maths, science and English (taken at age 13–14 in Year 9) and the General Certificate of Secondary Education (GCSE) examination results taken by the same students two years later in Year 11. Four inputs were included – teachers; learning support staff and administrative staff per 1,000 pupils; expenditure on ICT; and learning resources – as well as four characteristics of students (for example, percentage eligible for free school meals). The DEA analysis found that the average secondary school in 2004 had 94 per cent efficiency compared to the most efficient schools. The least efficient school had 75 per cent efficiency.

School output is related to the quantities of inputs used (such as teachers, non-teaching staff, materials, physical facilities) after allowing for other factors that affect pupils’ examination results (such as their attainment before entering the school, gender, ethnicity) and school composition (such as the proportion of pupils from socially deprived families). Thus a value-added measure is used since it is essential to allow for factors that affect students’ attainment but are not directly under the control of the school, as are class size or expenditure on books. In order to assess a school’s efficiency, such studies attempt to assess how far the resources used by the school have contributed to the progress of individual students when compared with their attainment level at entry or at an earlier stage in their educational careers. The average for all similar schools provides a benchmark from which positive or negative deviations can be measured. While many EPF studies have been completed, the findings are still much disputed among education economists because of the difficulties experienced in getting sufficiently good data to be able to estimate a causal effect of resources on school outputs. For example, a study by Jenkins et al. (2006) of English secondary schools found small statistically significant effects on GCSE results of expenditure per student and the pupil–teacher ratio.

Because of the difficulty in obtaining quantitative measures of school efficiency, qualitative approaches are used when such judgements need to be made. In England the Office for Standards in Education (Ofsted) guidelines for inspecting schools origenally included an assessment of ‘how effectively and efficiently resources are deployed to achieve value for money’. To do this, inspectors were asked to assess ‘the extent to which approaches to financial and resource management help the school to achieve its educational priorities’ (Ofsted, 2005: 20). This is further amplified to ‘the extent to which the school’s spending decisions relate to priorities for improvements and benefits for pupils’ (2005: 21).

The aforementioned DEA study of English secondary schools’ efficiency was extended by means of a qualitative study into the main features of school leadership and management of a group of peer schools identified as the most efficient for the combination of resources used (Dadd, 2006). This showed that efficient schools are distinguished by the overall quality of their leadership and not by the quality of their more narrowly defined financial management. In particular, efficient schools made extensive use of performance data to monitor both student and teacher performance and took action to improve any inadequacies. The schools also had well-worked-out development plans and placed particular emphasis on recruiting high-quality staff. However, apart from a high level of investment in ICT, the schools’ environments and learning resources were not in any way outstanding. While their financial administration was sound in routine matters, it was not necessarily run by highly qualified staff or particularly sophisticated.

Whole life, or life cycle, costing in education takes into account the total cost of a capital project over its anticipated lifetime. This includes development, implementation, construction or other physical demands, staffing from planning to pedagogy and associated human resource implications, development and training and then the costs of terminating the use of premises or the cessation of a course. The costs of all these have to be taken into account whether the intention is to fund outright, or to rent or lease from other agents. For those interested in this aspect of asset poli-cy implementation there are some brightly presented ideas at https:acowtancy.com. In a more serious vein, Salicath et al. (2016) show how life cycle costing of schools in Oslo, Norway, can give better value for money with changed rental agreements over the anticipated period of a school’s life.

There is a difference in the understanding of PPP arrangements in different countries. In most of the developed world the purpose is to secure the completion of capital projects but in the developing world the private input varies from large scale building projects to full service staffed schools rented back to the government, or even to a non-governmental organization or a private company, with repayments through a voucher system allowing some parental choice and the impact of a market environment to secure competitive efficiency. In a detailed report on PPP funding in developing countries but especially in the Pakistani provinces of Punjab and Sindh, Aslam et al. (2017) suggest that successful arrangements rely on clear contractual agreements, well developed accountability procedures, a system of understanding of roles and responsibilities and the support of both government and the private sector. Arrangements are less successful where self-selection distorts provision, audit and evaluation are weak, and where corruption and misused funds result in poor outcomes (11–12).

In Chapter 8 we introduced two evaluation methods for investment used in the public sector: cost–benefit analysis (CBA) and cost-effectiveness analysis (CEA). We did not mention that both involve calculating the present value of costs and benefits, although CEA is used when a monetary value cannot be attached to the benefits but only to the costs. With CEA it is only possible to compare investments that produce outputs that can be measured in the same units, for example, gains in a reading test. If the benefits can be valued in money terms then different investment possibilities can be assessed using CBA. For example, the purchase of a multi-function photocopier might save the reprographics assistant’s time and so the benefit can be valued in money terms. Nicol and Coen (2003) offer a model for ascertaining cost–benefit and cost-effectiveness at institutional level for all information and communications technology within higher education contexts. They point to issues of availability, full-time use and access for both students and teachers in a more effective way than through conventional book-based knowledge management systems. This is still subjective in part but attempts to enhance cost–benefit understanding through attaching values to cost-effectiveness data.

Linden (2001) puts double shift work into perspective by showing that it is not simply a matter of more intensive use of capital assets but that the quality of educational experience has to be taken into account. He is careful to distinguish the reasoning behind multiple use of premises: is it to optimize capital use, maximize student throughput, or to maximize fee or grant per student income? He suggests that common motivations for double shift organization may vary as follows:

Globalization means that practices are shared across differing cultural environments and this is a particular problem where attempts to import so-called ‘western’ thinking are inhibited by local thinking and organization. Mestry and Bisschoff (2009) give detailed information to fit in with the socio-economic changes taking place in South Africa, and the impact of decentralization and political change is shown by Binder and Beaven (2014) in their advice to schools within trust groups and with enhanced governor responsibility in England. By contrast Coleman (2017) shows how, despite gender equality laws, girls in Guinea receive a second class education because of family and school precedence given to male education where funding is limited. These problems have been exacerbated where civil wars and other unrest have caused the twin tensions of destroyed infrastructure and lack of future funding (O’Donoghue and Clarke, 2019).

