This chapter is about the funding of school education in Portugal. It addresses the level, management, distribution and evaluation of educational expenditures. The chapter places particular emphasis on the integration of local, national and international sources of funding. In the face of challenging economic conditions, Portugal has continued to prioritise resources for school education. Further, Portugal has begun to shift its culture of funding to measure the impact of its spending and to use these findings to inform future planning. However, significant concerns remain about the transparency of the funding process, the relatively minimal local responsibility for funds and the low levels of financial support to under-resourced students and communities. The chapter also stresses the importance of developing system-learning through regular goal setting, metric development and progress monitoring – including programme evaluation – of educational initiatives.
OECD Reviews of School Resources: Portugal 2018
Chapter 2. The funding of school education
Abstract
The statistical data for Israel are supplied by and 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.
Context and features
Overall budget for education
Portugal invests considerably in non-tertiary education. According to OECD data, 5.1% of the added-value produced in the country (gross domestic product or GDP) in 2014 was devoted to financing early childhood education and care (ECEC) to upper secondary educational institutions (OECD, 2017[1]). Expenditure as a proportion of GDP was above the OECD average (see Figure 2.1). In fact, Portugal commits substantially more resources to education than its Southern European peers, devoting 1.2 and 1.4 percentage points more to education than Spain and Italy respectively.
Figure 2.1. Public and private expenditure on non-tertiary educational institutions as a percentage of GDP, 2014
1. Some levels of education are included with others. Refer to "x" code in Table B2.1 for details.
2. Year of reference: 2015.
3. Public does not include international sources.
Notes: Including public subsidies to households attributable for educational institutions and direct expenditure on educational institutions from international sources.
Net of public subsidies attributable for educational institutions.
Source: OECD (2017), Education at a Glance 2017: OECD Indicators, http://dx.doi.org/10.1787/eag-2017-en, Table B2.3. See Source section for more information and Annex 3 for notes (www.oecd.org/education/education-at-a-glance-19991487.htm).
But while the percentage of GDP spending devoted t/o education is high at all educational levels, both the absolute level of expenditure and expenditure per student are short of OECD averages (Table 2.1). In fact, the annual expenditure per student in secondary schooling, corrected for differences in purchasing power across countries, is about 15% below the OECD average (Table 2.1). Likewise, Portugal’s cumulative educational expenditure on each student falls behind most other countries’ investment. Portugal spends the equivalent of a total of USD 117 000 on students throughout their educational pathway from the start of primary through the end of secondary education, which compares to an OECD average of about USD 122 000, corrected for cross-country price differences (Figure 2.2).
Table 2.1. Main indicators of expenditure on pre-school and school education, 2014
Note: Annual expenditure per student is by educational institution and for all services.
PPP: Purchasing Power Parity.
Source: OECD (2017), Education at a Glance 2017: OECD Indicators, http://dx.doi.org/10.1787/eag-2017-en, Tables B1.1, B2.1, C2.3.
Figure 2.2. Cumulative expenditure per student by level of education, 2013
1. Some levels of education are included with others.
2. Year of reference: 2012.
3. Year of reference: 2014.
4. Public institutions only.
Source: OECD (2016), Education at a Glance 2016: OECD Indicators, http://dx.doi.org/10.187/eag-2016-en, adapted from Tables B1.3 and B1.4.
Expenditure per student in Portugal also disproportionately favours secondary and tertiary education levels, compared to primary ones. Expenditure on secondary education (ISCED levels 2 and 3) is 33% above expenditure on primary education, as compared to an OECD average difference of 17%. Similarly, per student expenditure on tertiary education is 39% higher than primary, as compared with an OECD average of 17% higher (OECD, 2017[1]).
The funding of education in Portugal is largely supported by public revenues (88%) (OECD, 2017[1]). As of 2014, public spending on primary to upper secondary education accounted for 7.1% of all state expenditure, below the OECD average of 8.2% (OECD, 2017[1]). According to the latest OECD data, 85% of the funds are raised at the central level (OECD, 2017[1]). The majority of funding is then channelled to municipalities, public or government-dependent private schools through the central state budget. Schools receiving public funds can also have complementary revenues raised through services provided to the community or other private contributions (OECD, 2017[2]). In 2012, municipalities only contributed 12% of public spending on education. Expenditure from private sources in education represents 12% of total spending. Private sources of spending amount to only 0.2% of GDP in primary, 0.1% in lower secondary and 0.2% of upper secondary education – slightly above the OECD and EU22 averages of 0.1% of GDP at each level (OECD, 2017[1]).
The central budget for school education is executed by the Ministry of Education (ME), in co-ordination with multiple other ministries, according to their ascribed authorities (see Chapter 1). In face of the tightened fiscal constraints (see Chapter 1), there was a significant decrease in public funding of schools in the aftermath of the crisis in 2009. In fact, the budget of the Ministry of Education was the most severely hit by the adjustment process in the Portuguese public administration – shrinking from 5.4% of GDP in 2009 to 4.6% in 2015 (CNE, 2016[3]). Figure 2.3 showcases the evolution of the ME budget in recent years. Consolidation measures included salary cuts for all personnel above a given salary threshold. Others comprised the freezing of career progression through the steps and lanes of the salary ladder, reduction in the number of school management positions, the downsizing of regional educational administrations, a major rationalisation of ministerial services, continued consolidation of the school network and the increase in average class sizes. It is estimated that the total impact in pre-school, basic and secondary education during the period 2012-14 enabled savings of over EUR 1.1 billion. As staff expenditures make up a significant portion of the ME budget, funding cuts loomed larger than in other public services with less intense human resource requirements.
