Empowering You Through Knowledge 1 THE IMPACT OF INTER-GOVERNMENTAL TRANSFERS ON DISTRICT EDUCATION...

Empowering You Through Knowledgewww.eprc.or.ug

1

THE IMPACT OF INTER-GOVERNMENTAL TRANSFERS ON DISTRICT EDUCATION SPENDING IN UGANDA

BY

CORTI PAUL LAKUMA, ROBERT MARTY AND ANNETTE KUTEESA


2

Main Objective of this Evaluation

Evaluate the impact of fiscal transfers on local education spending

Identify crowding out effects of transfers on budgetary and total education spending

Identify whether funding follows enrolment, and if so, is this policy efficient and equitable?


3

Main Motivation for this Evaluation

Decentralization of education services

o The importance of education as a share of total transfers, 60% of total transfers.

o Increased enrollment in the UPE Program and the Scope for UPE to alleviate poverty ( million children in 2012).

o Legitimacy and importance of LG’s in delivering education services

Inter-jurisdictional spillover/Externalities

o Lack of fiscal capacity (Vertical imbalance).o Disparities in education service provision among recipient governments.


4

Motivation for this Evaluation

FIGURE 1: EVOLUTION OF INTERGOVERNMENTAL TRANSFERS 2012/13, %SOURCE: MOFPED BUDGET DATA, 2012/13

Finance, planning and Internal AuditCommunity Based Services

Natural Resources Statutory Bodies

ProductionRoad Rehabilitation Grant

Rural Water and SanitationLGDP FUND

Support to NAADSAdministration

HealthEducation

0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00


5

DataVariable Description Source

Total education spending

Recurrent + development

Ministry of Finance

Budgetary education spending

Recurrent Ministry of Finance

Total transfers Transfers to all the 16 sectors

Ministry of Finance

Total district revenue

Total transfers + local tax collection

LGFCMinistry of Finance

Total transfers/Total district revenue (%)

Ratio of total transfers to total transfers per district

LGFCMinistry of Finance

Population General, student and teacher

UBOS, EMIS

Local tax collection Local taxes(LST, LHT)

LGFC

Agriculture Value Value of Agriculture pdn.

MODIS, Globcover, UBOS

Pupil Classroom Ratio (PCR)

No. of students per class

EMIS


6

Key Messages from the Baseline OLS Model

Inter-government

al transfer

Positive relationship with district education spending

Large share of fiscal

transfer in district

revenue

Increased education spending

Large share of

fiscal transfer

in district revenue

Transferability/ fungibility of education spending


7

Regression Discontinuity Design

Method

o Inter-governmental transfers follow enrolment, the Pupil Classroom ratio (PCR) of 70 is considered the cut off point.

o Districts with PCR of > 70 are considered distressed and allocated the SFG and more SCG.

o Districts with PCR of <= 70 do not receive the SFG and receive less SCG.o We examine a band along the cut –off point

Intuitive explanation of the method

o The potential districts (units) just above the cut-off point are very similar to the potential district just below the cut-off.

o We compare outcomes for units just above and below the cutoff.


8

Why Fuzzy RD?

Higher enrolment should yield higher district spending

District may manipulate statistics to qualify

Political considerations may also play a role in allocation of funds


9

The Density Distribution of the District PCR

The figure suggest that there is no significant manipulation of the PCR around the cut off point


10

Identification for fuzzy discontinuity

yi = β0 + β1 Di + δ(PCRi) + εi

Di = 1 If district receives transfer

0 If district does not receive transfer

ButTreatment depends on whether PCRi > or< 70

AndEndogenous factors – manipulation of statistic and politics


11

Identification for fuzzy discontinuity

yi = β0 + β1 Di + δ(PCRi) + εi

First stage:

IV estimation

Second stage:

Di = γ0 + γ1 I(PCRi > 70) + ηi Dummy

variable

Continuous function


12

Identification Some Key resultsTotal Education Spending Per Capita

All Years 2002 2005 2006 2010 2011 [60~80] [55~85] [60~80] [55~85] [60~80] [55~85] [60~80] [55~85] [60~80] [55~85] [60~80] [55~85] (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)

Without Controls Enrollment 0.0210 0.00145 -0.0111 0.0574 0.0169 0.00525 -.00243 0.00775 0.00416 -.00483 -0.766 0.0377

(0.0301) (0.0213) (0.0636) (0.566) (0.0161) (0.00849) (0.0108) (0.0224) (0.0110) (0.0223) (35.46) (0.0720)

Observations 302 430 10 21 30 44 27 37 46 58 39 58 With Controls

Enrollment 0.0112 0.00869 -0.0134 0.0345 0.00664* 0.00477 0.00522 -0.0141 0.0132 0.0554 0.0243* 0.0666 (0.00911) (0.0111) (0.0163) (0.0549) (0.00387) (0.0127) (0.0103) (0.133) (0.0257) (0.103) (0.0144) (1.147)

% of Agricultural

Production in Total Economy

-0.338 (2.756)

-1.260 (3.360)

-9.237** (4.486)

13.62 (34.23)

-1.748 (1.151)

-2.546 (4.792)

-1.700 (5.282)

-10.05 (48.20)

-0.884 (0.634)

0.882 (6.939)

-0.257 (1.013)

4.714 (135.7)

Log(Agricultural

Production per capita)

0.0653 (0.459)

0.213 (0.566)

2.115* (1.248)

-3.014 (7.284)

0.307 (0.235)

0.437 (0.941)

0.479 (0.684)

1.636 (7.721)

0.143 (0.188)

-0.205 (1.298)

0.0518 (0.170)

-1.958 (50.33)

Log(Population) -0.814 -0.594 1.851 -3.734 -0.480 -0.485 -0.421 1.417 -0.922 -3.624 -1.272* 2.045

(0.765) (0.993) (2.148) (6.485) (0.307) (1.196) (1.050) (11.42) (1.522) (7.024) (0.772) (74.32)

Observations 302 430 10 21 30 44 27 37 46 58 39 58


13

Key Messages from the fuzzy RD Model

Inter-government

al transfer

Insignificant relationship with district education spending

Inter-government

al transfer

No evidence of crowding out between budgetary and total education spending (improving of teachers welfare would not diminish school development


14

Policy Options

Increase funding to district (say 30% of national revenue)

Consolidation of some of the current grant/increase district discretionary power

Need for further information, analysis, expertise and coordination of MDA’s


15

Key References

Lu, X. (2010). Do Inter-governmental Transfers Enhance Local Education Spending in China? Working paper, Department of Political Science. Yale University.

McMillan, M (2014). Initial Ideas for consolidation of intergovernmental fiscal transfers in Uganda. A Policy Brief to Ministry of Finance, Planning and Economic Development. Department of Economics University of Alberta, Canada

Ministry of Education and Sports (MoES, 2013). Education statistical Abstract


16

Thank You!


17

Q & A ?

Empowering You Through Knowledge 1 THE IMPACT OF INTER-GOVERNMENTAL TRANSFERS ON DISTRICT EDUCATION...

Documents

Transcript of Empowering You Through Knowledge 1 THE IMPACT OF INTER-GOVERNMENTAL TRANSFERS ON DISTRICT EDUCATION...