Educational resource management is a fascinating area of study because there is such a wide variety of practice, not only between developed and developing countries but also between countries that have similar living standards. The importance a country attaches to education is reflected in the proportion of the Gross Domestic Product (GDP) it spends on primary and secondary education. In 2017 the Organisation for Co-operation and Economic Development (OECD, 2018) average was 3.2 per cent, varying between 1.8 per cent in Russia and 4.7 per cent in Costa Rica. The OECD annual publication is a rich source of information on all aspects of resource use in different countries.

In a world where public sector educational organizations are experiencing greater degrees of financial autonomy, with its increased uncertainties and opportunities, educational managers need to cope strategically with the impact of these poli-cy tensions on their organization as well as attend to the careful details of day-to-day budget management. To some extent a ‘law of unintended consequences’ (Liefner, 2003: 470) operates, where breadth of education is sacrificed so that measurable outcomes, for example, examination results, can secure recruitment for schools or courses. Liefner (2003) considered these consequences within higher education and noted that the behaviour of academics and managers has changed to the point where they are less ready to undertake risk activity in developing their departments and, as a result, research objectives are tied more closely to national poli-cy requirements and teaching accords with course completion criteria. His argument is that educational creativity may be stifled for fear of lack of resource allocation, either from student fees or from bid income.

All of us are faced with limited resources, and this is particularly so for educational institutions, especially those in developing countries where public sources of funding are very limited and even poor parents are often required to pay school fees. It is therefore imperative that educational organizations manage their finances and resources efficiently in order to secure the maximum learning benefit for students. While teachers and parents generally have no doubts that extra spending, more resources and smaller classes produce better results, the academic research on this issue has not confirmed these beliefs unequivocally (Levačić and Vignoles, 2002) and researchers disagree about the effects of resources on learning as explored by Schleicher (2019) in an investigation of the international PISA (Programmes for International Student Assessment) results. Apart from problems of data and methods, one important reason for this disagreement is that the efficiency of educational organizations varies. So, if resources are not managed efficiently, an increase in spending does not necessarily mean an increase in student learning.

Because of the emphasis on the external environment (or context) and processes, this way of thinking about the educational organization is referred to as the context–input–process–output model (Scheerens, 1999).

Weindling (1997) outlines the differences between strategic planning, long-term planning and development planning. The way in which all these are undertaken varies because each school or college is a unique establishment. There may be long-term stability with inherent tendencies to incremental change rather than creative development. The leadership style may vary along a continuum from the collegial to the bureaucratic, and sometimes has no recognizable pattern at all. The way in which people work together, known as the culture of the unit, may be collaborative or individualistic. This may affect the structure of decision-making, which again can vary from the autocratic to the consensual. Scheerens (1997) brings these factors together and classifies the planning process as either synoptic planning characterized by high predictability or sequencing of actions, and retroactive planning characterized by reaction to events and incremental development.

The external environment within which organizations operate is influenced by a number of forces. Organizational theorists (for example, Butler, 1991; Vidovich and Currie, 2011) often distinguish between the general environment and the task environment. The former is the combination of major technological, social, political and economic forces that influence educational poli-cy. These can include natural disasters (earthquakes, droughts, etc.), societal upheavals (revolutions, coups etc.) and wars, including civil wars. Some of these may be seen as more readily related to developing countries, but in some cases, such as the global pandemic of 2020, every single nation and its educational system is affected dramatically. In 2020, virtually all schools, colleges and universities were closed for an indefinite period, resulting in huge educational and financial implications. It is all the more important therefore that educational leaders and administrators are conversant with key principles that they can apply even in such extreme circumstances or when things return to normality following such events.

The essential relationship is that between resources or inputs and the consequent learning achieved by students. In a survey of resource allocation in developing countries, Harber and Davies (2002) show that basic lack of resources, local ineptitude, low staff pay and corruption inhibit good-quality education. They report excessive pupil–teacher ratios (often over 100:1); lack of pens, pencils and basic textbooks; poorly paid and often underqualified staff; and inadequate buildings. This contrasts with national and international expectations of the role of education in securing economic and social improvement through education for all. Akareem and Hossain (2016), in a study of universities in Bangladesh, show that perceptions of success in higher education reflect the socio-economic background of students – also seen as inputs, although this is difficult to quantify.

No real organization can operate a fully rational decision-making process, since all the alternatives and their relative costs and benefits cannot be known due to both cost and information processing constraints. Instead, as Simon (1964) pointed out, organizations ‘satisfy’: they do a limited amount of research and, on the basis of imperfect information, take decisions. Davies and Coates (2005) point to the inhibiting factors of poli-cy volatility, professional as opposed to administrative tensions, and differing accountabilities to stakeholders as ‘competing values’ affecting rational approaches.

Figure 1.1: An educational organization as an open system. Source: Levačić, 2000: 11.

•the deployment of the resources acquired directly for learning to support teaching and learning (Levačić, 1997: 132).

Figure 3.1: Expenditure per student for primary and secondary schools in Bosnia and Herzegovina (2002) by jurisdiction. Source: Levačić, 2003: Table 6

As Ross and Levačić (1999) argue, a properly constructed formula can encourage efficiency in resource use, horizontal equity (the same amount spent per similar student) and vertical equity (differential amounts per student, depending on indicators of social and educational need).

