How can we best use public funding
for schools improve the educational
outcomes of socially disadvantaged
Presentation for International Conference
on The Right to Education for Every Child
Belgrade June 2-3 2009
Rosalind Levačić, Institute of Education,
University of London
Interlinked issues in using public finance
to combat educational disadvantage
funding per
How it is
How it is
Examples of additional funding to
compensate for social disadvantage
Netherlands (from 2007) abandoned use of immigrant
status and fund only in relation to parents’ education.
Additional 30% for pupils whose parents’ highest level
is junior secondary and 120% more for parents whose
highest level is primary or less.
England: central government funds local authorities
about 70% more per pupil for those with additional
educational needs (about 19% with AEN) 12% of total
funding is for AEN + deprivation.
AEN based mainly on social welfare payments data.
How has additional funding to combat
educational disadvantage been used?
Policies in advanced economies date from 1960s.
USA: Title 1 for schools- small additional funding and not well used
(e.g. withdrawal of pupils from class)
Head Start and Follow Through for early years
U.K. A range of different programmes for schools. Since late 1990s
stronger focus on early years and integrating education, health and
social work services.
Broad conclusions:
additionally funded school based programmes have had at best small
positive effects.
most effective are good quality early years programmes which also
involve families;
decentralization: greater focus on responsibility for delivery of results
at the school level
Stylisation of rates of return to investment in
education at different stages of the life cycle
Carneiro and Heckman (2003)
Rate of
return to
and training
Opportunity cost of funds
Cost %
Post school
Age of individual
Main methods of funding from central
government to local level
Sustained public funding rather than one-off short term
1. Categorical (ear-marked) grants for specific
programmes to raise attainment of socially
disadvantaged children:
can be combined with local matched funding
2. Priority areas/schools: extra funding to pay teachers
more or provide more teachers per 100 pupils
3. Per pupil funding: additional funding for socially
disadvantaged pupils
Per pupil funding for social disadvantage
• First best: as part of system-wide funding of preschool and basic education using a formula in
which the main element is per pupil funding.
Budgets allocated to schools and managed by
• Second best (if school financial decentralisation is
not introduced):
additional funding per socially disadvantaged
pupil in relation to numbers of such pupils
enrolled at the school
Why per pupil funding and school based
financial management could improve education
for the socially disadvantaged
Per pupil funding: horizontally equitable - stops any underfunding of pupils of low socio-economic status (SES)
Funding formula can include additions for educationally
disadvantaged pupils – makes them more attractive to
enrol and retain.
Schools have more flexibility in how to use resources to
combat educational disadvantage- provided teachers
value this, have knowledge of how best to use resources,
and are provided with information on their pupils’
progress in relation to SES and prior attainment
compared with other schools.
Four Components of a Per Capita School
Funding Formula
1. Basic per pupil allocation
2. Pupils’ additional
3. Special
educational needs
4. Schools’ additional site costs
Indicators for funding pupils’ additional
educational needs
Dimensions of social
Low educational
Learning difficulties
Low socio-economic
Test results at end of
previous education phase
assessment of the child
Income of family or area
Occupation or education
of parents
Self-identification: census
data from school or
national survey
Characteristics of a good indicator of
additional educational need
The indicator (or indicators) should:
• be a good predictor of low educational
• not be manipulatable by local governments or
• not give schools wrong incentives (e.g. use of test
results of the school receiving the funding)
• use data that are easy to collect e.g. are already
collected for other purposes
What has to be overcome in combating
educational disadvantage in central and
eastern Europe: attitudes
• Lack of awareness of and concern about the
relationship between socio-economic status
and educational outcomes
• Schools judged by outcomes of the most able
pupils and not by value added i.e. how well
the school educates pupils of all social groupse.g. focus on olympiads- with extra funding
What has to be overcome in combating
educational disadvantage in central and
eastern Europe: provision
• Low funding per pupil and consequently low
teacher salaries
• Decline since communist period of pre-school
education and in particular of free provision
and in rural areas
• Lack of good quality early years education, in
particular for socially disadvantaged groups
What has to be overcome in combating
educational disadvantage in central and
eastern Europe: funding methods
• Centralised and inefficient use of finance and resources
• Traditional systems of school funding still remain in a
number of countries- based on historic expenditure
and actual numbers of staff in post
• Absence of compensatory funding for social
disadvantage- only for special education to which
children from poor backgrounds tend to be assigned in
order to remove them from mainstream schools
• Lack of accountability for how human and financial
resources used in achieving educational outcomes
Barriers to school funding reforms
• Impossible to introduce system-wide school
based financial management reforms without
strong political will from central government
• Lack of interest in using indicators of social
disadvantage in funding formulae
• Lack of data to identify children from socially
disadvantaged backgrounds (Open Society Institute
(2006) Monitoring Education for Roma.)
