1. Mun C. Tsang Teachers College Columbia University
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Mun C. Tsang Teachers College Columbia University
Financial Disparities And Intergovernmental Grants In Compulsory Education In China
Mun Tsang

2. 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:
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3. 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
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4. Financial Reform of Education: The Historical Context
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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
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Mun Tsang

5. 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?
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6. DATA Financial database of the Ministry of Education
About 2,900 observations in 1999 (“county level” units)
About 2,600 observations in 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
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7. 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
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8. 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
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9. 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
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10. 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)
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11. Summary Of Findings (2): Change In Inequality Measures, (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
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12. 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)
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13. 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)
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14. 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
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15. 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
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16. 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
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17. Table 1 Per-student spending by category, 1999 (Yuan)
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18. Table 7 Inequality in per-student school spending: Restricted range, federal range ratio, and coefficient of variation, 1999
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19. Table 8 Inequality in per-student spending: Gini coefficient and Theil Index, 1999
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20. Table 9 Decomposition of Theil indexes, 1999
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21. Table 11 Changes in per-student total spending between 1997 and 1999
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22. Thanks!
Questions?
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