1. Pricing the right to education The cost of reaching new targets by 2030

2. 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

3. Key messages
To achieve universal pre-primary, primary, and secondary education in low and lower middle income countries:
the annual total cost will increase from US$149 to $US340 billion on average between 2015 and 2030
the total cost will need to increase from 3.5% of GDP in 2012 to 6.3% in 2030
even if public expenditure increases significantly, there will be an annual financing gap of US$39 billion on average between and 2030
aid for pre-primary, primary and secondary education will need to increase by at least six times
For the last bullet there is a problem:
1) Currently basic education aid for low and lower middle income countries is 3,610 million and aid to secondary education (which would include upper secondary) is 1,739 million. But it is the fact that you can’t split out the aid for secondary into lower and upper. So in the paper at least there should be a footnote indicating this. Also you should probably be aware that we can split away vocational and general secondary education from DAC stats = we would want to just want to focus on general secondary right? In which case it is that aid for pre-primary, primary and lower secondary will need to increase by at least five times as 3, =4,340 and 22/4.3 = 5

4. What targets were directly costed?
Early childhood:
all children complete one year of pre-primary education
Primary and secondary education:
all complete primary and lower secondary education and access upper secondary education
Quality:
declining PTR as countries become richer with average ratios at 15:1 (pre-primary), 29 (primary), 27 (secondary) by 2030
teacher salaries converge to 50% better paying countries
a quarter of recurrent expenditures for non-salary expenditure
Equity:
per student costs increase by 20%-40% to address the disadvantages of out of school children living in poverty
Quality – second bullet
* Unclear. Probably better to say “teacher salaries in poorer countries converge to at least half of what teachers in better paying countries get e.g. from 3.6 to 4.5% of GDP in LICs

5. 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:
tertiary education
skills for work
adult literacy
scholarships

6. 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 (not related to youth illiteracy as in 2010)

7. 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

8. Results – 1. Total annual cost
The annual total cost of universal pre-primary, primary and secondary education is projected to:
more than double in LICs and LMICs from US$149 billion in to an average of US$340 billion between 2015 and 2030
increase from 3.5% to 6.3% of GDP in LICs and LMICs between and 2030
consist of salaries recurrent expenditure by 84%, capital expenditure by 11%; catering for marginalized equals 5% of the total (8% in LICs and above 12% in selected poor countries)
Higher enrolment but, mainly, higher expenditure per student account for the majority of the increase in total cost. For example:
the number of children in pre-school will increase five-fold in LICs
the cost per primary education student in LICs will need to increase from US$70 to US$197

9. Results – 2. Government spending
The exercise assumes significant increase in domestic effort:
the combined effect of increasing tax revenue as a share of GDP and the share of the budget allocated to education (above 20%) will be to increase public expenditure on pre-primary, primary and secondary education: from 2.6% to 3.9% of GDP in LICs excluding aid (for reference these countries increased the relevant share of GDP by 0.8 percentage points between 1999 and 2012) from 3.3% to 3.9% of GDP in LMICs excluding aid

10. 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$39 billion
in LICs, the annual gap of US$21 billion is 42% of the total cost
in LMICs, the annual gap of US$18 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 6 times
the required increase in aid could be lower if other external sources of financing step in to fill part of the gap

11. Results – 3. Financing gap in low income countries

12. Results – 3. Financing gap in lower middle income countries

13. What does this financing gap mean?
In order for every child in LICs and LMICs to benefit from pre- primary, primary and secondary education of good quality by 2030, all we need is just eight days of global military spending…

14. 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

15. Recommendations
Ahead of the major international conferences on education and financing for development this year, it is necessary to set targets:
LICs will need to increase spending in terms of GDP on pre- primary, primary and secondary education by 50%
In order to fill the gap, OECD DAC donors would need to increase the volume of aid for pre-primary, primary and secondary education in LICs and LMICs by at least six times
Part of this can be covered by better targeting of aid currently going to UMICs and/or to post-secondary education
The gap would be filled if DAC and selected non-DAC donors spent (i) 0.7% of their gross national income on aid and (ii) 10% of their aid portfolio on basic and secondary education

16. blog: efareport.wordpress.com
blog: efareport.wordpress.com
#EduCost #post2015
@efareport
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