On average across OECD countries and at each level of education, over 90% of the expenditure on educational institutions is dedicated to current expenditure: resources required for daily operations (pay of teachers and other staff, school meals, etc.).
Students in schools facing shortages of teaching staff or educational material score lower on the PISA test than their peers in better resourced schools, on average across OECD countries. The difference is around or over 10 score points, roughly equivalent to half a year’s worth of learning.
There is much variation across countries in expenditure on different categories of staff. This reflects how education systems and schools are organised. For example, in primary education expenditure on compensation for non-teaching staff is relatively high compared to expenditure on teacher compensation in Chile, Estonia and the United States (the former is around half or more of the latter).
Education at a Glance 2024
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Chapter C6. On what resources and services is education funding spent?
Copy link to Chapter C6. On what resources and services is education funding spent?Highlights
Copy link to HighlightsContext
Copy link to ContextEducation systems require funding to provide both the necessary infrastructure, such as school buildings, and the resources required for daily operations, such as teachers, heating and supplies. Both types of expenditure are crucial for ensuring high-quality education, in different ways. Current expenditure, which includes teacher salaries and instructional materials, is fundamental for hiring and retaining teachers and other staff members in educational institutions and thereby ensuring high-quality education. Additionally, certain operational costs within current expenditure are necessary for creating an optimal learning environment (e.g. heating, preparation of school meals). On the other hand, capital expenditure, which involves investments in facilities like buildings, science labs, libraries and computers, can enhance teaching and learning experiences.
Education budgets and the distribution of various types of expenditure can fluctuate in response to several factors. For example, increasing enrolment often requires hiring more teachers, resulting in higher levels of current expenditure. At the same time, at some point increasing enrolment requires the construction of new buildings, which leads to higher capital expenditure (see Chapter B2 for data on enrolment patterns). The introduction of new health and safety regulations may require the renovation of school buildings, leading to increased capital expenditure. Some strategic initiatives require a combination of current and capital expenditures. For example, effectively incorporating digital tools in classrooms requires not only the purchase of computers (a capital expenditure) but also the training of teachers or the hiring of additional staff (current expenditure).
This chapter focuses on what funds dedicated to educational institutions are spent on. It first examines the share of capital vs. current expenditure at different levels of education. Then it focuses on different types of current expenditure, followed by an analysis of staff compensation per full-time equivalent student. The last section of this chapter draws on PISA data to explore the relationship between shortages of educational resources and student performance.
Other findings
Copy link to Other findingsAt primary and lower secondary levels 78% of current expenditure goes to staff compensation, while at upper secondary level the figure is 77%. At tertiary level the share of staff compensation is lower at 67% on average across OECD countries, reflecting the fact that other types of current expenditure (e.g. materials and supplies, equipment, rental of buildings) play a more important role at this level.
In primary education, USD 8 715 is spent on staff compensation per full-time equivalent student on average across OECD countries. Expenditure per student on staff compensation increases with the level of education: the figure is USD 9 793 for lower secondary education, USD 8 993 for general and USD 10 169 for vocational upper secondary education. In tertiary education USD 12 742 is spent on staff compensation per full-time equivalent student.
Analysis
Copy link to AnalysisCapital vs. current expenditure
Copy link to Capital vs. current expenditureOn average across OECD countries and at each level of education, over 90% of the expenditure on educational institutions is dedicated to current expenditure: resources required for daily operations (pay of teachers and other staff, school meals, etc.). The remaining less than 10% is capital expenditure, which involves spending on long-lasting assets such as construction, renovation and major repairs of buildings (see Definitions). Cross-country differences in the share of current vs. capital expenditure reflect largely the degree to which countries have invested in new buildings. This can be due to increased enrolment, the need to restore old structures, or to adapt to new educational or safety regulations. Capital expenditure can fluctuate significantly over time. It peaks in years when major investment plans are implemented and dips in years with less intensive investment activities. The mix of capital vs. current expenditure may also reflect other factors, such as whether school buildings are owned (and therefore built or renovated, with spending falling under capital expenditure) or rented (with spending falling under current expenditure).
In 2021, capital expenditure on primary to tertiary education ranged from 4% of expenditure on educational institutions in Belgium, to 15% in Korea (Figure C6.1.). The share of capital expenditure was highest in Estonia and Korea, accounting for over 15% of spending on primary institutions. At secondary level, it was highest in Korea (17%) and Latvia (14%). In some countries capital expenditure represents a much lower share of spending, accounting for 2% in Portugal at primary level and 3% in Austria and Belgium at secondary level. At tertiary level, the mix of capital and current expenditure varies also across countries, with capital expenditure accounting for 2% in Chile and Iceland, but over 15% in Czechia, Hungary, and Türkiye (Table C6.1).