The Portuguese school system is co-funded by the European Union’s European Structural and Investment Fund (ESIF), primarily through the European Social Fund (ESF) and the European Regional and Development Fund (ERDF). Between 2007 and 2015, 70% of ESF funding (just over EUR 5 billion) were devoted for building human capital skills (the design, introduction and implementation of reforms in the education and training system; measures to increase participation in education and training throughout the lifecycle; and the development of human potential in the field of research and innovation, in particular through postgraduate studies). In the same period, ERDF invested EUR 2.3 billion in education infrastructures. Between 2014 and 2020, the European Structural and Investment Funds plan to invest EUR 5.2 billion in the Portuguese education system.
Figure 2.3. Public budget for school education, 2005-16
Source: CNE (2017), Estado da Educação 2016 [State of Education 2016], http://www.cnedu.pt/content/edicoes/estado_da_educacao/CNE-EE2016_web_final.pdf.
In the case of the ESF, most investments are made through the Human Capital Operational Programme (PO CH), approved by the European Commission at the end of 2014.1 The total funds allocated to PO CH are over EUR 3.6 billion between 2014 and 2020, with 85% coming from the EU budget and 15% from national sources. These funds support the provision of school education in the North, Centre and Alentejo regions, classified as convergence areas due to their regional GDP per capita below 75% of the EU average. Funds are distributed based on five primary goals: i) to promote educational success and tackle early school leaving; ii) to increase enrolment in higher education and advanced training; iii) to enhance learning, lifelong learning and employability; iv) to improve the quality and innovation of the education and training system; and v) to provide technical support. As concerns school education, PO CH funds primarily support VET programming, teacher training, equipment procurement and targeted programmes for equity (see Annex 2A for details). Algarve and Lisbon receive national funds to further the same goals.
Distribution of funding across resource categories and governance levels
Current expenditure
For the purpose of this report, current educational expenditure refers to the costs of running the day-to-day operations of schools and the education system at its different levels of governance. It includes costs incurred by teaching and learning activities, teachers’ and other educational staff’s salaries and other operating costs. Operating costs refer to expenses associated with the maintenance and administration of a school (e.g. heating, electricity, small repairs, perishable instructional materials, equipment that lasts for less than one year, etc.) (OECD, 2017[2]).
According to Portuguese administrative data, current expenditures accounted for 98.4% of the total public budget on education in 2015. Current expenditures included the costs associated with the payment of staff salaries (92.1%) and other operational costs (6.3%) (Ministry of Education, 2018[4]). Internationally comparable data sets the proportion of current expenditures devoted to staff salaries in Portugal at 93% of current expenditure, around 15 percentage points above the OECD average (OECD, 2017[1]). Chapter 4 provides greater detail on the evolution of investment in human resources in recent years.
Funding for schools’ current educational expenditure in Portugal is implemented by seven allocation mechanisms – approaches to distribute and transfer funds to different levels of government or school administration. Table 2.2 outlines these different funding streams, their main purpose and the basis to determine their amount. The type of allocation mechanism indicates the degree of discretion that recipients have to decide how the funds are used (OECD, 2017[2]).
As Table 2.2 demonstrates, most funding streams in Portugal are directly transferred from the Ministry of Education – with the oversight of Institute for the Management of Education Finance (IGeFE) (see Chapter 1) – to the school cluster level.2 However, in line with a gradual process of delegation of responsibilities to subcentral levels of governance (see Chapters 1 and 3), municipalities have been progressively given more discretion over the distribution of funds, mostly in pre-primary through lower secondary education. Local authorities have the responsibility to distribute funds for current expenditures intended for educational facilities, extracurricular activities and non-teaching staff in public pre-schools, primary and lower secondary schools and, in the case of municipalities with administrative contracts granting additional responsibilities (contratos interadministrativos – see Chapter 1), school meals and transport.
Municipalities use resources raised through both municipal taxes and funds transferred by central authorities. The state transfers funds in a block grant (Table 2.2, Line 1: the Municipal Social Fund) to municipalities under the supervision of the Directorate General of Local Administration, except for municipalities with inter-administrative contracts that receive funds for 2nd and 3rd cycle schooling under the supervision of IGeFE. Block grants are relatively flexible since municipalities have discretion over the funds that are allocated from the central level, as long as these are assigned to broad areas of funding. The Municipal Social Fund (MSF) is determined using a combination of funding formula and administrative discretion based on spending justification by local authorities. The formula for distribution of the MSF is fixed annually by the State Budget Law according to specific weights and indicators: 35% of the allocation is based on the enrolment of children in public and government-dependent pre-school and basic education establishments; 32.5% of the allocation is based on the number of users registered with the National Health Service for a given municipality; and 32.5% based on the number of users and beneficiaries of nursery networks and pre-school education establishments located in the municipality. Execution and inter-administrative contracts (Table 2.2, Line 2) established between the Ministry of Education and municipalities also guarantee funding for operating costs, to the extent negotiated between the central and local levels. Municipalities can also further delegate responsibilities to civil parishes in the distribution of funding, resources and services to schools. Many municipalities and civil parishes also allocate funds from other sources to transportation and school meals (Line 6 in Table 2.2).