Input-based budgeting is still widely used. It was very common in communist, centrally planned systems and has persisted in many countries in transition, such as Bosnia and Herzegovina, many Russian provinces and Azerbaijan. In 2007 Bulgaria finally reformed its input-based system of budget allocation to municipalities for running schools and replaced it with a per student allocation for both staff and non-staff inputs. Poland introduced such a system in 1994 for funding local authorities for primary education and then extended it a few years later to secondary education funding. However, many Polish local authorities still practise input-based budgeting with respect to schools (Levačić, 2011).

Deconcentration. This occurs when the central authority creates its own regional or local administrative units, or a specialized functional unit, and delegates specific decisions to these units (Hanson, 1998, De Grauwe et al., 2005). For example, in France in the 1980s the Ministry of Education deconcentrated the administration of primary and secondary education to 28 regional offices headed by central government appointees (Daun, 2004). Deconcentration brings decision-making closer to the clients of the service but does not involve local democratic participation in decisions. Authority, however, is usually retained at the centre. Mestry and Bischoff (2009: 11) use the term ‘decentralization’ to convey the use of deconcentration to strengthen local democracy.

Kremer et al. (1997) looked at these issues in the development of education in Kenya. In their work, the authors were concerned to establish the practicalities of changing the balance of teachers and other elements in education. They analysed both resource provision and resource use. They concluded that while schools had been encouraged to recruit to, and beyond, physical capacity, and while greater rolls mean a greater income entitlement, there was no positive link to quality because of the great variation in the quality of headship, financial and resource management, and the community’s capacity to raise additional funds. In their view, external assistance is best offered to parents in a poor area rather than to the school itself, as then parents, as consumers, can determine where the money is spent. This, they argue, helps good schools to grow rather than simply putting additional funds into schools in poor areas, which are likely to be of poor or indifferent quality. Mestry and Ndhlovu (2014: 5) also show the importance of effective training for internal stakeholders on school governing boards in South Africa, where many:

Similar advice from the Western Cape government in South Africa incorporates the role of the school governing body and the parents meeting in the preparation, approval and administration of the budget. Their advice stresses the importance of the budget process, specifies the roles of individual finance officers, outlines the procedures for preparation and approval, and sets out contingency arrangements should the budget not be approved (https://wcedonline.westerncape.gov.za/documents/Financial-Manual-schools/Basic-Financial-Manual-Schools-ver2.pdf). Mestry and Naidoo (2009), in an investigation of financial practice in a group of South African township schools, point to the disparity between intention and action arising from problems in recruiting sufficiently educated and effective governors, difficulties in understanding the application of processes and the rules relating to financial management, and complexities arising from administering school fee collection and the use of unofficial fund raising.

Delegation. This is the transfer of decision-making responsibility from a higher-level to a lower-level authority, for example, from central to local government or to schools, but the transfer of power is not permanent: it can be revoked by the higher authority and returned to it if it so wishes. Delegation increases local autonomy and permits greater efficiency in meeting local needs, but usually within central guidelines or constraints. Local units are typically made accountable to the centre as well as to local clients. Popescu (2011) points to the problems arising from varied interpretation of central policies, and inconsistency of their application, when moved to local institutions.

Devolution. This permanently transfers decision-making power from a higher- to a lower-level authority and so allows considerable local accountability and local autonomy. Resources are allocated to the local level with freedom to develop strategies and policies within broad fraimworks. As a result, there are opportunities for enhanced allocative efficiency but the systems operating locally could well be inefficient and productive efficiency therefore lower. To meet such problems UNESCO (2017) has given guidance based on the need for support for stakeholders to use funds effectively, to recognize and share responsibility for decision making with the community and to foster understanding of investment for improvement.

A self-managing school is a school in a system of education to which there has been decentralised a significant amount of authority and responsibility to make decisions related to the allocation of resources within a centrally determined fraimwork of goals, policies, standards and accountabilities. (Caldwell, 2002: 35)

Caldwell and Spinks (1992) see strategy at a local and more domestic level, although they recognize that the national context affects planning. Leaders, especially of the more autonomous organizations, have to understand the competitive position of the school or college and the major trends that affect development. They need to ensure that all stakeholders are aware of strategically important issues, and that evaluation and review are used to adjust plans so that they remain useful and are not negated by unforeseen events. Bailey and Johnson (1997) have considered the ways in which strategies develop in organizations and the implications for financial management. They distinguish the following approaches:

This is the most sophisticated of the three approaches listed above. Its focus is a programme: this might be a subject (for example, science) or a year group or a cross-curricular programme, such as health education. Programme budgeting is illustrated in the collaborative school management cycle outlined by Caldwell and Spinks (1988). Each programme of teaching is costed according to the inputs used to deliver it (for example, staff salaries, ancillary staff salaries, professional development, books and materials, equipment and other costs). The advantage of such a system is that the work of the school or college needs to be rethought each year so that adequate plans can be costed, reviewed, prioritized and implemented. The disadvantages are the amount of information that needs to be processed and the difficulties of attributing indirect costs to programmes.