Types of current expenditure
Copy link to Types of current expenditureThe largest component of current expenditure is staff compensation. On average across OECD countries, 78% of current expenditure goes to staff compensation at primary and lower secondary levels, and 77% at upper secondary level. At tertiary level the share of staff compensation is lower at 67% on average. A similar pattern exists in all OECD countries: the share of staff compensation is lower at tertiary level than at lower levels of education. This reflects the fact that other types of current expenditure, such as materials and supplies, certain items of equipment or the rental of facilities, play a more important role at tertiary level than in primary to post-secondary non-tertiary education.
In primary and secondary education, there is less variation across countries in the share of expenditure on staff compensation within current expenditure than at tertiary level. For example, at primary level it ranges from 61% in Finland to 88% in Belgium and Romania. At lower secondary level it ranges from 61% in Finland to 91% in Belgium. At tertiary level, however, staff compensation accounts for only 45% of current expenditure in Hungary but 81% in Bulgaria (Figure C6.2.).
There is also much variation across countries in expenditure on different categories of staff. This reflects how education systems and schools are organised (for example counselling might be offered within schools or as a service offered to youth not within the education system). For example, in Chile, Czechia, Estonia and the United States, over 25% of current expenditure on primary institutions goes to non-teaching staff such as head teachers, school psychologists, librarians, or maintenance staff. Spending on non-teaching staff represents less than 10% of current expenditure on primary institutions in Portugal, Romania, and the United Kingdom (Table C6.2.).
Staff compensation per student
Copy link to Staff compensation per studentFigure C6.3. shows expenditure on staff compensation per full-time equivalent student in general upper secondary education. This ranges from more than USD 20 000 per full-time equivalent student in Luxembourg, to less than USD 5 000 per full-time equivalent student in Bulgaria, Chile, Estonia and Türkiye. Countries’ placements in the distribution of this measure closely mirrors those for overall expenditure per student (see Figure C1.1. in Chapter C1) as staff compensation is a significant share of total expenditure (Figure C6.1.). Staff compensation is largely driven by teachers’ salaries, and some countries that have high levels of staff compensation per student, such as Austria, Germany, and the Netherlands, also have high teacher salaries in general upper secondary education (see Table D3.3. in Chapter D3).
However, expenditure on staff compensation is also driven by other factors. First, “staff” includes non-teaching personnel such as administrators, librarians, and support or operations staff. Depending on how institutions and education systems are organised, the balance of teaching and non-teaching staff will vary across countries. Student-teacher ratios also shape staff compensation per student (higher student-teacher ratios will result in lower staff compensation per student, if all other factors are kept equal), while they do not directly impact teacher salaries. Several countries with high staff compensation per student, such as Belgium, Germany, Luxembourg, and Norway, also have relatively low student-teacher ratios in general upper secondary education (see Table D2.2. in Chapter D2). Third, compensation includes expenditure on categories other than salaries, such as subsidies, insurance, and employer contributions to staff pension schemes (see Box C6.1. for more information on the breakdown of non-salary payments in primary education).
As a result, above-average levels of staff compensation per student are not always due to high teachers’ salaries. For example, at the primary, lower secondary, and upper secondary levels, Finland has relatively high teacher salaries but below-average staff compensation per student (Figure C6.3. and Table D3.3. in Chapter D3).
Box C6.1. Breakdown of staff compensation in primary education
Copy link to Box C6.1. Breakdown of staff compensation in primary educationExamining the distribution of pay checks, pensions, and more
Copy link to <em>Examining the distribution of pay checks, pensions, and more </em>Salaries for staff are by far the largest element of staff compensation in all countries for which data are available. Looking at primary education, which follows the distribution seen in other education levels (OECD, 2022[1]), most countries spend around 70-90% of staff compensation on staff salaries (see Table C6.4., available online). In addition to salaries, staff compensation also includes contributions to retirement schemes and expenditure for other non-salary compensation such as health insurance, disability insurance, unemployment compensation, maternity and childcare benefits, and other forms of social insurance.
The share of staff compensation that is dedicated to employer contributions in staff pensions reflects country-specific schemes and policies. For example, nearly one-third of staff compensation in the United Kingdom is dedicated to staff pensions. Indeed, employer contribution rates to the UK Teachers’ Pension Scheme were very high in 2021, at 24% of staff salaries, and continue to rise (GOV.UK, 2024[2]). Of the seven countries where more than 15% of staff compensation in public institutions goes to employer contributions to staff pensions (Czechia, Estonia, Finland, Latvia, Norway, Switzerland, and the United Kingdom), six have pension systems with employer contributions rates (as a percentage of gross salaries) in public sector occupations which are higher than the OECD average (OECD, 2023[3]).