Despite the existence of several funding streams cascading from the central level to local authorities, the bulk of school funding in Portugal is directly transferred from the Ministry of Education to the administration of school clusters. Teacher salaries are funded by earmarked grants to school clusters (Line 3) in all educational levels and so are non‑teacher salaries in secondary education. Schools receive the earmarked transfers and pay teachers working in their cluster. Non-teaching staff working in 3rd cycle and upper secondary schools are paid by schools from funds transferred to the schools’ administration directly from the Institute for the Management of Educational Finance (Instituto de Gestão Financeira da Educação – IGeFE) (Table 2.2, Line 4). On the other hand, non-teaching staff assigned to work with children in pre-schools, primary and 2nd cycle education are municipal workers and receive their salaries directly from municipalities (Table 2.2, Line 7).
Table 2.2. Funding streams for current expenditure, 2016
1. Block grant from central authority to local authorities for operating costs, extracurricular activities and subsidised meals, excluding teachers’ salaries (ISCED 0-1 first 4 years, ISCED 2): The Municipal Social Fund (Fundo Social Municipal) is a central budget block grant to municipalities, aimed at covering current expenses in public pre-schools and public schools offering the first 4 years of ISCED 1, namely non-teaching staff salaries, meals, extracurricular activities, school transport and other operating costs, besides teaching and monitoring staff in extracurricular activities in sports and the arts, student curricular support, health support at school and socio-educational support to students in ISCED Level 1. Furthermore, it also aims to cover expenses with school transport at ISCED level 2. If the municipality presents expenditure exceeding the budget in a given year, the excess is deducted from the grant of the following year.
2. If the municipality presents expenditure exceeding the budget in a given year, the excess is deducted from the grant of the following year. At the time of the review, representatives from IGEFE indicated that the funding formula for non-teaching costs overrides administrative discretion decisions.
3. The numbers of teaching and non-teaching staff are determined via an administrative process described in more detail in the section below on the budgeting and planning process. Once staffing levels are established, the final grant amount is determined based on salary schedules of teaching and non-teaching staff.
Source: OECD (2017), The Funding of School Education: Connecting Resources and Learning, http://dx.doi.org/10.1787/9789264276147-en, Annex A: Country Profiles.
Block grants, restricted to given areas of spending (Line 4), are channelled to cover operating costs related to the activity of lower and upper secondary schools. The amount is determined through the Institute for the Management of Educational Finance’s (IGeFE) analysis of management indicators, prior year expenditure, expectations for changes in prices, as well as student enrolment and teaching hours projected by the General Directorate for School Administration (Direção-Geral da Administração Escolar – DGAE) and other relevant variables provided by the Directorate General for Schools (Direção-Geral dos Estabelecimentos Escolares – DGEstE). These restricted block grants for operating costs in lower and upper secondary schools, as well as the funds transferred from municipalities to schools offering other levels of education, give limited expenditure flexibility as these are expected to be just enough to pay for utility bills.
The administrative, budgetary and pedagogical management of all schools is the responsibility of the school unit, either the school cluster or a non-clustered school. Subsidiary schools within a cluster have no independent responsibilities over budget management.
Alongside the regular budget, school clusters may apply for additional resources, in order to develop specific projects and activities. These include targeted programmes addressing equity concerns, such as the Priority Educational Intervention Areas (Territórios Educativos de Intervenção Prioritária – TEIP) and the National Programme to Promote School Success (Programa Nacional de Promoção do Sucesso Escolar – PNPSE). Each application is accompanied by specific criteria, which attempt to guide schools to make evidence-informed plans. The application process evaluates schools’ ability to implement the proposed initiatives. The Ministry of Education provides support in the form of training and technical resources to schools to develop both TEIP and PNPSE applications. The allocations of resources from TEIP and PNPSE come mostly in the form of the provision of extra human resources to execute the project, together with the financing of training related to the school’s project.
Capital expenditures
Funding for capital expenditure covers spending on assets that last longer than one year. It includes funds for construction, renovation or major repairs to buildings, as well as on new or replacement instructional and non-instructional equipment (e.g. furniture, laboratory equipment, computers, etc.) (OECD, 2017[2]).
Capital expenditure corresponds to less than 2% of the total budget of education in Portugal (see Figure 2.3). As with the funding of current expenditures, the responsibility for distributing financial resources is shared between the central and local levels. While the Ministry of Education is responsible for investing in lower and upper secondary schools, municipalities generally have responsibility for management and maintenance of school buildings at the pre-primary and primary levels.
Capital expenditure is determined by ad hoc decisions and infrastructure investment programmes, both based on assessments of needs (Table 2.3). Local authorities are expected to finance infrastructure investment programmes in school clusters for infrastructure construction, maintenance and renovation, and the provision of non‑instructional and instructional equipment in pre-primary and basic education. There is no publicly-available, system-wide information about the amount spent by municipalities on the fulfilment of this responsibility.
Table 2.3. Funding streams for capital expenditure, 2016
Note: Infrastructure investment programme refers to specific, initiatives targeted at infrastructure investment following medium-term development plans or strategies at the national or sector level for a fixed period of time. Ad hoc decisions refer to punctual agreements between the public funder and the entities receiving the funds.
Source: OECD (2017), The Funding of School Education: Connecting Resources and Learning, http://dx.doi.org/10.1787/9789264276147-en, Annex A: Country Profiles.
