From primary to tertiary education, 92% of the spending of educational institutions is devoted to current expenditure (goods and services consumed within the current year).
On average across OECD countries, staff compensation comprises the largest share of current expenditure in non-tertiary education (78%) and tertiary education (68%).
OECD countries allocate on average 8% of their total education spending to capital expenditure. The share is higher in tertiary education (12%) than in non-tertiary education (7%). Shares vary considerably across countries, as well as between public and private educational institutions within the same country.
Education at a Glance 2018
OECD Indicators
Education at a Glance
Indicator C6. On what resources and services is education funding spent?
Figure C6.1. Share of capital expenditure as a percentage of total expenditure in public and private institutions (2015)
1. Year of reference 2016.
2. Primary education includes pre-primary programmes and post-secondary non-tertiary figures are treated as negligible.
3. Countries are ranked in descending order of the share of capital expenditure in public institutions.
Source: OECD / UIS / Eurostat (2018), Education at a Glance Database, http://stats.oecd.org/. See Source section for more information and Annex 3 for notes (http://dx.doi.org/10.1787/eag-2018-36-en).
Context
How spending is allocated between current and capital expenses can affect the quality of instruction (through teachers’ salaries, for example), the material conditions under which instruction takes place (such as expenditure on school maintenance) and the ability of the education system to adjust to changing demographic and enrolment trends. Decisions on resource allocation can thus influence the nature of instruction and, by extension, student learning outcomes. Striking a proper balance, given a country’s educational priorities, is a challenge facing all governments. Comparing the distribution of educational expenditure across resource categories can shed light on the various organisational and operational structures that different countries have developed.
This indicator describes the resources and services on which money for education from all funding sources (governments, international sources and the private sector) is spent. It shows the difference between current and capital expenditure. Capital expenditure can be driven by rising enrolment, which often requires construction of new buildings. The indicator also presents details on how current expenditure is allocated, looking particularly at staff salaries and other related aspects. Current expenditure is mainly affected by teachers’ salaries (see Indicator D3), but also by the age distribution of teachers and the size of the non-teaching staff employed in education. Educational institutions do not only offer instruction. They also provide other services, such as meals, transport, housing and/or research activities. All these expenditures are captured in this indicator.
Other findings
Staff compensation comprises the largest share of current expenditure at all levels of education. Four-fifths of staff compensation goes to teachers in non-tertiary education with the remainder going to other staff. In tertiary education, about one-third of staff compensation goes to other staff, almost doubling its share in non-tertiary education.
In non-tertiary education, the share of total expenditure allocated to current expenditures by public institutions (93%) is larger than that of private institutions (91%). Conversely, at tertiary levels, private institutions (92%) spend a larger share of total expenditure on current expenditures than public institutions (87%).
The share of other staff expenditure varies in non-tertiary institutions, from a high of around 20% or more in Belgium, the Czech Republic, Estonia, France, Iceland, Lithuania and the United States to less than 10% in Austria, Colombia, Greece and Luxembourg.
Analysis
Distribution of educational institutions’ current and capital expenditure by level
Expenditure by educational institutions is composed of current and capital expenditure. Current expenditure includes spending on school resources used each year for operation of schools, while capital expenditure refers to spending on the acquisition or maintenance of assets which last longer than one year (see Definitions section at the end of this indicator). Given the labour-intensive nature of education, current expenditure, particularly staff compensation, makes up the largest proportion of total education expenditure in OECD countries. In 2015, an average of 92% of total expenditure by educational institutions in OECD countries was on current expenditure, across all education levels from primary to tertiary. Across countries, the share of current expenditure for all levels varies from 79% in Latvia to 97% in Belgium and the United Kingdom (Table C6.1).