The diversity of pension systems across OECD countries also leads to methodological differences in how employer contributions to staff pensions are reported. In countries with fully funded pension systems (i.e., employers pay contributions into pension funds that will be returned directly to employees when they retire) pension contributions are easy to report. In unfunded pension systems, where future pensions are paid from future revenues, such pension contributions may sometimes be underestimated, as they are harder to report (amounts must be estimated or imputed). Cross-country comparisons of the distribution of staff compensation should consider such differences in pension systems.
In addition to salaries and contributions to pension systems, staff compensation may include health care or insurance, unemployment compensation, housing support, parental and childcare benefits or subsidies, and other non-cash supplements. In public institutions for all countries for which data are available, except Canada and Mexico, this is the smallest share of expenditure on staff compensation in public institutions (Table C6.4., available online).
Resource shortages and student performance
Copy link to Resource shortages and student performancePISA data shed light on the relationship between resource shortages and student performance in mathematics. Figure C6.4. (OECD, 2023[4]) looks at different types of shortage: teaching staff, assisting staff, educational material, physical infrastructure and digital resources. For each type of shortage, it distinguishes between two levels of severity: lack of resources and inadequate or poor quality resources.
On average across OECD countries, students in schools facing shortages of teaching staff or educational material score lower on the PISA test than their peers in better resourced schools (Figure C6.4.). The difference is around or over 10 score points, roughly equivalent to half a year’s worth of learning. Shortages of assisting staff, physical infrastructure and digital resources are also associated with lower PISA scores, with differences ranging from 6 to 10 score points.
It is also important to analyse these issues taking into account information on the socio-economic background of students, to explore to what extent these results are driven by the socio-economic composition of differently resourced schools. Staff shortages are associated with weaker student performance on PISA even after accounting for the socio-economic profile of students and schools. Once these profiles are considered, the performance gap between well-resourced and poorly resourced schools narrows to around or below 5 score points, but remains statistically significant. As shown in Figure C6.4., schools that have adequately qualified and sufficient teachers and assisting staff tend to have better PISA scores, regardless of the social background of the students’ and their schools.
At the same time, PISA data show that schools serving more disadvantaged students tend to suffer from more shortages of education staff than schools serving students from more privileged backgrounds (OECD, 2023, p. 173[4]). This explains why the relationship between PISA performance and shortages of educational material, physical infrastructure and digital resources disappears (it is no longer statistically significant) when accounting for students’ and schools’ socio-economic profile. From an equity perspective, this is concerning. The students who most need high-quality learning resources are the ones with the least access to them.
Definitions
Copy link to DefinitionsCapital 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 capital nor current expenditure includes debt servicing.
Current expenditure refers to spending on staff compensation and on “Other current expenditure”, i.e. on goods and services consumed within the current year, which require recurrent production in order to sustain educational services (expenditure on support services, ancillary services like preparation of meals for students, rental of school buildings and other facilities, etc.). These services are obtained from outside providers, unlike the services provided by education authorities or by educational institutions using their own personnel.
Research and development includes research performed at universities and other tertiary educational institutions, regardless of whether the research is financed from general institutional funds or through separate grants or contracts from public or private sponsors.
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 health-care plans and other contributions or premiums for social insurance or other purposes); 2) expenditure on retirement pensions (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 (health care 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 school administrators, supervisors, counsellors, school psychologists and health personnel, librarians, and building operations and maintenance staff). At tertiary levels, “teaching staff” includes personnel whose primary assignment is instruction or research. This category excludes student teachers, teachers’ aides and paraprofessionals.
Methodology
Copy link to MethodologyExpenditure per student on educational institutions at a particular level of education is calculated by dividing total expenditure on educational institutions at that level by the corresponding full-time equivalent enrolment. Only educational institutions and programmes for which both enrolment and expenditure data are available are taken into account. Expenditure in national currencies is converted into equivalent USD by dividing the national currency figure by the purchasing power parity (PPP) index for gross domestic product. The PPP conversion factor is used because the market exchange rate is affected by many factors (interest rates, trade policies, expectations of economic growth, etc.) that have little to do with current relative domestic purchasing power in different OECD countries (see Annex 2 for further details).
