New Financing Model was Introduced at Public Schools

Nino Barabadze

On January 20 learning process will be continued at all public and private schools. There are quite a few new developments for the schoolchildren, teachers and principals.  The new model of school financing is one of the main novelties. This new formula provides equal opportunities to schoolchildren of mountainous regions and cities.  None of the schools will have budget deficit: - all schools will have enough financial means to become independent. In the long run this approach will lead to the decentralization of the schools.

What does the new system envisage? What are the novelties that will be introduced from 2011 academic year? Minister of Education and Science of Georgia Dimitri Shashkini answers these questions.

Dimitri Shashkini:  Voucher financing system of the school has no alternative, though formula plays a major role here.  Back in 2005 when this formula was worked out the education system faced different challenges. There were many positive developments during these six years, but the above mentioned formula had serious drawbacks.  This fact was acknowledged by experts and highlighted that these shortcomings would be corrected by themselves.

There are up to 2200 schools in Georgia. About 60-65% of the schools had budget deficit- that means that 1600 schools were not able to allocate teachers’ salaries and communal taxes from their own budget. This is not a voucher financing. This deficit was reimbursed by the Ministry according to the period of the year. It is true, that Ministry has saved 15 million GEL by the right economic approach in 2010, but still, the overall budget deficit was 40 million GELL. This could not have been corrected by the appropriate management system only. 

According to the new mechanism none of the schools will have budget deficit, though this formula might not be working always, since apart from the development of the country there are  numerous other factors that influence the school financing system , among them :number of schoolchildren, learning program , number of schools.

What does a new financing model envisage?

Existing financing model was calculated per pupil according to the financial normative issued for village, town and city schools. This approach caused serious problem: some schools could not spend all money that has been allocated for them, while others experienced a budget deficit. For example, one school had a surplus with the amount of 150 000 GEL – whereas the Ministry provided funds for covering heating expenses to its neighboring   school.

Therefore lump sum financing system was introduced. The new formula is calculated per pupil and fully meets the needs of unified national curriculum and other school requirements.

What are the concrete characteristics of the new lump sum system?

With the financing of the USAID, Ministry’s coworkers and foreign experts have been working on the new model for a year.  Finance experts were also involved. Consultations were held with the experts of Ministry of Finance. Based on these findings, Georgian government decided to introduce a concept of lump sum financing which means that apart from vouchers all schools will be provided with single payment for the total amount due in order to operate efficiently. Lump sum financing is calculated from 10 000 – to 30 000 GEL depending on a school size, amount of schoolchildren etc. This new formula is especially important for small schools. The Ministry aims at providing equal opportunities to schoolchildren both in the cities and in mountainous regions. Even a right management cannot be helpful for the efficient operation of the school if it has only 10 pupils and receives 5000 GEL financing. New lump sum system is enabling this opportunity.

As to the private schools, despite the fact that it is a private business,   the Ministry will continue providing them with the vouchers, though some modifications will be introduced. Further developing of the private school system is one of the priorities of the Georgian government. Government takes concrete steps in this regard- for example ,  service provided by the educational institutions is exempted from VAT.