Training Workshop on Education Policy Formulation & Monitoring UNESCO Bangkok May 27 th -31 st , 2013 Bangkok Office Asia and Pacific Regional Bureau for Education United Nations Educational, Scientific and Cultural Organization
Jan 13, 2016
Training Workshop on Education Policy Formulation &
MonitoringUNESCO Bangkok
May 27th-31st, 2013
Bangkok OfficeAsia and Pacific RegionalBureau for Education
United NationsEducational, Scientific and
Cultural Organization
The Linkages Between Policy, Planning and
BudgetingLe Thu Huong
Programme SpecialistEducation Policy and Reform Unit
Bangkok OfficeAsia and Pacific RegionalBureau for Education
United NationsEducational, Scientific and
Cultural Organization
1.Budgets and Budgeting: Some Concepts
2. Linking Policy, Planning and Budgeting
3. Experience and Lessons from Nine Countries in Asia
Outline
Budgets and Budgeting: Some Concepts
General terms: A statement of the estimated income and expenditure of a
country, an organization, or an individual over a given future period
National budget:“Act according to which the annual income and
expenditure of the State are estimated and authorized”
Legal dimension (Legal regulations, legally-binding) Economic dimension (Instrument for macro-economic
policy) Functional dimension (Contribution to achieving
objectives, collective utility, optimization of the utility under constraints)
.
Budgets: A definition
Roles of the budget
Planning instrument Real short-term programming
Policy instrument Translation of policy choices
Management tool Distribution of resources
A budget is a law Imposing legislative framework
The budget as a policy instrument - How?
budget is the means by which the government
A budget is the means by which the government exercises the policy goals through: ‘Fiscal discipline’, i.e. controlling overall government spending
so it does not go beyond what money has been raised
Allocation of resources in line with the government’s policy goals, i.e. good budgets should start with an assessment of what needs have to be met, followed by plans of how to meet those needs, followed by a budget.
The efficient and effective use of resources in achieving policy goals
A budget guides policy implementation through informing public institutions how much may be spent for what purpose
What information can be obtained from a budget?
Adequacy – how much is budgeted? Is it enough to cover the cost of carrying out the policy?
Priority – how does the budget for education compare to resources spent in other sectors/areas?
Progress – is the government’s response to meeting education needs improving?.
Equity – are resources being allocated fairly? Is funding being used to even up the differences in education provision, or is it being allocated in a way which maintains these differences or even makes them worse?
Efficiency – is the money being spent efficiently? Is there a big difference between allocation and actual expenditure?
Effectiveness – is the money being spent on the right things? E.g. if the objective is improved levels of education achievement, where should spending be allocated to have the biggest impact on learning achievements? Classrooms, teachers, teacher training…?
Development vs. Regular budget
Development / Investment budget often linked to external funding (in aid dependent
countries) often based on list of projects implementation can be outside the budget often involves longer spending time low implementation rate
Regular / Recurrent budget domestic funding subject to national budget rules for implementation
Budget systems
Budget System Budget PolicyBudget
Outcomes
The system bywhich resources are collected, allocated, recorded, monitoredand accounted for.
Policy to ensure that totalspending is affordable, thatresources are spent on priorities and are spent well, not wasted oninefficiency and corruption
Can be assessed based on the information on:• How much money is spent?• On what is it spent?• How well is it spent?