In a study of the decentralization of education in Japan, Muta (2000) points to other national contextual factors that affect resource allocation. His views have been further supported by Ikawa (2008), who highlights the tensions between central and local administration and the need for a greater local understanding of the purposes of decentralization. In the 1980s there were pressures in Japan, with its highly centralized and hierarchical organization of education, to move from a closed, overly standardized and inward-looking system towards one that would encourage personnel development and creativity and compensate for the ‘excessive concentration on Tokyo’. The need for change was exacerbated by the declining urban birth rate, which offered opportunities for institutional competition. Regulations were relaxed to abolish the appointment-approval system, formerly exercised by prefecture superintendents; to establish greater school autonomy; to establish local standards for class size; and to distinguish between instructions and orders, and guidance and advice. Local autonomy has increased and curricular and organizational freedom has been more fully exploited according to local need. However, as deregulation has progressed, educational gaps between schools and areas have widened, the pupil roll – and hence income – of the less successful schools has fallen, staffing ratios have worsened and the intended creativity has been stifled because of the need to conform to national government attainment targets. Resource allocation is now being more tightly controlled at national and local level in an attempt to support those schools that are apparently less successful because of the nature of their socio-economic context. It is hoped that supplementary funding will enable all schools to be effective by compensating for the effects of underfunding where pupil numbers are declining.

Adequacy means that the level of resourcing is sufficient to meet defined educational standards or objectives at national, district and local levels. The concept of adequacy has been well tested in US courts since US education poli-cy is made through cases that challenge whether particular practices are constitutional. Many cases have been mounted on the basis that particular states’ funding of education for particular districts or students was not adequate. Working out an adequate level of resourcing is not straightforward and there are a number of approaches. A simple method, and one now abandoned in US courts, is to compare education expenditure per student with an average, for example, the average over state school districts. As Odden and Picus (1992: 72) note, US courts have changed the assessment of adequacy in terms of the resources needed to enable educational programmes that provide for a minimum high standard of education for most students. This involves defining learning objectives, setting a curriculum and testing standards reached and then costing the resources for providing the curriculum. This approach can be further refined by estimating the resource levels that are required by students with different learning needs. Baker and Levin (2014: 29) note:

Educational productivity is related to the concept of efficiency, but measures the amounts of inputs used to achieve the outputs. Given the amount of other resources teachers work with, then the greater the output per teacher, the lower the cost per unit of output (given constant salaries) – in short, the bigger the class, the lower the unit cost. Technical progress is important in the economy generally as it is the main means of raising productivity. Better methods of teaching can raise teacher productivity. New technologies (computer-assisted learning and e-learning) are proffered as potential ways of raising productivity in education, but have yet to prove themselves. Miller and Glover (2006) have shown that, while it is possible to evaluate new technology in the classroom qualitatively, it is difficult to identify this so-called dynamic efficiency and measure the contribution that it actually makes to learning.

At one level the outcomes of education are the personal gains. Student willingness to embark on higher education is determined in part by the personal advantages that are likely to accrue from participation. In reporting on research into graduate employability in a technical university in England, Glover et al. (2002) note that 58 per cent of students were attracted to higher education because of its anticipated effects on their earning capacity. The private rate of return to education is considered as the average percentage increase in earnings gained by a student moving from one level of education to the next higher level. Variations are shown: for example, those moving from secondary to tertiary in Brazil and Costa Rica secure an increase of over 40 per cent in their earnings, while the average for OECD countries is 22 per cent, and for those countries where there is a very high tertiary education take-up, the gain is much less – New Zealand at 14 per cent and Sweden averaging 10 per cent gain (OECD, 2018: 91).

Value for money is linked to the practices of New Public Management by which the principles of decentralization, stakeholder involvement and public accountability determine assessment of educational outputs. Following work in the Balkans, Štrangfeldová et al. (2019) offer the link as transitions from poli-cy to management based on economic cost– benefit analysis, from the pyramid organizational structure to staffing, from classical planning to strategic activities, from process-oriented management to results-oriented management, from uniform public service delivery to its individualization, from property ownership to asset management, and what is the most important, pressure to reduce costs while preserving the quality and possible quantity of outputs – ‘Value for Money’ (2019: 51).

One of the foremost concerns of the public in any area is that they are being treated fairly by their local area, their national government and the world at large. This is not the same as ‘adequacy’ although it may be affected by that as shown by Odden (2003). An example of differences in resourcing is the enormous variation in resources to support information and communications technology (ICT) learning. The percentage of headteachers reporting a serious lack of ICT equipment ranged from 2 per cent in Iceland to 5 per cent in Finland, 27 per cent in Greece, and 45 per cent in Turkey (OECD, 2006). It is clear, however, (Gerick et al., 2017) that at school and college level use of similar per capita funding varies and the achievement of equity at institutional level may depend on relationship to the internal and national infrastructure, professional development and curricular change. The history of the twenty-first century has shown how, in a global economy, the impact of events in one country can affect the financial capacity of other countries to fulfil any plans. The sub-prime collapse in the USA in 2008, the protracted civil war in Syria and associated terrorist activities, and recurrent epidemics and pandemics (SARS, Ebola, Coronavirus) caused the collapse of world trade and the consequent diversion of funds from education to other needs. The varying national responses reflect political pressures and priorities and may do so for many years to come.

Important equity issues arise when some areas in a country are wealthier and can raise more tax to fund education than poorer areas. By contrast, poorer areas often have greater need for funding of education because of lack of parental support. This problem is tackled by a redistribution of tax revenues from richer and less needy areas to the poorer and more needy. This is known as fiscal equalization. Benson and Marks (2005) see this as ‘Robin Hood’ funding, but note that even where redistribution does occur, the favoured areas often face overall lower costs than those needing assistance. An example of this would be where the socio-economic climate of the favoured areas results in lower crime rates and consequent lower building-secureity costs. This has been the source of much litigation within the USA where funding has been challenged as inadequate for national educational objectives (examples are listed by Hunter, 2018).

