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Results and Incentives
The supply of public goods and services has to be result-
oriented.
That is, just offer education or health services is not enough.
The government needs to delivery results on education and
helath.
To have results as the main goal of public services supply
we need incentives toward a result-oriented budget cycle.
An example of such incentive is a New Law, signed by the
Governor of the State of Ceará on December 17, 2007, that
regulate the way the State distribute part of its VAT revenue
among its municipalities.
In Ceara, as in the rest of Brazil, we have:
*ICMS is the denomination for the State’s Value Added Tax .
ICMS (VAT)
75% to State
25% to Municipalities
75% → Defined by Federal Law
(Econômic Activity)
25% → Defined by State Law
(Selected Variables)
Results and Incentives
The old law:
The new law
5% → Municipality Population
12,5% → Expenditure on Education
7,5% → Equally distributed
25% → Defined by State Law
(Selected Variables)
18% → Education (performance of
students on standardized exams)
5% → Health (Infant Mortality Rate)
2% → Enviroment (Appropriate
Waste Disposal System)
25% → Defined by State Law
(Selected Variables)
Old Law x New Law
Education:
Indicators considered in the coeficient:
Student approval rate in first five grades of elementary school
Average grades of Second Year Students in reading exams
Average grades of Fifth Year Students in math and portuguese
Formula:
* Score is adjusted for Standard Deviation and the proportion of
students that were tested
i
i
i
i
i
i
i
i
ii
Score
Score,
Score
Score,,
Approv
Approv,Coeficient 60408020
Level Advance
Components of the coeficients
Health:
Indicator considered in the coeficient: Infant Mortality Rate (IMR)
Formula:
DM
DM,
DM
DM,Coeficient
i
i
i
i
i
ii
5050 ii IMRDM 100
Level Advance
Two controls for potencial “gaming”
behavior
Groups of students
Municipality
A
Results
Only some groups receive
higher attention, which
can raise the average of
the municipalities in
detriment of the majority
of students.
Average Grade = 200
Standard Deviation = 50
8SD0,5
AG
Municipality
B
All groups receive
attention, reducing the
dispersion between the
results of students.
Average Grade = 150
Standard Deviation = 30
10SD0,5
AG
Two controls for potencial “gaming”
behavior
Students enrolled
(NE)
Students Assessed
(NA)Results
Average Grade = 200
NA/NE = 0 ,50
100N
NAG
E
A
Municipality
A
Average Grade = 150
NA/NE = 1Municipality
B150
NN
AGE
A
Initial Results
Winers and Loosers
The winers income come from... Taking only the poorest 60’s
Economic
24%
Social
Results
76%
Winers
65%
Loosers
35%
Winers
62%
Loosers
38%
Initial Results
0
0,05
0,1
0,15
0,2
0,25
0,3
0,35
0,4
1 7
13
19
25
31
37
43
49
55
61
67
73
79
85
91
97
103
109
115
121
127
133
139
145
151
157
163
169
175
181
COEF. 2008
COEF. 2009
Coefficients of distribution by Municipality (∑ Coef. = 1)
Initial Results
0
0,05
0,1
0,15
0,2
0,25
0,3
0,35
0,4
1 7
13
19
25
31
37
43
49
55
61
67
73
79
85
91
97
103
109
115
121
127
133
139
145
151
157
163
169
175
181
COEF. 2008
COEF. 2009
Dispersion of Coefficients of distribution
Initial Results
-80,00%
-60,00%
-40,00%
-20,00%
0,00%
20,00%
40,00%
60,00%
80,00%
100,00%
1 713
19
25
31
37
43
49
55
61
67
73
79
85
91
97
103
109
115
121
127
133
139
145
151
157
163
169
175
181
G-L
G-L
Distribution of the Gains and Losses by Municipality
Initial Results
0
0,002
0,004
0,006
0,008
0,01
0,012
0,014
0,016
0,018
0,02
1 8
15
22
29
36
43
50
57
64
71
78
85
92
99
106
113
120
127
134
141
148
155
162
169
176
183
IQE2008
IQE2009
Municipalities Education Coefficients
Initial Results
0
0,002
0,004
0,006
0,008
0,01
0,012
0,014
0,016
0,018
0,02
1 8
15
22
29
36
43
50
57
64
71
78
85
92
99
106
113
120
127
134
141
148
155
162
169
176
183
IQE2008
IQE2009
Dispersion of Municipalities Education Coefficients
Initial Results
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
"1/5" "2/5-4/5" "5/5"
2008
2009
Sums of IQE’s ( Municipalities Education Coeficients)
“1/5” Richest quintile
“5/5” Poorest Quintile
Initial Results
-40
-30
-20
-10
0
10
20
30
40
1 7
13
19
25
31
37
43
49
55
61
67
73
79
85
91
97
103
109
115
121
127
133
139
145
151
157
163
169
175
181
DIF-DIF PORT
DIF-DIF PORT
The difference of the differences of Portuguese grades: 2005-2006 / 2007-2008.
Initial Results
-50
-40
-30
-20
-10
0
10
20
30
1 6
11
16
21
26
31
36
41
46
51
56
61
66
71
76
81
86
91
96
101
106
111
116
121
126
131
136
141
146
151
156
161
166
171
176
181
DIF-DIF MAT
DIF-DIF MAT
The difference of the differences of Math grades : 2005-2006 / 2007-2008.
Initial Results
Portuguese performance x GDP
0
5000
10000
15000
20000
25000
-20 -10 0 10 20 30
GDP2007
Initial Results
0
500
1000
1500
2000
2500
3000
-20 -10 0 10 20 30
R$ EDUC
Portuguese performance X Education expenditure
A Result Oriented Policy Must Have:
L eadership
I nformation
F ocus
E xecution
A Final Message
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