The OECD average share of current expenditure is higher in non-tertiary education (93%) than at the tertiary level (88%). At primary and secondary levels, shares vary from 83% in Latvia to 99% in Greece. At the post-secondary non-tertiary level, shares vary from 83% in Latvia to 100% in Luxembourg. At the tertiary level, allocations vary from 52% in Greece to 96% in Finland and Sweden. The share of current expenditure does not differ by more than 5 percentage points, on average, across all education levels. In most countries, the share of current expenditure in non-tertiary education is greater than at tertiary level. The only countries where the share of current expenditure is greater at tertiary level than in non-tertiary education are Finland, Ireland, Israel, Norway and Sweden.
Differences in expenditure allocation across countries reflect how various levels of education are organised and the degree to which countries have invested in the construction of new buildings, which often becomes necessary when enrolments increase (this has been particularly pronounced at the tertiary level). As presented in Table C6.1, the share of capital expenditure is generally higher in tertiary institutions, where the OECD average is 12%, than in non-tertiary institutions, where the OECD average is 7%. Capital expenditure on tertiary education reaches highs of 39% in Colombia, 48% in Greece and 31% in Latvia. In non-tertiary education, Japan, Latvia and Norway allocate the highest shares of education budgets to capital expenditure across countries with available data.
Differences in the relative shares of current and capital expenditure at the tertiary level can be explained in part by the ownership arrangement of university buildings. For instance, in various cases, the buildings and land used for education may be owned by the institution, used free of charge or rented. Therefore the amount of current and capital expenditure reported by countries partially depends on the physical infrastructure arrangement that prevails in a given country (see Box B6.1 in (OECD, 2012[1])).
How current expenditure is allocated
Current expenditure by educational institutions can be further subdivided into three broad functional categories: 1) compensation of teachers; 2) compensation of other staff; and 3) other current expenditure (for example, teaching materials and supplies, maintenance of school buildings, providing students’ meals and renting school facilities). The relative shares of these categories typically do not change much from year to year. Current and projected changes in enrolments, changes to salaries of education personnel and the costs of maintenance of education facilities can affect not only the amounts allocated, but also the shares allotted to each category.
The salaries of teachers and other staff employed in education comprise the largest share of current expenditure in non-tertiary and tertiary education. However, salaries represent a larger share in non-tertiary education (78%) than at the tertiary level (68%), a difference of 10 percentage points. OECD countries spend on average 63% of the total amount of current expenditure on teacher compensation and 15% on paying other staff in non-tertiary education, leaving 22% for other current expenditure For tertiary education, 42% of current expenditures go to pay teachers, 26% to other staff, devoting 32% to other expenditures (Table C6.2 and Figure C6.2).
There is significant variation within countries in how current expenditure is allocated across levels of education. Colombia and Iceland are the only countries to report a greater share of current expenditure allocated to staff compensation at the tertiary level than at any other level (Table C6.2). Finland, France and Poland allocate equal shares to staff compensation at the tertiary level and in non-tertiary education. For all other countries, tertiary education receives the lowest share of total current spending allocated to staff compensation. In Italy and Japan, the differences between tertiary and non-tertiary categories exceed 20 percentage points. When looking at all education levels together, common patterns are observed in Belgium, Colombia, Greece, Luxembourg and Portugal. They tend to devote a larger share of current educational expenditure to staff compensation (above 82%) and less to other contracted and purchased services, such as support services (e.g. building maintenance), ancillary services (e.g. meal programmes) and rent paid for school buildings and other facilities.
Figure C6.2. Composition of current expenditure in public and private educational institutions (2015)
1. Year of reference 2016.
2. Primary education includes pre-primary programmes.
Countries are ranked in descending order of the share of all staff compensation.
Source: OECD / UIS / Eurostat (2018), Table C6.2. See Source section for more information and Annex 3 for notes (http://dx.doi.org/10.1787/eag-2018-36-en).
The variation between levels of education in the share of current expenditure allocated under “other current expenditure” reflects to some extent the differences in the size of administrative systems (for instance, the number of employees or the equipment available to the administrative staff across these levels). The cost of facilities and equipment is generally higher in tertiary education than at other levels. In addition, in some countries, tertiary institutions may be more likely to rent premises, which can account for a substantial share of current expenditure. The differences among countries in the shares allocated to paying non-teaching staff likely reflect the degree to which non-teaching education personnel (such as principals, guidance counsellors, bus drivers, school nurses, janitors and maintenance workers) are included in the category “non-teaching staff”. Compensation of staff involved in research and development at the tertiary level may also explain some of the differences between countries and across levels of education in this category (as in Finland and Sweden, see Indicator C1).
