1. Financing Education in a Federal Framework: Lessons from Brazil

2.  Reform of Financing Structure  Effects of Reform  Municipal and State systems compared  Focus on Improving Performance in Municipalities Structure of Presentation

3. 26 States (and 1 Federal District) in Brazil, 5,500 municipalities. Constitution grants substantial autonomy to municipalities within a State Pre-School: Municipal Responsibility Primary(1-8): State and Municipality shared Secondary: State Responsibility Tertiary: Mainly Federal Constitution assures 18% of Federal and 25% of Sub-national Revenues for Education Federal Structure

4. Wide disparities in revenue availability to sub-national entities: Inter-State and Intra- State variability Wide variation in state and municipal responsibility for educational services In developed South/South-East, low level of municipalization, In poorer North-East, extremely low municipal revenue Municipalities with school fountains and school band trips to Europe; Other municipalities with “lay teachers”, huge out of school population Pre-reform situation: 1996

5. FUNDEF Reform of 1996/1997 Establishment of Single Fund (FUNDEF) for each State Government Fund comprised of 15% of Tax and Transfer revenues (Main sources: Equalizing revenue transfers FPM and FPE; Value-added Tax) Fund distributed to state or municipality on the per capita basis of number of students enrolled; Minimum national floor on per student spending with federal top-up guaranteed Huge reallocation of resources

6. Chart: Transfers from State to Municipalities

7. Table: Effect of Reform on Equity of Spending

8. 1.The clearest and most discussed result of the recent reforms has been the increase in enrollment in the period from 1996 to 2001. Enrollment for Crèches (0-3 years) went up from 382,000 to 1.1 million Enrollment for Pre-School (4-6 years) from 4.1 million to 4.8 million. Fundamental Education (Grades 1-8) from 33.1 million students to 35.4 million. Secondary Education (Grades 9-11) from 5.7 million students to 8.5 million students. Effect of Reform on Enrollment

9. Comparing State and Municipality on Efficiency

10. Positive Deviants

11. Model of Positive Deviance Based on learning from theories of chaos, complexity and emergence Solutions to complex problems have already been found by some of the agents in very similar contexts These ‘positive deviants’ can introduce a dynamic of change that is based on ownership of discovered solutions Replaces ‘TBU’ notion of superb Mayors or excellent School Principals