Infrastructure maintenance and renovation, the provision of non-instructional and instructional equipment (including ICT equipment) are financed by ad hoc decisions at the central level in ISCED 1-3 (Table 2.3, Lines 1-3). The central level finances infrastructure construction in ISCED 1-2 on the basis of ad hoc decisions. The Directorate General for Schools (DGEstE) is responsible for modernising and requalifying schools over which it has authority, but the amount invested in school building maintenance has declined steadily from EUR 14.3 million in 2013, to EUR 2.8 million in 2016. For a select number of schools (173) at the secondary level (ISCED 3), infrastructure construction and maintenance is financed by an infrastructure investment programme co‑ordinated by Parque Escolar (Table 2.3, Lines 4-5).
Parque Escolar is a state-owned company, functionally dependent on the Ministry of Education, created in 2007. The main motive for the creation of Parque Escolar was to plan and carry out a Programme for the Modernisation of Secondary Schools, with the objectives of updating and restoring the physical, environmental and functional effectiveness of secondary school facilities. Parque Escolar also inaugurated a new management model for the maintenance of the intervened school infrastructures (Ministry of Education, 2018, p. 25[4]). Chapter 3 explores details of these school facilities in more depth.
Since it was launched in 2007, Parque Escolar has invested almost EUR 2.4 million in the requalification of 173 of the 332 public secondary school buildings initially included in the programme. The programme has mobilised a significant percentage of European Regional and Development Funds (ERDF) (almost EUR 950 million) during the National Strategic Reference Framework for the 2007-13 period. It was awarded grants by the European Investment Bank (EIB) (EUR 900 million) and by the Council of Europe Development Bank (CEDB) (EUR 250 million). Parque Escolar played an important role in the economic stimulus package launched by the Portuguese Government in 2009 within the European Economic Recovery Plan (approved by the European Council in December 2008). In 2017‑18, Parque Escolar is expected to invest an additional EUR 106 million to maintain the facilities of the original 173 schools. However, more than 100 planned school re-qualifications were suspended in 2011 and ERDF funds for this programme have been greatly reduced in the 2014‑20 investment period.
School library facilities and materials are managed by the School Library Network (Rede de Bibliotecas Escolares – RBE), which includes all schools with more than 100 students and covers all education levels. This programme launches annual applications to support the installation of new libraries or to maintain and modernise existing libraries.
Budgeting and planning process
The budget process for financing schools is annually defined, based on information provided by schools and centrally estimated, and is anchored in past expenditure corrected for inflation. The public budget for education is proposed by the Ministry of Education, negotiated with the Ministry of Finance and finally approved by both the central government and parliament (OECD, 2017[2]). Two separate mechanisms exist for budgeting centrally distributed funds, one for the teaching salary component of the budget and the other for non-teaching salaries and non-salary expenditures.
Teaching salary budgeting
Each spring, the Directorate General for Schools (DGEstE), in articulation with ANQEP for planning VET courses, provides student enrolment projections to each school cluster administration. The school cluster administration uses this information to decide on an offering of classes sufficient to meet student need, following the guidelines presented in a governmental dispatch and formalised in the Organisation of the School Year (organização do ano letivo), an official regulation that defines the class size and staffing rules for schools, published on a yearly basis by the Secretary of State for Education. The school cluster proposal takes into account planned strategic projects, including PNPSE and TEIP, and the estimated number of classes previously approved by DGEstE on the basis of the estimated distribution of students. DGEstE reviews, corrects as necessary and ultimately validates the network of class offerings for each school and the entire system.
Once classes have been determined, the school cluster administration reviews the available permanent teaching staff returning to the cluster, compares the instructional need with the available human resources and submits a proposal for any missing teaching hours to the Directorate General for School Administration (DGAE) to meet its instructional needs. Similarly, DGAE reviews the proposal, corrects it as necessary, validates the number of required teachers and then assigns the required teachers following protocols articulated in Chapter 4 of this report.
Finally, the financial department within the Ministry of Education (IGeFE) receives the defined staffing levels for each school cluster and transfers earmarked funds to schools and school clusters to pay teachers’ salaries.
Non-teaching salary budgeting
A parallel process exists for planning and developing the budget for the non-teaching component of schools’ budgets. Each spring, school administrators prepare a proposal for their non-teaching expenses to submit to IGeFE. This proposal takes into account prior‑year expenditures, planned investment in school facilities and resources, and other projects pursued by the school, all following the guidelines relating to non-teaching expenses in the Organisation of the School Year regulations.
IGeFE is responsible for analysing the budget proposal according to legal criteria and for defining the school budget. The amount requested by the school is contrasted with the results of a model recently developed by IGeFE based on historical expenses, number of students, levels of education, facilities at the schools, the existence of central heating and the geographic location of schools. This model, which was newly introduced for the 2017/18 school year and is not public, automates the rules defined for each expenditure item. During the review visit, stakeholders indicated that in the case of a difference between the amount requested by the school cluster and the amount generated by the IGeFE model, the amount allocated would default to the total determined by the IGeFE model. During the school year, IGeFE may approve additional ad-hoc funding following a justified request from a school.
Budgetary responsibilities
Schools and school clusters have limited autonomy to manage their budget. The vast majority of schools’ operating budget is devoted to staffing (around 93%) but the levels of staffing, the selection of staff and the assignment of teaching staff to schools are decisions made at the central level. School clusters do control assignment of teachers to roles within a cluster as long as they respect the level and content area for which they are licensed (see Chapter 4). Though schools are granted legal autonomy over directing the non-salary current expenditure, in practice, school-level stakeholders report this amount must be used to cover basic maintenance and utility costs, leaving minimal opportunity to invest these funds in innovative projects. Carry-over of funds from one year to the next is subject to the approval of local or central authorities depending on the source of funding. During the review visit, stakeholders reported the difficulty they had in covering even minimal utility expenses with their non-salary budgets.