What can be done?
• High quality early years provision integrated with health
and social services and targeted at socially deprived areas to
develop children’s social and cognitive skills in order to make
them better prepared for school.
• Considerably higher per pupil funding for low SES children
at school (at least twice as much) but should be used to
provide good quality teaching over a longer sustained period
(instruction hours, attendance and retention) rather than
lower class size.
• More control at school level of use of finance and resources
to improve the attainment of socially disadvantaged pupils.
• Much better data: transparent and reliable information on
how pupils of different social backgrounds progress through
the education system - used for evaluation, monitoring and
• Hearts and minds: teachers who value each child equally.
Additional funding for education of
socially disadvantaged: allocation
• Major funding source must be central
government since incidence of social
disadvantage is uneven.
How has additional funding to combat
educational disadvantage been used?
Policies in advanced economies date from
Netherlands Funding for schools with high
proportions of socially disadvantaged pupils
for additional teachers as part of formula
France (Priority Education Zones) Additional
pay for teachers and additional staff
Use of additional funding to combat
educational disadvantage: USA
Title 1 (since 1965) Reconfirmed in 2002 No Child
Left Behind Act.
Federal funding to states then allocated to schools.
But relatively small amount per pupil.
Not well used (e.g. withdrawal of pupils from class)
Pre-school programme: Head Start (also from 1960s)
Evaluations: positive effects into adult hood of high
quality programmes on attainment, income and
reduced criminality.
Use of additional funding to combat
educational disadvantage: England
• Central government funded programmes e.g.
Excellence in Cities learning mentors; learning units
within school for disruptive pupils; gifted and talented
programmes. Modest positive effects.
• Sure Start: Neighbourhood Nurseries and Children’s
Centres (0-5 years):
home-visits, support for parents, play and
learning activities; health care, special needs
Sure Start Evaluation (2008) Improved social development
of 3 year olds
Why improve the educational attainment of
children from socially disadvantaged groups?
• Equity: a child’s educational opportunities should
not depend on gender, ethnic group or socioeconomic-status
• Efficiency (Carneiro & Heckman, 2003; Heckman and
Masterov, 2007 )
Public investment in the education of children
from socially disadvantaged backgrounds
creates much higher benefits over the lifetime
of the child than the additional costs – but
the right types of investment needed.
Social disadvantage and educational
attainment: importance of family influence
A complex of factors reflected by indicators of:
Low household income
Parental occupation- unskilled or unemployed
Parental education: low qualifications
Family structure – single parents
Home language different from national language and
language of instruction
• Ethnic groups which have some of the above characteristics
and are in addition discriminated against
• Living in an area of social deprivation
Indicators of social disadvantage used in
the allocation of additional funding to
local authorities in England
Children in households
receiving state benefits
Low birth weight babies
Deprivation indicator of
area based on income,
employment and
qualifications of adults
English as additional
Ethnic groups with low
educational attainment
Pupils entitled to free
school meals
Indicators of social disadvantage used in
the school funding formulae in the
• Parents’ highest education: junior secondary
and for higher per pupil allocation
• Parents’ highest education: primary
Replaced indicator of child or parent born abroadi.e. emphasis more recently is on social
disadvantage not ethnicity
Central or local discretion in use of funding?