Distribution of current and capital expenditure by public versus private educational institutions
Public and private institutions allocate their spending to either current or capital expenditure in a similar way, although differences are more marked in tertiary education than in non-tertiary education. Across OECD countries in non-tertiary education, the average share of current expenditure in private institutions is (91%), 2 percentage points lower than that of public institutions (93%). However, at the tertiary level, the share of current expenditure in private institutions (92%) is 5 percentage points higher than that of public institutions (87%). This difference at the tertiary level is more marked in Colombia, Greece and Lithuania. In Austria, Estonia, Hungary, Ireland, Italy and Japan, the share of current expenditure is higher in public institutions.
Public and private institutions also differ in how current expenditure is distributed (Table C6.3). On average, across OECD countries in non-tertiary education, the share of current expenditure devoted to staff compensation in public institutions (80%) is 8 percentage points higher than that of private institutions (72%). This gap is most pronounced in Greece, Italy, Portugal, the Russian Federation and Turkey, with differences of 20 percentage points or more between the two sectors. The pattern is reversed in the Czech Republic, Finland, the Netherlands, Poland and the Slovak Republic, where private institutions allocate a greater share of their current expenditure to staff compensation than public institutions. At the tertiary level, public institutions also allocate a higher share of their current spending to staff compensation (68% on average across OECD countries) than do private institutions (65%).
The fact that private institutions typically devote a lower share of current expenditure to paying staff can be explained by factors inherent to each country’s educational system. It may be the case that private institutions are more likely to contract services from external providers. They may more often rent school buildings and other facilities (as opposed to functioning in state-owned properties), and they may be at a disadvantage when purchasing teaching materials, as they cannot benefit from the same economies of scale in procurement as the public sector.
Public and private institutions allocate a very similar share of their total expenditure to capital investment (8%). However, the share varies to a large extent by country and between public and private institutions (Figure C6.1). Public institutions in Colombia, Latvia and Lithuania allocate the highest shares of spending to capital, reaching more than 14% of total expenditure from primary to tertiary education. Public institutions spend the lowest share on capital in Austria, Belgium, Hungary, Italy, Portugal, Sweden and the United Kingdom (below 6%). The variation across countries is even higher for private institutions, with private institutions in Colombia, Latvia, and Turkey spending more than 19% of their total expenditure on capital, and Greece and Iceland spending below 2%. The difference between public and private institutions in the share of their allocations to capital expenditure is below 4 percentage points for two-thirds of the countries with data available. Latvia has the largest differences in the share of capital expenditure, and its private institutions spend proportionally more than its public institutions.
Definitions
Capital expenditure refers to spending on assets that last longer than one year, including construction, renovation or major repair of buildings, and new or replacement equipment. The capital expenditure reported here represents the value of educational capital acquired or created during the year in question (i.e. the amount of capital formation), regardless of whether the capital expenditure was financed from current revenue or through borrowing. Neither current nor capital expenditure includes debt servicing.
Current expenditure refers to spending on goods and services consumed within the current year and requiring recurrent production in order to sustain educational services. Other current expenditure (i.e. not on paying staff) by educational institutions includes expenditure on subcontracted services, such as support services (e.g. maintenance of school buildings), ancillary services (e.g. preparation of meals for students) and rental of school buildings and other facilities. These services are obtained from outside providers, unlike the services provided by education authorities or by educational institutions using their own personnel.