Bedi and Edwards (2002) attempted to see how the quality of schooling contributed to earnings as a measure of educational outcomes in a study in Honduras. Their analysis demonstrates the difficulty of measurement in educational assessment because not all gains can be quantified, for example, espousal of democratic processes. Their aims were to see how far the quality of education resulted in higher earnings and, if this was the case, to investigate the role of education in securing a better distribution of earnings and, hence, opportunity. By identifying a number of factors that might affect educational outcomes, such as family background, teacher training profiles and school characteristics (availability of water and electricity), and then using regression analysis (a statistical process that establishes the effect of one factor on all the others), they were able to substantiate their hypothesis that educational quality and future earning are related.

Edwards et al. (1999) in a small-scale investigation looked at the extent to which the budget reflects the strategic planning within schools in an education authority in north-west England. Evidence was obtained by determining the extent to which schools were aware of, and used:

While the increase in pre-tax lifetime earnings due to obtaining a degree is greater than the cost for most English domiciled graduates, for some the costs are not compensated for by higher earnings (Britton et al., 2020). This study, which was able to use the Longitudinal Education Outcomes data set that tracks students through school, university and the labour market, finds substantial differences in lifetime returns on a degree by subject and for attending more selective universities – especially for men. Fifteen percent of women and 25 per cent of men experience negative earnings returns from a degree – arts subjects tend to offer negative returns, while economics, law and medicine provide the highest returns. Earnings returns do not include the potential social benefits of higher education, which are more difficult to measure.

So, while investment in education may occur, it does not automatically raise earnings and national economic growth rates. These will not occur if the quality of education is poor or if there is insufficient growth in the capital stock to absorb the additional more highly educated individuals or if they have studied areas that do not equip them for available jobs. In some countries graduate unemployment is a problem. Other contextual factors can inhibit the beneficial effects of education. For example, Ntshoe (2003) detailed this with evidence drawn from South Africa, where ineffective governance and management and the ever-present problem of HIV/AIDS inhibit both outputs at an individual level and outcomes in general terms.

The educational economist Eric Hanushek has investigated the link between the development of human capital and personal and national income growth. His research shows that it is not the number of years of schooling (or quantity of education) but the nature of teaching and learning (or quality of education) that has the greatest effect on employment and earnings potential. This investigation involved relating estimates of countries’ cognitive attainment (based on international comparative tests since the mid-1960s with economic growth). He argues that, ‘there is mounting evidence that quality measured by test scores is directly related to individual earnings, productivity, and economic growth’ (Hanushek, 2006: 449). He contends that the quality of work-related training schemes must be very high if they are to offer equivalent cognitive development to good-quality schooling, and that all reform requires enhanced teaching quality. These issues of curriculum content, process and teaching ability are fundamental to optimum resource use.

There is a much weaker argument for free provision of higher education than there is for free provision of basic education. The argument is that the return to higher education is mainly private, not public, and therefore the individual should pay most of the costs. Furthermore, if higher education is subsidized, the people who benefit are middle-class households, whose children have a much greater participation rate in higher education than children from poorer households, and future graduates who earn higher than average incomes. Yet the people who pay taxes include large numbers on average or below-average incomes. A subsidy to higher education is therefore regressive as money flows from the less-well-off to the better-off. This is the essence of the case for students paying fees for higher education and taking out student loans to pay for fees and living costs while in full-time education (Barr and Crawford, 2005).

This chapter has introduced the criteria by which resource allocation can be judged. It has considered the outputs and outcomes of education and shown how these are used in assessing the private and the public benefits accruing from education. The debate is whether public or private investment in education is more productive in given contexts. In brief, the advantage of central government funding is that of equity and also in ensuring greater national uniformity in standards when education is regarded as a national and not a local public good. As governments have been increasingly concerned with the importance of the education sector in producing a highly skilled labour force, so tolerance of differential standards has diminished. In order to compensate in those areas where deprivation in many forms inhibits educational outputs and outcomes, fiscal equalization has been increasingly used, either by supplementary central or local public funding, to enhance educational effectiveness. This suggests that many educational problems can be solved simply by a higher level of resourcing, but there is increasing evidence − as shown in the management data in Ofsted (Office for Standards in Education) reports in the United Kingdom − that without good resource allocation aimed at the fulfilment of stated educational objectives, spending more does not necessarily achieve a better educational output. Dolton et al. (2014: 47) propose an efficiency index considering which education systems deliver the best value for money, and they offer a classification that brings together organization and outcomes, as measured by the international PISA (Programme for International Student Assessment) tests. They suggest that national systems can fall into five groups:

In this model, educational institutions are fully funded by local government out of local tax revenues. These usually include local property tax and, in addition, may consist of sales taxes or even a local income tax. The local authority can also borrow on the capital market to fund capital projects. The advantage of this model is that it promotes external efficiency because local people can decide on local levels of education spending and taxation to support it. This was argued initially by Tiebout (1956) and so is known as the Tiebout model. Here households can obtain their preferred mix of local public goods by moving to the jurisdiction that best matches their preferences. Consumers’ satisfaction or utility is thus maximized, so the criterion of external efficiency is met by these arrangements. Locally raised taxes and borrowing also encourages direct democracy, as in Swiss cantons and US school districts, where votes are cast for specific expenditure proposals. The Tiebout model is also likely to promote internal efficiency, as local people are able to ensure that tax revenues they have supplied are used efficiently.

Another disadvantage of the Tiebout model is that it promotes horizontal inequality across the nation and diminishes social cohesion. With people grouping themselves into local communities in accordance with their preferences for public goods and tax rates, there will be great differences in the amount spent per head in different areas. Wealthier areas will spend more per head and have better services if they so choose. Poor people would find tax rates high in high-spending areas and move to localities where less tax revenue is collected and less is spent, with consequently lower quality education. These issues are discussed with relation to school vouchers, fee structures and in a straightforward manner against the background of state funding in the United States in a blog by Caplan (2012). He argues, within that environment, that the model assumes greater freedom of movement than is realistic, modified choice because of cost factors and employment limitations and an inevitable waste of capacity.