Funding of private schools
Despite the fact that there is no state obligation to award subsidies to private schools, the Portuguese central government has funded private schools by means of various contracts. In the 1980s, the central government started to partially fund private schools in order to provide a sufficient offer of schooling throughout the country. Under an “association contract” (contrato de associação) government-dependent private schools received government funding on a per-class basis. These government-dependent private schools were granted public funding in geographic areas insufficiently served by public schools. The number of association contracts has decreased over the past decade and they have also become politically controversial, particularly since a new law in 2013 allowed the central government to establish these contracts with private schools regardless of the public offer in the same area. Evidence of corruption in the management of the association contracts created further controversy.
Contracts that provide direct support to families to attend private schools are important parts of the government support of private schools, though these draw less widespread attention. Two types of family-support contracts exist depending on the educational level: “simple contracts” (contrato simples) provide a partial subsidy for low-income students to attend private primary and secondary schools; and “development contracts” (contratos de desenvolvimento) also privilege low-income students but subsidise private pre-schooling. Concerns exist as to whether the level of government subsidy fully covers the cost of attending private schools for the lowest-income families. This fact begs the question of whether these types of contracts end up serving the interests of middle-income families, and therefore, promote greater socio-economic school segregation (see Chapter 3).
A final contract category is the “sponsorship contract” (contrato de patrocínio) in which the central government awards a grant of 50% or more of the costs to private schools that are providing an innovative form of education in subjects that are under-served by public schools, such as specialised artistic education. These private schools may charge tuition to cover the remaining costs. Sponsorship has almost tripled during the last decade. This contract category also supports private school-aged (initial) VET-schools.
About 7% of the State budget is allocated to government-dependent private schools, representing a stable proportion between 2008 and 2015. As of 2015/16, it includes support to pre-school in social institutions (around 2%), private professional schools not supported by the European Social Fund (0.82%), private schools in areas where the public offer is not sufficient (3.19%) and specialised services for students with special needs (0.34%).
Funding for equity purposes
Equity considerations are important in the design of educational policies and involve two key dimensions: fairness and inclusion (see Box 2.1). The educational system in Portugal is built around the notion of universal quality education for all learners. Different policies to respond to the varied needs of a diverse student population have been implemented, steered by the central authority of the Ministry of Education and based on a centralised distribution of funding. While the programmatic aspects of those policies are reviewed in greater detail in Chapter 3, the budget assigned to each of these political priorities is presented in Table 2.4 and described below.
Expenditure on additional support measures focused on the needs of special education learners has increased, from EUR 197 million or 3.3% of the educational budget in 2010/11 to EUR 300 million or 5.9% of the overall budget in 2016/17. However, this has been accompanied by a near doubling of the SEN student population from 46 950 to 82 667 during the same time span, thus representing a decrease in per-student expenditure in recent years.
The most significant targeted support measure for special education students is teachers specialised in special needs education instruction. Costs for these rose from EUR 181.5 million in 2010/11 to EUR 244 million by 2016/17 but declined from 92% to 81% of the total expenditure in additional support measures due to the emergence of a variety of other expenditures that are consistent with the inclusive approach. The most relevant strategies in terms of expenditure are early intervention (EUR 20 million since its introduction in 2012/13) and the financing of resources centres and assistive technologies (stable at around EUR 20 million since 2014/15).
Box 2.1. What do we understand by equity in education?
Equity in education has two dimensions. The first is fairness, which means making sure that personal and social circumstances – for example gender, socio-economic status or ethnic origin – should not be an obstacle to achieving educational potential.
The second is inclusion, in other words ensuring a basic minimum standard of education for all – for example that everyone should be able to read, write and do simple arithmetic. The two dimensions are closely intertwined: tackling school failure helps to overcome the effects of social deprivation, which is associated with higher rates of school failure.
Both fairness and inclusion are key issues for OECD countries. Children from poorer homes in most OECD countries are between 3 and 4 times more likely to be among the poorest performers on assessments of literacy and numeracy at age 15. Three key policy areas can affect equity in education: the design of education systems, practices in and out of school and how resources are allocated.
Regarding financing, the OECD (2007[5]) report No More Failures: 10 Steps to Equity in Education recommends three measures:
Provide strong education for all, giving priority to early childhood provision and compulsory schooling.
Direct resources to the students with the greatest needs.
Set concrete targets for increased equity, particularly related to low school attainment and dropouts.
Evidence suggests that resource allocations to address inequality have the greatest impact in addressing learning gaps if they are made early in students’ educational progression. But these investments may increase inequality if they are primarily claimed by those least in need of it or if they are of low quality.
Since national education resources are limited, governments need to ensure that they are being directed to the poorer students and regions so that minimum standards are met everywhere. Many countries have special schemes to direct additional resources to schools or school areas serving disadvantaged students. Such schemes need to ensure that the extra resources are used to assist those most in need. The stigma arising from the labelling of particular schools as “for disadvantaged children” should be avoided.
As with all policy changes, governments need to be able to measure success in improving equity, performance and school dropout rates. Numerical targets can be a useful tool, by articulating policy in terms of what is to be achieved rather than in terms of formal processes. Numerical targets for reducing the number of school leavers with poor basic skills and the number of early school dropouts are particularly useful.