Staff compensation (including teachers and non-teaching staff, see below) includes: 1) salaries (i.e. gross salaries of educational personnel, before deduction of taxes, contributions for retirement or healthcare plans, and other contributions or premiums for social insurance or other purposes); 2) expenditure on retirement (actual or imputed expenditure by employers or third parties to finance retirement benefits for current educational personnel); and 3) expenditure on other non-salary compensation (healthcare or health insurance, disability insurance, unemployment compensation, maternity and childcare benefits and other forms of social insurance). The “teachers” category includes only personnel who participate directly in the instruction of students. The “non-teaching staff” category includes other pedagogical, administrative and professional personnel as well as support personnel (e.g. head teachers, other administrators of schools, supervisors, counsellors, school psychologists and health personnel, librarians, building operations and maintenance staff).
Methodology
Calculations cover expenditure by public institutions or, where available, by both public and private institutions.
Please see the OECD Handbook for Internationally Comparative Education Statistics 2018: Concepts, Standards, Definitions and Classification (OECD, 2018[2]) and Annex 3 for country-specific notes (http://dx.doi.org/10.1787/eag-2018-36-en).
Lithuania was not an OECD member at the time of preparation of this publication. Accordingly, Lithuania does not appear in the list of OECD members and is not included in the zone aggregates.
Sources
Data refer to the financial year 2015 (unless otherwise specified) and are based on the UNESCO, the OECD and Eurostat (UOE) data collection on education statistics administered by the OECD in 2017 (for details see Annex 3 at http://dx.doi.org/10.1787/eag-2018-36-en). Data from Argentina, China, Colombia, India, Indonesia, Saudi Arabia and South Africa are from the UNESCO Institute of Statistics (UIS).
Note regarding data from Israel
The statistical data for Israel are supplied by and are under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
References
[2] OECD (2018), OECD Handbook for Internationally Comparative Education Statistics 2018: Concepts, Standards, Definitions and Classifications, OECD Publishing, Paris, https://doi.org/10.1787/9789264304444-en.
[1] OECD (2012), Education at a Glance 2012: OECD Indicators, OECD Publishing, Paris, http://dx.doi.org/10.1787/eag-2012-en.
Indicator C6 Tables
Table C6.1. Share of current and capital expenditure, by education level (2015)
Table C6.2. Current expenditure, by resource category (2015)
Table C6.3. Share of current expenditure, by resource category and type of institution (2015)
Cut-off date for the data: 18 July 2018. Any updates on data can be found on line at http://dx.doi.org/10.1787/eag-data-en. Data can also be found at http://stats.oecd.org/, Education at a Glance Database.
Table C6.1. Share of current and capital expenditure, by education level (2015)
Distribution of current and capital expenditure by educational institutions from public and private sources, by level of education
Note: Some levels of education are included with others. Refer to “x” code for details.
1. Primary education includes pre-primary programmes. And post-secondary non-tertiary figures are treated as negligible.
2. Year of reference 2016.
Source: OECD / UIS / Eurostat (2018). See Source section for more information and Annex 3 for notes (http://dx.doi.org/10.1787/eag-2018-36-en).
Please refer to the Reader’s Guide for information concerning symbols for missing data and abbreviations.
Table C6.2. Current expenditure, by resource category (2015)
Distribution of current expenditure by educational institutions from public and private sources as a percentage of total current expenditure
Note: Some levels of education are included with others. Refer to “x” code in Table C6.1 for details.
1. Primary education includes pre-primary programmes.
2. Year of reference 2016.
Source: OECD / UIS / Eurostat (2018). See Source section for more information and Annex 3 for notes (http://dx.doi.org/10.1787/eag-2018-36-en).
Please refer to the Reader’s Guide for information concerning symbols for missing data and abbreviations.
Table C6.3. Share of current expenditure, by resource category and type of institution (2015)
Distribution of current expenditure by educational institutions
Note: Some levels of education are included with others. Refer to “x” code in Table C6.1 for details.
1. Primary education includes pre-primary programmes.
2. Year of reference 2016.
Source: OECD / UIS / Eurostat (2018). See Source section for more information and Annex 3 for notes (http://dx.doi.org/10.1787/eag-2018-36-en).
Please refer to the Reader’s Guide for information concerning symbols for missing data and abbreviations.