Transparency and accountability
Characteristics of a good budget system
Transparency
Accountability
Comprehensive
Predictability
Flexibility Contestability
Budgeting
Process of expressing quantified resource requirements
amount of capital amount of material number of people
into time phased goals and milestones
IncomeExpenditure
Some approaches in budgeting in education
Traditional method- Structure based on spending units and nature of expenditure- Incremental method for budgeting- More concern with control and accounting Programme budgeting- Structure by programmes and activities- Costing based on resources required for an activity- Budget decisions based on utility- More concern with policy choicesResults- based budgeting- Linking allocations with outputs- Structure can be by programmes and activities- Clearly defined indicators for expected results- Reporting on the results of spending using performance indicators- More concern with performance and effectiveness of public spending- Can involve a contract between government and an implementing agency
Linking Policy, Planning and Budgeting
Policy, plan and budget
Policy
Guiding principles Policy making Abstract Legally or not
legally binding
Plan
Guiding document
Planning Concrete Not legally
binding
Policies are concretized through planning, reflected in plan document and implemented through the budget approved for plan implementation
Budget
Guiding policy implementation
Budgeting Concrete Legally
binding
Three different concepts but closely linked
ü Medium or long term plan10 years, 5 years, rolling,…
ü Guidelines, policy documents
ü Targets desirable situations, what would be good
Low legal value,not compulsory
Planning Budgeting
ü Short term, annual
High legal value, budget is
a law
ü Takes into account financial constraint, what is affordable
ü National budget, sector budget
Planning and budgeting
The policy, planning and budgeting link in education
--> Poor budget outcomes often result from failure to link policy, planning and budgeting
From policy to plan…
Possible reasons for missing link: Inadequate target setting (unfeasible plan
targets) Vague implementation strategy (unclear actions) Lack of a financing framework (plan is not costed) Inconsistent policies and plans in scope and time Failure to reach a consensus among stakeholders Misalignment of different policies and initiatives
within a wider development framework Lack of coordination among different concerned
departments / agencies
From plan to budget…
Possible reasons for missing link: Inconsistent plan and budget in scope and time Overly ambitious actions while financial capacity
is limited Divergence of priorities among involved parties Technical capacity in budgeting and financial
management of education ministry
From policy to impact: The problem with budget
Policy
Budget
Institutions and
structures for
implementing the policy
Service delivery
Impact of policy
Why budget problem?
Mismatch between what is promised in policies and what is affordable Lack of good information and accurate diagnosis of the
problems Variation of priorities (budget preparation is often separated
from planning with different priorities) Failure to direct government expenditure towards the priorities Lack of good feedback mechanisms Lack of accountability Difficulties in building the budget from the bottom up and to
ensure that grassroots priorities and resources are taken into account
Medium term approach as a solution…
22
Need for a budgeting tool To reconcile planning and budgeting To meet the requirements for a good budget system
Then a medium-term approach provides linkages between policy, planning and budgeting through expenditure programmes driven by policy priorities and disciplined by budget realities
In addition, if policy and budget are put in a medium term framework, it is likely that the mismatch (missing link) problem can be solved with the following advantages:
- Predictability - Result orientation (performance based)- Continuity - Efficiency- Transparency
Sector level medium-term framework
Developing this kind of framework requires: Agreement on sector objectives and policies A combined bottom-up/top-down process to develop a
clear vision for the sector Sector priorities and objectives identified and/or revised An effective cost projection tool, e.g. education
simulation and projection model Definition of sector resource envelope Assessment of expenditure implications of policies Coverage of all sector activities and organisations and
focus on whole of sector expenditures
Sector level medium-term framework (cont’d…)
In aid-dependent countries there is often separation between foreign aid and domestic policy, and management and budgeting.
A sector medium-term framework seeks to remove the separation by emphasizing all activities and overall expenditures
Medium-term Expenditure Framework (MTEF)
25
What is MTEF? A whole-of-government strategic policy and expenditure framework,
including a rolling plan of budgets, constructed for each year of a future time frame, usually between three and five years
How does it work ? MTEF consists of: A top-down resource envelope A bottom-up estimation of the current and medium-term costs of
existing policy, The matching of these costs with available resources. The matching of
costs should normally occur in the context of the annual budget process
Experience and Lessons from Nine Countries in Asia
Issues common to MTEF implementation in the education
sector
Capacity limitations and the implications for change management
The span of MoE control and MoE sector leadership
The relationship between the MoE and the MoF Integration of MTEF with the annual budget – Lack
of a hard budget constraint and unrealistic bottom up budget
Inadequate data for budgetary analysis and poor financial information flows
Lack of solid political commitment
Lessons
28
Successful implementation of MTEF requires: Engagement and commitment by MOE politically with
the process, i.e. identifying real, quick-win benefits and downplaying unrealistic legal and/or political commitments
Need for MOE to actively engage and partner with ministries of finance and other central planning agencies to make MTEF work, avoid meaningless game playing and work to align fiscal transfer and information flows to the needs of sector development.
Good management of donors Strengthened technical capacity in order in terms of
staff and information in order to engage in and internalize the process.
Better prioritisation helps win bigger budgets
Slide 29
In Vietnam, the savings from the reduced salary budget resulted from the increase made in the PTR at primary and secondary education levels (2006-2008) were used to fund other quality improvement activities
Thank you
In practice…..
Policy Plan Result
Gap