Source: OECD (2007), No More Failures: Ten Steps to Equity in Education, http://www.sourceoecd.org/education/9789264032590.
Table 2.4. Expenditure on equity and inclusion policies
In EUR thousands (nominal)
x : Programme non-existent in these years.
.. : Data not available.
1. PIICIE funds represent EUR 108.1 million over 7 years (2014-20). Table annualises the total by dividing by 7.
2. This category collapses the following categories from the EASNIE report: Communication Tech. Resource Centre for Special Ed (CRTIC); Resource Centre for Inclusion (CRI) financing; Professionals contracted by schools in specialised units; Assistive learning products; CRTIC financing; and Specialised support units.
Note: Expenditure on equity and inclusion policies includes all nationally managed funds, combining Portuguese and European sources.
Sources: European Agency for Special Needs and Inclusive Education (2018), Financing Policies for Inclusive Education Systems, Country Report: Portugal, EASNIE, Brussels; Ministry of Education (2018), OECD Review of Policies to Improve the Effectiveness of Resource Use in Schools: Country Background Report for Portugal, http://www.oecd.org/education/schoolresourcesreview.htm.
The most important additional support measure is a stable programme named School Social Assistance (Ação Social Escolar – ASE), that supports students living in poor conditions, based on an application filled by school clusters’ social workers, according to parents’ official information (including tax declaration), that provide families with support for the costs of attending school, such as meals, books, school supplies, transport and accommodation. The number of students supported through this programme is high, around 35% of students, divided into three different intensities of support (School Social Assistance A, B or C).
Other important selective support measures are TEIP and PNPSE. Funding for TEIP reached EUR 21.3 million in 2016 (0.41% of the overall schools’ budget) and has been relatively stable in nominal terms. Coupled with increasing school and student participation, this implies declining resources per student. Open to all school clusters excluded from TEIP, the National Programme to Promote School Success (PNPSE) was created in 2016, as an extension of a previous school success programme (More School Success Programme, Programa Mais Sucesso Escolar – PMSE), with a total approved budget of EUR 32 million (EUR 29 million from European funds and EUR 3 million from national funds) distributed according to specific criteria. Additional supporting funds for school clusters’ PNPSE projects exist to finance teacher training, non-teaching staff levels, second-chance education, guidance and psychology network services, extracurricular activities, family training, ICT investments and other school-developed priorities as part of the EU co-financed Integrated and Innovative Plans to Combat School Failure (Planos Integrados e Inovadores de Combate ao Insucesso Escolar – PIICIE). Regions and municipalities apply for these funds for a three-year investment period. The total budget for the EU-sponsored Portugal 2020 investment (2014-20) amounts to EUR 108.1 million. In total, yearly spending on TEIP, PNPSE and PIICIE amounts to around EUR 69 million or just under 1.4% of the educational budget.
Unfortunately, a complete accounting of measures to promote equity in schools is impossible due to a lack of systematic recording. Other programmes to tackle specific vulnerabilities of some groups, such as Portuguese as a Second Language (Português Língua Não Materna – PLNM), Distance Learning for Itinerant Students (Ensino a Distância para a Itinerância) and tutorials for low achievers (Apoio Tutorial Específico – ATE and Apoio Educativo Tutorial – AET) exist. Data on financial expenditures on these topics are not publicly available and the ministry is not readily able to produce estimates of these.
Monitoring and assessment of financial expenditures and strategic initiatives
State monitoring of expenditures comprises a large array of procedures and systems that involve different units of the Ministry of Education (Ministry of Education, 2018, p. 119[4]). Two broad types of monitoring prevail: i) the evaluation of inputs and outputs to ensure compliance with legal requirements; and ii) the definition of desired outcomes from public expenditures and the systematic evaluation procedures to determine its effectiveness and efficiency. Some monitoring processes follow one or the other of these typologies, while other processes integrate both in their reviews.
The audit and financial control monitoring by the central government is conducted by the Inspectorate-General for Education and Science (Inspeção-Geral da Educação e Ciência – IGEC), within the responsibility of the Multidisciplinary Audit and Financial Control Team (Equipa Multidisciplinar de Auditoria e Controlo Financeiro – EMAF). In 2015, IGEC carried out auditing and financial control activities on EUR 400 million of expenditure and EUR 480 million of revenue collected. As a result, situations were detected that were worth correcting by the audited services in the amount of EUR 95 000, to be reimbursed by employees to the Ministry of Education and EUR 166 000, related to amounts payable to school employees as a result of inaccuracies in the processing of remunerations or credits in their favour. Visualised as a percentage of total expenditure, and of total revenue audited, 0.02% and 0.03% respectively, these results reveal a system that follows financial regulations.
At the system level, the National Council of Education (CNE) prepares an annual report (the State of Education – Estado da Educação) on the inputs, outputs and outcomes of school education in Portugal. Further, the Directorate General for Education and Science Statistics (DGEEC) develops, monitors and disseminates indicators of school performance and compares them with their expected values taking into account the characteristics of the respective school population. A public portal called InfoEscolas reports in a user-friendly way system-wide averages and school-level performance for all public and government-dependent schools in Portugal. Currently in pilot phase, DGEEC has also created a website called Escola 360 which hosts a wealth of data and allows teachers, parents and students to access comprehensive school-specific data.
