Mun C. Tsang Teachers College Columbia University 2/18/2019 Mun C. Tsang Teachers College Columbia University Financial Disparities And Intergovernmental Grants In Compulsory Education In China Mun Tsang

Sources Tsang, M. & Ding, Y. (Forthcoming 2005). Resource utilization and disparities in compulsory education in China. China Review Tsang, M. (2002). Financing compulsory education in China: Establishing and strengthening a substantial and regularized system of intergovernmental grants. Harvard China Review, No. 5: 15-20. 2/18/2019 Mun Tsang

Objectives of Presentation Document disparities in per-student spending in compulsory (primary and lower-secondary) education in the late 1990s Argue for the establishment of a regularized and substantial scheme of intergovernmental grants in compulsory education 2/18/2019 Mun Tsang

Financial Reform of Education: The Historical Context 2/18/2019 Financial Reform of Education: The Historical Context 1985 Reform: Administrative and fiscal decentralization Diversification in resource mobilization Achievements: Decentralized & diversified system Increased resources to education sector Notable Problems: Financial difficulties of poor and rural areas Substantial disparities in education spending 2/18/2019 Mun Tsang Mun Tsang

Research Questions How were educational resources utilized in 1999? What was the extent of inequality in per-student spending in 1999? Was there any change in inequality in per-student spending between 1997 and 1999? 2/18/2019 Mun Tsang

DATA Financial database of the Ministry of Education About 2,900 observations in 1999 (“county level” units) About 2,600 observations in 1997-1999 analysis Comparison with previous studies (Jiang 1992; Tsang 1994; Wang 1998; Zhang 1998; Pan 2000; etc.) Focus on county level (increasing important of county units) Most comprehensive dataset More comprehensive analysis of disparities (across regions, urban/rural, minority/non-minority areas) Change in inequality in the late 1990s 2/18/2019 Mun Tsang

Summary Of Findings (1): Resource Utilization & Disparities In 1999 1. Similar pattern of resource utilization across areas and regions Primary education: recurrent spending amounted to 94% of total spending; and personnel spending about three-quarters of recurrent spending Lower-secondary education: recurrent spending amounted to 92% of total spending; and personnel spending about two-thirds of recurrent spending 2/18/2019 Mun Tsang

Summary Of Findings (1): Resource Utilization & Disparities In 1999 - Continued 2. Large variations in per-student total spending across areas and regions Urban areas substantially more than rural areas: 84% in primary education & 69% in lower-secondary education Region One (coastal) substantially more than Region Three (inland/west): 71% & 75% more Non-minority areas somewhat more than minority areas: 6% & 24% more 2/18/2019 Mun Tsang

Summary Of Findings (1): Resource Utilization & Disparities In 1999 - Continued 3. Variation Related to How Schools Were Financed Importance of non-government sources Schools in less-advantaged areas depended more on government funding which was used mostly on personnel inputs Financial difficulty was a key contributing factor to poor education inputs in poor rural areas 2/18/2019 Mun Tsang

Summary Of Findings (1): Resource Utilization & Disparities In 1999 - Continued 4. Measure of Inequality in Per-student Total Spending The five measures (restricted range, federal range ratio, coefficient of variation, Gini coefficient, Theil index) consistently showed a large degree of inequality at both the primary and lower-secondary education levels across areas and regions Decomposition of Theil Index Primary education: index = 0.23 (71% due to variation within provinces, 29% across provinces) Lower-secondary education: index = 0.23 (69% due to variation within provinces, 31% across provinces) 2/18/2019 Mun Tsang

Summary Of Findings (2): Change In Inequality Measures, 1997-1999 (Based On Per-student Total Spending) Modest change but mixed findings Some modest increase, based on the restricted range, federal range ratio, and coefficient of variation No change, based on Gini coefficient Modest decrease, based on Theil Index Overall, little change in inequality between 1997 and 1999, but with some increased polarization at both ends of spending Decomposition of Theil Index Inequality across provinces increased between 1997 and 1999 2/18/2019 Mun Tsang

Role Of Intergovernmental Grants In Financing Of Compulsory Education 1. Decentralization as a process in China Administrative decentralization Fiscal decentralization Devolution of decision-making power Capacity building Accountability Financial challenges (difficulties of poor areas & disparities) 2/18/2019 Mun Tsang

2. Current weaknesses in financial equalization Amount small Role Of Intergovernmental Grants In Financing Of Compulsory Education – Continued 2. Current weaknesses in financial equalization Amount small Ad-hoc practice (not regularized) Limited scope (project based, investment) 2/18/2019 Mun Tsang

3. Arguments for intergovernmental grant scheme Efficiency argument Role Of Intergovernmental Grants In Financing Of Compulsory Education – Continued 3. Arguments for intergovernmental grant scheme Efficiency argument Equity argument Socio-political argument 2/18/2019 Mun Tsang

4. Need for intergovernmental grant scheme Regularized Role Of Intergovernmental Grants In Financing Of Compulsory Education – Continued 4. Need for intergovernmental grant scheme Regularized Substantial increase over time Broader scope (recurrent spending too) Stable growing revenue sources Evolving process of development 2/18/2019 Mun Tsang

5. Issues to be tackled over time Role Of Intergovernmental Grants In Financing Of Compulsory Education – Continued 5. Issues to be tackled over time Appropriate intergovernmental structure How to raise additional resources How to distribute intergovernmental grants Nature of decision-making process 2/18/2019 Mun Tsang

Table 1 Per-student spending by category, 1999 (Yuan) 2/18/2019 Mun Tsang

Table 7 Inequality in per-student school spending: Restricted range, federal range ratio, and coefficient of variation, 1999 2/18/2019 Mun Tsang

Table 8 Inequality in per-student spending: Gini coefficient and Theil Index, 1999 2/18/2019 Mun Tsang

Table 9 Decomposition of Theil indexes, 1999 2/18/2019 Mun Tsang

Table 11 Changes in per-student total spending between 1997 and 1999 2/18/2019 Mun Tsang

Thanks! Questions? 2/18/2019 Mun Tsang