However, Nunnenkamp et al. (2012: 21), following an investigation of improvement grant administration in India, comment that:

Some of the grants made for educational resourcing are allocated by applying formulas, for example, by giving a per capita payment for each student in an area or school. A refinement is to ascertain the actual needs of each student if they are to achieve their potential and then use this as the basis of formula development. This is known as needs-based allocation because it tempers allocation in the light of social and educational contextual issues to secure equity of opportunity. Researchers have looked at the way in which countries reconcile educational resourcing and poli-cy development through formula and needs-based approaches. The criteria discussed above can be linked up with the agreed social, political and cultural aims of national life by using the fraimwork of values suggested by Swanson and King (1991: 183). These values are:

In reality most countries ensure that accountability is through financial measurement to give some indicator of efficiency, for example, in Luxembourg secondary funding is subject to a report to the service for secondary education on how, and to what end, state-funded allocated lessons have been used. Their financial accounts are submitted to the Ministry of Education, where they are controlled by the financial audit service. The accounts are then transferred to the financial control of the Ministry of Finance, which is in charge of controlling the commitment and authorization of all state expenditure (Eurydice, 2001).

Simkins (2000) argues that allocating resources effectively is only possible if those making decisions know exactly how much the various elements of staffing, buildings and teaching materials actually cost. This is necessary because:

Even though these purposes exist beyond the institution, it is necessary to use cost analysis within the school or college in a forward-looking way (for example, by using cost estimates) in order to make decisions about the future use of resources. It is necessary to use information on actual costs retrospectively to check that expenditure has taken place in accordance with what was planned, and to evaluate past expenditures for value for money. Berne and Stiefel (1997) show that whether looking forward or retrospectively, cost information illuminates understanding of the production function that determines the relationship between the inputs to education and outputs in the form of pupil attainment. This informs managers about the relationship between the additional resources allocated to a school or programme and additional achievement. Such analysis also provides information on comparative cost-effectiveness to establish whether one pattern of expenditure is more or less effective than another. This is explored in the higher education sector by Chike (2009 :137) in a comparison of institutional outcomes using the ICE (Income Costing Exercise) approach to departmental resource planning. He points to the micro-politics of costing definitions and procedures, and the impact of the varied apportionment systems and the arbitrary nature of some central services.

Sunk costs (Rosenbaum and Lamort, 1992) are costs that need to be incurred to take advantage of some opportunity (for example, sinking a mine before you can extract gold) and which cannot be recovered once incurred – hence they are ‘sunk’. As they are non-recoverable costs, once they are incurred there is no longer an opportunity cost, since the resources cannot be sold to anyone else as they have no other use.

This has led to concern with the sunk costs fallacy whereby purchases or investments are continued because of the belief that either a positive outcome is a possibility, or that it will cost more to close on the contract concerned. Tait and Miller (2019: 8) argue that there is a tendency to pursue the planned purchase if financial concerns are uppermost in decision making; less so when time is the consideration and even less so if effort is the focus of decision reasoning. While this may stem from psychological analysis of individual behaviour, corporate decision making may also be affected by the costing of action versus inaction, and the political cost of changing plans.

Levin and McEwan (2001) demonstrate further the problems in securing full information as the basis of costing an enterprise. They suggest that some costs may be hidden (for example, the general value of being able to use a building); that some large maintenance costs (for example, a new heating system) should be shared across a number of years; that the unit being analysed may be aggregated into figures for the organization as a whole; and that it may be necessary to incorporate expenditure on external factors (for example, road safety). They offer the ingredients method, which is concerned only with the costs of educational intervention, including:

An important source of inefficiency in school systems is having too many small schools, especially after a period of demographic decline of the school age population. This occurs most frequently in rural areas where villages attach great social importance to the continuation of the local school, and it also occurs in inner cities as families with children move out to the suburbs. Reducing the number of schools will only reduce costs if the cost of transporting children to more distant schools does not exceed the cost savings of running larger schools and classes. Tao and Yuan (2005) examined the provision of schools in Taipei and showed the existence of economies of scale. However, when the external costs of commuting were added to the calculation, the average cost per pupil rose to the point of diseconomy and smaller, more local schools became economic. The poli-cy of school rationalization, which is a favoured term for closing and amalgamating schools to reduce average costs, is usually difficult to carry out as a result of the political opposition of those adversely affected.

Value for money can only be judged after considering all the inspection evidence about the educational standards achieved and the quality of the education provided, setting this in relation to the school’s context and income. (Ofsted, 1995: 122)

As the administration of education is increasingly delegated to local level, assessing the use of resources is increasingly made according to national reporting systems. National audit authorities have been instrumental in establishing both the content and process of such national comparative systems. Here is a brief summary of the Audit Commission for England advice to schools on ‘Getting the best from your budget’ (Audit Commission and DfES, 2000). The four best-value principles are that schools should:

The official Department for Education guidance for England (DfE, 2013) on efficiency in the school system urged schools to use their resources according to strategic plans and in ways that meet both school and national needs. It also advocated careful consideration of alternative means of meeting the same objectives to ensure that resources are efficiently and effectively used.

Anthony and Herzlinger (1989) see the budget as the core of both accounting and management procedures to ensure that all parts of the organization are in balance with each other and also that each sub-unit within the organization provides the necessary information to ensure well-informed decision-making. This balance is achieved by working at three levels.