Official statistics regarding system-wide performance are based on a longitudinal database entitled the Information System of the Ministry of Education, known as MISI for shorthand. This longitudinal data system covers student, human resources and school social action from pre-school to upper secondary education for public schools and private schools with association or sponsorship contracts, private professional schools of the Lisbon and Tagus Valley area and of all other private schools that express an interest in participating. DGEEC accesses the information system of schools on a daily basis and verifies its correct functioning.3 In 2014, the MISI databases were anonymised, longitudinally aligned and placed into a secure server environment, permitting the use of these data in external research projects. These microdata permit researchers both within and outside the ministry to rigorously evaluate programmatic impacts. Similar data and course management functionality on vocational and adult education exist in the Information and Management System of the Education and Training Offer (Sistema Integrado de Informação e Gestāo da Oferta Educativa e Formativo – SIGO) database.
At the school level, all public and government-dependent private schools are subject to compulsory inspection of their teaching and learning processes, and their operational administration by central governments’ education inspection services (see Chapter 3). These inspections include both an assessment of schools’ use of resources, their outputs (e.g. number of classes offered), as well as an assessment of student outcomes.
School clusters are expected to comply with laws and regulations that focus on inputs and processes within the school organisation and to report to central government directorates and inspectorates. Schools report activities, expenses and students’ results in their annual activities plan. The activities and accounting reports from schools are submitted for approval to the General Council (see Chapter 3) and are disseminated on the InfoEscolas website. The accounting reports from municipalities are submitted to the Municipal Assembly and publicised on their websites. Each school also submits a report regarding their provision of services to students with SEN, structured around two dimensions: planning and organisation of education and educational services and the educational responses and students outcomes. Financial or administrative malpractice results in significant sanctions for school principals. A complete review of school evaluation efforts beyond financial and regulatory compliance monitoring follows in Chapter 3.
Ad hoc evaluation of particular projects exists, particularly when these projects are co‑financed by the European Social Fund (ESF). With respect to European funds, performance framework conditions exist for the financial and outcome results for ESF‑supported initiatives. Conditions prior to (ex ante) the disbursement of funds must be suggestive that successful completion of an initiative is likely. These conditions include the development of clear performance targets. Progress towards these targets is then reviewed systematically over the project’s lifecycle. Between 5% and 7% of each project’s funds are reserved in a performance reserve. Projects failing to meet targets see these funds reallocated to other priority areas (European Commission, 2015[6]). The first cycle of ESF fund expenditure was evaluated at its conclusion (ex post) (European Commission, 2014[7]), while interim results are regularly assessed (e.g. the European Commission’s Surveillance Report (2017[8])).
Similarly, various national programmes have incorporated formal evaluations as part of their implementation. There is some production of evidence to inform decision-making such as in evaluations of the impact of class size in Portugal, the rates of social segregation, the impacts of year repetition and others. However, the formal evaluation approach of the ESF funds is the exception rather than the norm. National evaluations of programmes such as TEIP, PNPSE, principal training and others generally focus on input and output measures (e.g. amount invested, number of training sessions provided) and these are not sufficient to evaluate the actual effects of the programme. While extensive data monitoring and reporting systems exist, few student subpopulation or system-wide goals have been articulated and minimal support and accountability mechanisms exist. Even in the case of ad hoc reporting of outcomes, minimal interventions either in the form of support or sanction, occur in response to struggles (see below).
Strengths
Portugal expresses a strong cultural commitment to education, supported by high levels of financial investment as a proportion of GDP
Despite the economic crises that led to severe cuts in the education sector, Portugal spends a high proportion of its GDP on total and public expenditure in primary, secondary and post-secondary institutions. Additionally, local enterprises commit financial and human resources to various initiatives that foster learning and a sense of belonging in schools. These initiatives serve to illustrate the widespread cultural commitment to education among different economic, social and political actors. Despite these high levels of relative effort, the total amount of investment in education and expenditure per student remains at relatively low levels.
Further, the availability of European funds has allowed Portugal to invest in key priority areas such as vocational education and training (VET), dropout reduction and the support of struggling student populations. Portugal’s future challenge is to appropriately integrate sources of local, national and international funds to support a sustainable investment in core strategic educational areas.
Demographic context provides opportunities for improvements in quality
While Portugal’s predicted long-term demographic trends pose challenges to its overall economic health, the projected decline in the young population presents opportunities for the school system. As in other Southern European countries, the school-aged population is already low by international standards and is predicted to continue to decrease. For instance, between 2015 and 2025, the overall Portuguese population is expected to decline from over 10.4 million to just under 10 million, while the share of population between 5 and 19 years old will decline from 7.5% to 6.6%, a reduction of almost 117 000 young people in Portugal or 15% of the total in the age group. By 2035, the share is anticipated to decline to 5.8%, an additional 12.8% reduction of the youth population. If Portugal can succeed in sustaining roughly the same overall levels of real educational spending, it would result in higher expenditure per student even without augmenting absolute amounts. To the limited extent that expenditure is related to quality, this has the potential to increase quality without affecting cost.
While the financial crisis forced attention on the efficient use of resources, modest economic growth offers potential for new investments in schools
Budget restraint due to the economic crises has increased awareness about the importance of efficiency in education and further fostered processes such as the consolidation of the school network that reduced the number of small schools and increased class sizes. Other current efforts that reflect the commitment to an efficient use of public resources include: the limitation of state funding to private schools only in geographic areas where the public offer is insufficient; the centralisation of wage payments: and a more thorough monitoring of fraudulent sick leave. Projections are that Portugal’s economy will continue to grow (OECD, 2017[9]) and recent evidence suggests that Portugal may be surpassing even these rosy projections. Combined, these trends present an opportunity for strategic planning to target educational priorities, leveraging resources freed up through efficiency and new resources available through economic growth.