Central: for
Local: for
• Ensures funding spent on
socially disadvantaged
• Best practice knowledge can
be applied
Effect ways of using additional
resources depend on local
contexts and cannot be
determined centrally
Local professionals need to be
motivated and empowered
Central control can be
exercised through holding
local managers to account
for performance- requires
appropriate data
Studies on use of additional resources to combat
educational disadvantage
Carneiro, P. and Heckman, J. J. (2003), 'Human Capital Policy. Inequality in America: What Role for
Human Capital Policy?'. IZA Discussion paper 821.
Heckman, J. J. and Masterov, D. V. (2007), 'The productivity argument for investing in young
children'. NBER Working Paper No. 13016.
Karsten, S. (2006), 'Policies of disadvantaged children under scrutiny: the Dutch policy compared
with policies in France, England, Flanders and the USA'. Comparative Education, 42 (2), 261-282.
Leuven. L. and Oosterbeek, H. (2007), 'The effectiveness of human capital policies for
disadvantaged groups in the Netherlands'. In L. Woessmann and P. Peterson (eds), Schools and the
equal opportunity problem (pp. 327): MIT Press.
Machin, S., McNally, S. and Meghir, S. (2004), 'Improving pupil performance in English secondary
schools: Excellence in Cities'. Journal of the European Economics Association, 2 (2-3), 396-405.
Nores. M., Belfield, C. R., Barnett, S. and Schweinhart, L. (2005), 'Updating the economic impacts of
the High/Scope Perry Pre-School Program'. Educational Evaluation and Policy Analysis, 27 (3), 245262.
Stewart. K. (2009), ''A scar on the soul of Britain': child poverty and disadvantage under New
Labour'. In J. Hills, T. Sefton and S. K. (eds), Towards a More Equal Society? Poverty, inequality and
policy since 1997. Bristol: Polity Press.
Sweinhart, L. J. and Weikart, D. P. (1997), Lasting Differences: The High/Scope Perry pre-school
curriculum through age 23. Ypsilanti, Michigan: High Scope Press.
The National Evaluation of Sure Start (NESS). (2008), The Impact of Sure Start Local Programmes on
Three Year Olds and Their Families: Institute for the Study of Children, Families and Social Issues.
Birkbeck, University of London. HM Stationery Office.
From what angle am I approaching this
• As an education economist: recent
revitalisation the this area of economics due
to (a) realisation of importance of human
capital of all members of society for its
(b) more empirical evidence
• As an international consultant who has
worked on school finance reform attempts in
7 transition countries
Conference proceedings highlight
importance for improving Roma
education of
• Access to good quality early years education
• Inclusion into mainstream schools
Consistent with what has been learnt in west
Europe and North America about best ways to
combat educational disadvantage
Accountability: monitoring and evaluation
Is an essential component of an effective and
efficient decentralised education system.
Transparency in how funds allocated and used.
Monitoring of attainment of children from
socially disadvantaged backgrounds.
Evaluation of education interventions for socially
disadvantaged children to learn which are cost
effective and which not.
Pupil Level Annual Survey in England
a question: “What is the child's ethnic group?”
White: British
White: Irish
Traveller of Irish Heritage
Any other White background
Mixed: White and Black Caribbean
Mixed: White and Black African
Mixed: White and Asian
Any other Mixed background
Asian or Asian British: Indian
Asian or Asian British: Pakistani
Asian or Asian British: Bangladeshi
Any other Asian background
Black or Black British: Caribbean
Black or Black British: African
Any other Black background
Chinese or other ethnic group: Chinese
Any other
Parents supply information when registering child: selfclassification
What can be learnt from experience of
compensatory educational policies?
• The richer economies of Europe and North America
have made limited progress in the last 40 years in
reducing educational inequality.
• Nevertheless the issue is receiving ever greater
political attention because of the increasingly
apparent social costs of educational inequality.
• Eastern and central Europe can learn from this
experience and adopt and adapt what our current
knowledge indicates are better practices

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