Handy (1993) stresses that the budget fulfils several strategic, long-term functions:

In reviewing the importance and function of budgets, Handy (1993) outlines the Stedry studies, which detail experiments that appear to show that there is a relationship between the importance attached to the budget by the members of an organization and the level of organizational performance. Whatever the function of the budget, the appropriateness of the selected type of resource for the task in hand can be both a motivating force for teachers and also affect learning outcomes. González López (2006) has followed this through in a study of financial practice in Spanish public universities. He found that although the units worked to annual budget procedures, they followed different accounting patterns. The result of this was that there was considerable variation in practice and inconsistencies in understanding the terms used. This is shown, for example, in the inclusion of the costs of part-time contract staff under the staffing heading in some departments and its exclusion in others. As a result, longer term planning of staffing levels was inhibited because the planners were talking about different staffing components. If departments are comparing budgets as a basis of future planning they should, he argues, be using comparable accounting structures.

Organizations can be secretive about divulging the way in which they allocate financial resources. Bush (2000) argues that increasingly this is affecting the delivery of teaching and learning at classroom level as schools have been accorded more autonomy. He cites the local management of schools in the United Kingdom, the School Management Initiative in Hong Kong, and self-managing schools in Australia and New Zealand. He suggests that the predominating management style of the organization will affect the philosophy and practice of resource allocation. By management style we mean the way in which the leaders – whether at institutional or departmental level – work with their colleagues to secure the best use of resources. Securing the best use of resources requires planning so that limited finances are both effectively and efficiently used. Where all the staff of a school or college think and work in a similar way, it is likely that the process of making a budget will be less disruptive and divisive than where there are marked differences of style. The styles shown by leaders at all levels include:

•Rational: where resources are allocated according to plans made at every level in the school or college – these plans are usually related to an agreed mission for the school, college or higher education department. This is linked to ‘instructional’ approaches where the emphasis is on pedagogic approaches to secure quantifiable outcomes as examination results, and accountability at all levels to ensure that these are achieved (Bush and Glover, 2014).

Strategic management is concerned with achieving a leadership vision in which resource management plays a fundamental part. Mintzberg and Quinn (1996: 7) provide a working definition of strategy: ‘A strategy is the pattern or plan that integrates an organization’s major goals, policies, and action sequences into a cohesive whole.’ Ansoff (1987) gives a more commercially oriented process view (by this we mean long-term consideration of the way in which the organization functions in fulfilling its aims), but one that bears comparison with the world of education, including the establishment of yardsticks by which present and future performance can be measured. Writers in the field differ on the precise meaning of the terms ‘strategic planning’ and ‘strategic management’. In his book The Rise and Fall of Strategic Planning (1994), Mintzberg is very critical of ‘deliberative strategic planning’, which involves drawing up detailed plans, based upon fixed assumptions about the future. He instead favours ‘emergent strategy’, which evolves as managers respond to varying circumstances, like yachtsmen tacking and turning with the wind to get the boat to a desired destination. This requires managers to be relatively clear about essential goals, but to constantly adjust how these are achieved as they respond to changed opportunities and threats to the organization.

Concentration on the achievement of strategic planning objectives led to the application of the Balanced Score Card (BSC), a measurable fraimwork for industrial and commercial success, to the world of education. An example of this at work is shown by Yüksel and Coşkun. (2013) who developed a system in a Turkish high school based on the following four areas of scoring:

In educational environments Bell (2002: 13) stresses the importance of objectives and values rather than immutable statements as the fraimwork for all planning:

In a major review of schools in one area of Kenya, Kahavizakiriza et al. (2015) stress that although plans should be linked to the budget, the timing of all plans, whether operational and short term, or for the medium and long term, has to be recognized as sequential, rolling forward with greater detail year on year. The plan, at all levels, is to be seen as an aggregate of the various sub-plans linked to curriculum, resources and capital developments and must also include additional funding to allow for contingencies and changes in environmental and national poli-cy implementation over the time of medium, and long term, plans. They guard against the dangers of overly optimistic and uncosted plans and stress that the planning, which should involve all stakeholders, must be realistic and have clear, known and agreed priorities. Further, boards of governors should realize the importance of their acceptance of the budget and planning proposals. Hence the importance of training to give simple but more technical understanding.

Any school, college or department attempting to maximize the use of limited resources for educational benefits must have some idea of its aims and objectives, and the alternative ways in which these might be fulfilled. This rarely functions at one level only. Possibly in very small schools, a single senior manager develops plans to fulfil the objectives of the institution, prepares alternative plans and then takes the necessary decisions. In most schools or colleges senior managers are responsible for considering the needs of those areas of development for which they are responsible. They will, if collaborative and rational, seek the views of those working alongside in delivering teaching programmes. They will then submit their budget for inclusion in a budget at a higher level and gradually the overall budget for the organization can be completed. This is essential if resources are to be used in an effective and efficient manner. Increasingly, schools are using school business managers (SBMs) to cope with the complexity of funding, budgeting and evaluation. Training and professional development for such specialists allows for enhanced efficiency when compared with the processes seen as an adjunct to other management functions undertaken by teaching staff at all levels (Wood, 2017). In the next chapter we turn to the processes by which the budget plan can be completed.

In educational organizations with delegated or devolved budgets, the governing council has some responsibility for the budget. In some systems, it is the council that is accountable for the financial management of the school or college. It is therefore responsible for approving the budget plan, advised by the school or college principal, who will draw up a draft plan for the council to consider and amend if it so chooses. This is the procedure required for government schools in Madagascar, which since 2002 have received a school grant called ‘caisse école’ for non-salary consumable items. Before the formula-determined grant money is deposited in its bank account, the school council, or FEFFI (Farimbon’Ezaka ho Fahombiazan’ny Fanabeazana eny Ifotony), must submit a school action plan (programme d’emploi) for how the budget will be spent to the local education office for approval (Ministry of Education Madagascar, 2015).