Please see the OECD Handbook for Internationally Comparative Education Statistics (OECD, 2018[6]) for more information and Education at a Glance 2024 Sources, Methodologies and Technical Notes(https://doi.org/10.1787/e7d20315-en).
Source
Copy link to SourceData refer to the financial year 2021 (unless otherwise specified) and are based on the UNESCO, OECD and Eurostat (UOE) data collection on education statistics administered by the OECD in 2023 (for details see Education at a Glance 2024 Sources, Methodologies and Technical Notes (https://doi.org/10.1787/e7d20315-en). Data from Argentina, China, India, Indonesia, Saudi Arabia and South Africa are from the UNESCO Institute of Statistics (UIS).
Data from Table X2.2. are used to transform expenditure in constant 2015 prices and in equivalent USD converted using PPPs.
References
[2] GOV.UK (2024), Teachers’ pension scheme employer contribution grant: further education providers academic year 2023 to 2024, https://www.gov.uk/government/publications/teachers-pension-scheme-employer-contribution-grant-further-education-providers/teachers-pension-scheme-employer-contribution-grant-further-education-providers.
[5] OECD (2023), Investments in a solid foundation for learning and well-being, OECD Publishing, https://doi.org/10.1787/4a2f0ed6-en.
[3] OECD (2023), Pensions at a Glance, OECD, https://doi.org/10.1787/678055dd-en.
[4] OECD (2023), PISA 2022 Results (Volume II): Learning During – and From – Disruption, PISA, OECD Publishing, Paris, https://doi.org/10.1787/a97db61c-en.
[1] OECD (2022), Education at a Glance, OECD, https://doi.org/10.1787/19991487.
[6] OECD (2018), OECD Handbook for Internationally Comparative Education Statistics 2018, OECD Publishing, Paris, https://doi.org/10.1787/9789264304444-en.
Chapter C6 Tables
Copy link to Chapter C6 TablesTables Chapter C6. On what resources and services is education funding spent?
Copy link to Tables Chapter C6. On what resources and services is education funding spent?
Share of current and capital expenditure, by level of education (2021) |
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Share of current expenditure by resource category, and expenditure on staff compensation (2021) |
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WEB Table C6.3. |
Trends in the shares of current and capital expenditure (2015 and 2021) |
WEB Table C6.4. |
Distribution of expenditure on teaching staff in primary education (2021) |
Cut-off date for the data: 14 June 2024. Any updates on data and more breakdowns can be found on the OECD Data Explorer (http://data-explorer.oecd.org/s/4s).
Table C6.1. Share of current and capital expenditure, by level of education (2021)
Copy link to Table C6.1. Share of current and capital expenditure, by level of education (2021)Distribution of current and capital expenditure from public and private sources
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Note: See under Chapter C6 Tables section for StatLink and Box C6.2. for the notes related to this Table.
Table C6.2. Share of current expenditure by resource category, and expenditure on staff compensation (2021)
Copy link to Table C6.2. Share of current expenditure by resource category, and expenditure on staff compensation (2021)Distribution of current expenditure as a percentage of total current expenditure
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Note: See under Chapter C6 Tables section for StatLink and Box C6.2. for the notes related to this Table.
Box C6.2. Notes for Chapter C6 Tables
Copy link to Box C6.2. Notes for Chapter C6 TablesTable C6.1. Share of current and capital expenditure, by level of education (2021)
Note: Data on R&D are included in tertiary education, unless otherwise specified.
1. Primary education includes pre-primary programmes.
Table C6.2. Share of current expenditure by resource category, and expenditure on staff compensation (2021)
Note: Other current expenditure is expenditure not for staff compensation, and this may include contracted and purchased services, such as maintenance of school building and preparation of meals, or expenditure on other resources used in education, such as teaching and learning materials. Some levels of education are included with others. Refer to "x" in Table C6.1. for details. Data on distribution of current expenditure for general and vocational upper secondary (Columns 9 to 16) and primary to tertiary combined (Columns 25 to 28), as well as expenditure on staff compensation per student for all institutions (Columns 29 to 36) are available for consultation online (see StatLink). Tertiary staff includes personnel whose primary assignment is instruction or research (Columns 21 and 22). Data on R&D are included in tertiary education, unless otherwise specified.
1. Primary education includes pre-primary programmes.
See Definitions and Methodology sections and Education at a Glance 2024 Sources Methodologies and Technical Notes (https://doi.org/10.1787/e7d20315-en) for more information.
Data and more breakdowns are available on the OECD Data Explorer (http://data-explorer.oecd.org/s/4s).
Please refer to the Reader's Guide for information concerning symbols for missing data and abbreviations.