ECONOMICS IN EDUCATION

Presented by:

Ms. Reve Faith F. Bagas

FINANCING EDUCATION

A. Prioritizing Education

B. Increasing Cost of Education

Financing Education: An Overview

In all countries, a large portion of national resources, both public and private, are devoted to education. The rationale sustaining this fact is compelling. A quality education, beginning with primary education, is fundamental to endow individuals with the capacity to successfully pursue their private goals, while at the same time equipping them with the knowledge and skills, as well as the values and attitudes, necessary to contribute effectively to the economic, social and political development of their societies.

Education not only empowers individuals to live a better life, and one of their own choice, but also makes an enormous contribution to the development of a country by, among several other things, reducing illiteracy, poverty and fertility, while at the same time improving nutrition and health, the productivity of labor and the quality of governance (Saavedra 2002)

Sources of Education Finance

Education funding comes from many different sources. The total level of funding a country dedicates to education is the result of the total level of funding provided by each one of these sources. The main sources of education finance are the following:

• Public finance. They represent, on average, the bulk of national educational expenditure or about 80% or so of the total. Refers to the total of the resources allocated and spent in education by the various levels of governments (central, regional and local) as well as by public educational institutions.

• Private sources of finance. They represent, on average, close to 20% of total national educational finance. In some countries, however, they represent a significant share of resources and even the larger portion of total educational expenditures. Private sources include, in general, mostly households, but also communities, civil society organizations and the private sector. With few exceptions, households pay for the overwhelmingly largest share of total private financing.

• International sources. International sources of finance, including loans, represent, according to data of 1997, about 2% of total educational expenditure by developing countries. In 1997, the sum of all educational resources provided by international, bilateral and multilateral agencies, including loans (which actually account for about close to half of this total), was between 6 and 6.5 billion dollars, while developing countries spent about 290 billion. Countries thus need, generally, to look inwards to search for more abundant sources of funds. There are some exceptions. Small economies and least developed countries may benefit from more significant external sources of finance. Still, with few exceptions, national resources are the key to educational spending.

A. Prioritizing Education

We all know the extent of importance of education to any country, and with no exemption to the Philippines. Reason why K12 was created due to the call for a change in our educational system that justifies the fact that the government is taking it seriously. A very serious matter that needs to be prioritized, in the national budget, in legislation, and even in the promotion of education to be globally competitive, the government is doing its best to ensure that we have the best educational system and putting it as one of the top on the list of their priority.

THE EDUCATION FOR ALL (EFA) 2015 : An initiative of the government

General Introduction

1.Filipinos have deep regard to for education. Education occupies a central place in Philippine political, economic social and cultural life. It has always been strongly viewed as a pillar of national development and a primary avenue for social and economic mobility.

2.A clear evidence of the value placed on education is the proportion of the national government budget going to the sector. The Department of Education (DepEd), the

country’s biggest bureaucracy 1 , is given the highest budget allocation among government agencies each year as required by the 1987 Philippine Constitution.

3.The 1987 Constitution likewise guarantees the right to education of every Filipino. It provided that, “The State shall protect and promote the right of all citizens to quality education at all levels and shall take appropriate steps to make education accessible to all.”

.4.The right of every Filipino to quality basic education is further emphasized in Republic Act

9155 or the Governance of Basic Education Act of 2001. Along with Republic Act 6655 or the Free Secondary Education Act, these laws reaffirm the policy of the State to protect and promote the rights of all Filipinos by providing children free and compulsory education in the elementary and high school level. This pertains to six years of free tuition fees for children aged 6 to 11, and free four years of secondary schooling for those aged 12 to 15.

4.The right of every Filipino to quality basic education is further emphasized in Republic Act 9155 or the Governance of Basic Education Act of 2001. Along with Republic Act 6655 or the Free Secondary Education Act, these laws reaffirm the policy of the State to protect and promote the rights of all Filipinos by providing children free and compulsory education in the elementary and high school level. This pertains to six years of free tuition fees for children aged 6 to 11, and free four years of secondary schooling for those aged 12 to 15.

5.Along with “Education for All”, the Philippines is also committed to pursue eight time- bound and specific targets under the Millennium Declaration which it signed on September 2000. The Declaration, in general, aims to reduce poverty by half in 2015 (22.65 percent proportion of the population below poverty incidence and 12.15 percent below subsistence incidence by 2015). With the adoption of the Declaration, the Philippines likewise affirmed its commitment to the Millennium Development Goals (MDG) geared towards reducing poverty, hunger, diseases, illiteracy, environmental degradation and discrimination against women. These goals have been mainstreamed in the country’s Medium Term Philippine Development Plan (MTPDP) 2004-2010 including policies and plans related to children, access to primary education and gender equality. Specifically, Part IV of the MTPDP focused on “Education and Youth Opportunity.”

Top Benefeciaries of 2015 Budget

The following amounts have been allocated to the following departments:

• Education – P367.1 billion, up 18.6% from 2014• Public Works and Highways – P303.2 billion, up 37.9% from 2014• National Defense – P144.5 billion, up 17.3% from 2014• Interior and Local Government – P141.4 billion, up 3.8% from 2014• Health – P108.2 billion, up 19.2% from 2014• Social Welfare and Development – P103.9 billion, up 24.6% from 2014• Agriculture – P89.1 billion, up 11.4% from 2014• Transportation and Communications – P59.5 billion, up 21.7% from

2014• Environment and Natural Resources – P21.5 billion, down 10% from

2014• Science and Technology – P17.8 billion, up 35.9% from 2014

B. Increasing Cost of Education

• Campuses had to expand to meet the new demand. As a result, tuition increased at a rate somewhat greater than the increase in the overall cost of living.

• That dramatic increase occurred because during this period many countries developed large budget deficits.

• When the public universities increased their tuition, the elite private universities took notice. Anxious to maintain their higher status and simultaneously bring in more revenue, they raised their tuition as well, setting off an escalating spiral. The result is visible today in the eye-popping tuition rates that now confront students at private colleges and universities.

• With the budget cuts temporarily neutralized by tuition increases, college administrators saw the expanding student population (the market for their services) as an opportunity to enlarge the size and standing of their campuses. Universities competed for prominent faculty by offering larger salaries. They expanded and modernized their laboratory space to attract prestigious government grants. New sports facilities were built along with dormitories that advertised comforts unheard of when I was a student. Some schools, to their credit, responded to the growing demand for fairness by offering more scholarships to disadvantaged students. All of these factors played a role in increasing the cost of tuition, but the main reason it went up was that legislative appropriations for higher education went down.

• In addition, it is so sad that nobody has yet figured out a way to run a university using drastically fewer professors without sacrificing some educational quality . While schools have managed to restrain their spending by paying masses of part-time adjunct faculty a pittance, the cost of instruction is still going up.