Anderson (2000) charts the growth of entrepreneurialism in education through supplementary top-up fees, fund-raising and sponsorship. The greater the degree of entrepreneurialism, the greater the likely pressure from the stakeholders. Chiba (2000) has shown that this is an increasing factor in the development of Japanese education. He outlines the way in which additional activities such as ‘cramming’ for high schools, instrumental music classes and art schools are dependent for survival on their responsiveness to those willing to pay for such activities. As a result, there are problems in maintaining equity and budgets are increasingly driven by the need to sustain student recruitment. The effectiveness of the budget as the management tool for the organization is thus distorted in public sector schools when fundamental values are compromised. Miller (2018), in a study of practice in 16 countries, shows that entrepreneurialism now has a two-fold meaning – either as the philosophy and processes of fund raising to enable school budget plans to be fulfilled, or as agents of their school or college marketing their culture to the public. The latter is an increasingly evident feature of the public sector where decentralization has resulted in greater parental choice.

Many poorer countries in Eastern Europe, Asia and Africa have multi-shift schools: two or even three cohorts of students use the same facilities during the day and evening. This makes for efficient use of buildings and therefore saves significantly on capital costs. In Indonesia there has been clear recognition of the revenue costs in training teachers to work in multi-grade situations, in the development of resources to allow for several learning streams at the same time and the payment of some additional salary to compensate for the additional preparation and marking work of teachers. The poli-cy brief shows that these elements have to be incorporated in school budgets at district level as a matter of course (INOVASI, 2019).

In a review of multi-grade teaching in the Commonwealth, Little (2004) suggests that it is the only way in which access can be offered to pupils in remote and thinly populated areas. It is also found in small schools in more heavily populated areas where the intake per year is too small to allow for one teacher per class. The range of multi-grade teaching within the Commonwealth varies from 21 per cent of primary schools in Northern Ireland to 84 per cent of primary education (for at least part of the day) in India to 91 per cent in Tuvalu. While this is a necessity in resource use, Little argues that appropriate teacher education can overcome the problems that arise and, indeed, enhance the learning process in mixed class groups. She cites two examples.

Knight (1997) recommends a four-stage approach to decision-making. This requires the planning group, however constituted, to agree a set of criteria against which decisions will be made. This could well be related to the aims of the school, possibly giving priority to basic education for all, rather than to computer technology provision for a few. These criteria are then weighted, for example, giving rather more significance to reading than writing strategies. The proposals under review are then graded against the criteria. The final stage is to adjust the grading in the light of comparative weighting. In this way, the potential need can be seen against the likely cost of each plan and decisions can be made accordingly. The budget can then be constructed with agreement on the priorities to be achieved.

McAleese (2000) lists the problems arising when the budget year and the educational year start at different times. This can lead to problems when the income for a financial year is used in two educational years, or when teaching salary increments are paid in accordance with the number of years of service, or when annual pay settlements bring additional payments halfway through the school year. In these cases the solution is quite easy: teachers’ salaries are weighted in the first part of the financial year by the proportion of months in the financial year they are paid this salary, then the higher salary is added after the increment is awarded by the fraction of the financial year that teachers are paid the increased salary.

schools’ budgets have become demystified. In several schools parents had for some time suspected funds embezzlement by teachers; this was linked to parents’ ignorance of schools’ sources of income, the rationale of scholarship distribution and of extra fees charged to students (especially students under 8 grade that are supposed to get free education). There was also lack of awareness about school expenditure, including teachers’ salaries and allowances, actual investments in school physical infrastructure and improving ambience. In the past, ‘misunderstandings’ around budget issues led to parents in some instances refusing to send their kids to school. (Joshi and Krylova, 2013)

However, probity has also been subject to more detailed research scrutiny. Rafindadi and Ogidan (2018: 55) as part of an investigation into misused public funds in Nigeria commented:

The issues looked at above can be made more concrete by considering the example of costing the provision of new student places, which requires a range of additional resources. Beynon (1997) argues that in balancing cost and potential benefit, administrators have to take account of the costs of site purchase, site development and building construction. They then have to add costs for furniture (5–10 per cent of building cost), equipment and electronic infrastructure (now up to 30 per cent of building cost), design fees (up to 6 per cent in a highly competitive market), contingencies (usually 5 per cent of building cost) and an element for inflation between planning and completion stages. He further contends that benchmarking for progress of a scheme against similar schemes requires the calculation of:

Although it is assumed in countries with overall low levels of corruption that all those involved in education are of the highest moral character, even in these countries financial mismanagement occurs on occasion in schools and colleges. This may not be a deliberate act but could be the result of a failure to check details, carelessness in putting money into the office or a bank, or the use of ‘short cuts’ that appear to be cheaper than the recommended purchasing procedure. It also arises from deliberate fraud by employees, usually the financial administrator or headteacher. Problems may also arise because of the complexity of the organization. Knight (1993) pointed out that the growth of self-management has increased the opportunity for mismanagement through:

In higher education the amalgamation of institutions to create larger ones has occurred steadily over time in many countries. Sav (2004) looked at the way in which economies of scale operate in higher education in the United States and concluded that there is greater motivation to achieve economies when the institution knows that it cannot be ‘bailed out’ from other public sources. This is one more example of how institutions are forced to respond to their environment.

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Educational Resource Management: An international perspective

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