Pricing the right to education The cost of reaching new targets by 2030 Aaron Benavot Director, EFA Global Monitoring Report Launch Event, Results for Development, Washington DC, 11 March 2015

Context : the experience  in 2010 GMR estimated annual gap for achieving universal primary and lower secondary education in at US$25 billion  lack of finance one of the main constraints explaining why core EFA targets were not achieved 2015: the challenge and the opportunity  new projections suggest world will remain far from targets unless major action is taken, e.g. lower secondary completion rates of 50% in low and 80% in lower middle income countries by 2030  major international conferences to agree post-2015 targets and their implementation mechanisms

Key messages To achieve universal pre-primary, primary, and lower secondary education in low and lower middle income countries by 2030:  the annual total cost will increase from US$100 to $US239 billion  public expenditure on education as share of GDP will need to increase to 5.4%  even so, there will be an annual financing gap of US$22 billion on average in the period  aid for pre-primary, primary and lower secondary education will need to increase by at least four times

What targets were directly costed? Early childhood:  all children complete one year of pre-primary education Primary and secondary education:  all children complete primary and lower secondary education Quality:  declining PTR as countries become richer with average ratios at 18:1 (pre-primary), 31 (primary), 28 (lower secondary) by 2030  teacher salaries converge to at least half that in better paying countries, e.g. from 3.6% to 4.5% of GDP in primary in LICs  a quarter of recurrent expenditures for non-salary expenditure Equity:  per student costs increase by 20%-30% to address the disadvantages of out of school children living in poverty

What targets were not costed? This exercise indirectly takes into account objectives such as:  universal youth literacy (via higher quality primary education)  education for sustainable development / global citizenship This exercise does not take into account those targets related to:  upper secondary education  tertiary education  skills for work  adult literacy  scholarships The EFA GMR will extend its estimate in 2015 to include the cost of achieving universal upper secondary education completion.

Some differences compared to the 2010 EFA GMR costing Wider coverage:  from 46 countries in 2010 to 82 countries (=all LICs and LMICs) Longer reference period:  from 8 years in 2010 (i.e ) to 16 years in 2015 (i.e ) Selected other differences:  pre-primary education target is 100% (compared to 52% in 2010)  teacher salary target varies by country (but was fixed in 2010)  share of non-salary items in total recurrent expenditure is 25% (but was 33% in 2010)  proportion of marginalized children = share of population living in poverty (this proportion related to youth illiteracy in 2010)

Base scenario Key assumptions  the targets will be reached by 2030  GDP growth rates up to 2016 follow IMF projections and after that converge to a long-term average growth rate of 5%  Increase the (i) tax ratios as a share of GDP and (ii) share of the government budget allocated to education by 2030 to increase domestic resources

Results – 1. Total annual cost The annual total cost of universal pre-primary, primary and lower secondary education is projected to:  more than double in LICs and LMICs from US$100 billion in 2012 to an average of US$239 billion between 2015 and 2030  increase from 2.7% to 4.2% of GDP in LICs and LMICs between 2012 and 2030  consist of salaries recurrent expenditure by 82%, capital expenditure by 14%; catering for marginalized equals 4% of the total (7% in LICs) Higher enrolment (18%) and higher expenditure per student (82%) account for the majority of the increase in total cost. For example:  the number of children in pre-school will increase six-fold in LICs  the cost per primary education student in LICs will need to increase from US$65 to US$199

Results – 1. Total annual cost increase in low income countries The total annual cost is projected to increase to a different extent between 2012 and 2030 across different low income countries The range will vary from less than 2 times to more than 4 times

Results – 2. Government spending The exercise assumes significant increase in domestic effort:  governments will increase tax revenue as a share of GDP from 16.6% in 2012 to 21.3% in 2030  governments will increase the share of the budget allocated to education from 17.6% in 2012 to 18.9% (and 19.7% in LICs)  overall, governments in LICs will increase public expenditure: - from 2.3% to 3.4% of GDP (on pre-primary, primary and lower secondary education) - to 5.4% of GDP (across all levels, assuming pre-primary, primary and lower secondary education account for a constant 62% of the total)

Results – 3. Financing gap Many countries are unlikely to increase their public education expenditure to cover the total cost of meeting the targets:  the average annual financing gap remaining across all LICs and LMICs between 2015 and 2030 is estimated at US$22 billion  in LICs, the annual gap of US$10.6 billion is 29% of the total cost  in LMICs, the annual gap of US$11.8 billion is 6% of the total cost  across LICs and LMICs, aid to pre-primary, primary and lower secondary education would need to increase by at least 4 times  the required increase in aid could be lower if other external sources of financing step in to fill part of the gap

Results – 3. Financing gap in low income countries

Results – 3. Financing gap in lower middle income countries

What does this financing gap mean? In order for every child in LICs and LMICs to benefit from pre- primary, primary and lower secondary education of good quality by 2030, all we need is…

Better quality data and financing policies are needed These estimates for LICs and LMICs are based on the most recent data available and are indicative of the financing gap. Even so:  the quality and coverage of official financing data remain poor  strong national policies are needed to accompany more finance; same spending levels produce different results across countries as result of differences in equity, efficiency, and effectiveness

Recommendations Ahead of the major international conferences on education and financing for development this year, it is necessary to set targets:  LICs and LMICs will need to spend 5.4% of GDP on education (3.4% on pre-primary, primary and lower secondary education)  Donors will need to increase the volume of aid for pre-primary, primary and lower secondary education in LICs and LMICs by at least four times  To support this commitment, donors should redistribute aid to education from UMICs and reallocate aid currently funding post- secondary education objectives

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