Central governmental funding authority establishes equal minimal levels of main resource allocations
As opposed to educational systems financed primarily by local taxes or private expenditure, the Portuguese system is mostly publicly and centrally financed, which allows the government to direct resources for the national public good and equalise inputs across different jurisdictions on the basis of basic resource needs for sustaining normal operations. As Figure 1.2 in Chapter 1 indicates, Portugal raises much more of its revenues at the central level, which has the potential to smooth out subnational disparities. Similarly, Figure 1.8 in Chapter 1 highlights the extent to which policy-making decisions in education are centralised in Portugal. This should allow Portugal to make choices to equalise inputs. For instance, class size minimums and maximums determine the number of classes and the number of classes and curricular requirements determine the number of teaching staff allocated to each school. In principle, this should result in equal resource allocation across the country. Non-teaching staff is allocated in similar ways, while non-salary expenditures are expected to provide just enough for operational costs required to run the school according to its location, although facilities might differ on historical grounds. Though this equity-focused steering potential exists, the reality is that inputs and outcomes vary significantly across communities (see Chapter 3).
Programmes exist to promote equity for under-resourced communities and students
The United Nations Strategic Development Goal 4.5 calls for “eliminat[ing] gender disparities in education and ensur[ing] equal access to all levels of education and vocational training for the vulnerable, including persons with disabilities, indigenous peoples and children in vulnerable situations” (United Nations, 2015, p. 17[10]).
Portugal has developed a series of programmes intended to combat inequality for under-resourced communities and vulnerable students. Means-tested social support exists for all students from disadvantaged socio-economic backgrounds that provide free or reduced-price school meals, transportation, textbooks and other benefits. Specific supports exist for students who are struggling in school in the form of tutorials where students receive small group support on topics they have not mastered. Students who are not native-Portuguese speakers receive specialised language instruction. The Distance Learning for Itineracy has supported mobile populations, primarily Roma communities that, as a group, have faced significant challenges in secondary school completion. Rules provide for additional staffing for students with complex special educational needs. Further, extensive networks of special education resource centres provide services and supplies to support the needs of students with SEN. In addition, to programmes targeting students, programmes such as TEIP and PNPSE provide some targeted resources to high-needs students and communities. Despite the existence of these programmes, concerns persist about whether their funding levels are sufficient and more broadly about whether they are effective.
There is a nascent focus on programme evaluation to inform decision-making that benefits from a rich wealth of data about schools and students
A wide range of data is collected at the system level and could be used to highlight strengths and challenges in the system and steer resource allocation. There exists in Portugal a growing focus on results and efficiency of resource use.
Evaluation systems have become more consolidated and informative over the past 15 years. This process began in 2006 with the development of the MISI data system, continued into 2007 with the first school evaluation cycle that included student result indicators and was furthered by the 2008 teacher appraisal reforms (see Chapter 4), Since then, Portugal has seen a growing attention to results-based decision-making. The very existence of national exams at the end of the 3rd cycle of basic education (Year 9) and upper secondary education (Year 12) ensures consistent national expectations for all students and allows for regular monitoring of quality and equity at the system level. With the extension of PNPSE to all schools not covered by TEIP, nearly 99% of schools prepare a strategic action plan based on ministry guidelines and monitor progress in relation to their strategic action plan. Projects co-funded by the European Social Fund include explicit requirements for ex ante and ex post evaluation; the last round of such summative evaluations was conducted in 2014/15.
There are various current projects to improve monitoring and transparency of financial management. In fact, under the supervision of both the Ministry of Education and the Ministry of Finances, IGeFE is developing different projects expected to improve system efficiency, including: i) the digitalisation of financial management in all schools and educational services, through a new digital platform (SmartMEC); ii) a mobile application for the civil sector, principals and staff to have access to updated school information (APP da Educação); iii) a central repository of financial data of education (SIGeFE); iv) a platform of predictive analysis of the financial and budgetary evolution (PredictionME); v) a tool to detect and analyse profiles of high possibility of sick leave fraud; vi) a tool to follow up contracts with municipalities to manage school resources; and vii) an accountability system to link schools budget and IGeFE (POC/SNC).
Despite the current potential for Portugal to leverage these resources to set goals, use multiple forms of data to review progress, disaggregate data for different populations and make decisions based on outcomes, these types of actions are insufficiently pursued in practice (see below).
Challenges
Funding levels for key priorities are insufficient and these priorities face further challenges if and when EU funds decrease
While Portugal spends substantial amounts on education in relation to its GDP per capita, the absolute amount of educational expenditure per student is low compared to more developed OECD nations. It is worth noting that the actual high level of relative effort is due, in part, to a reduction of GDP that was larger than the adjustment in public expenditure and both facts point to the need of sustaining investment as the economy recovers. There remains significant debate about the extent to which raw levels of expenditure are associated with better education results, at least above a minimal threshold (OECD, 2017[2]). Nevertheless, to the extent that higher levels of expenditure create the necessary pre-condition for making more informed and effective resource decisions, Portugal’s low nominal educational expenditure may impose a ceiling on its ability to achieve its educational goals.
Furthermore, European funds have been used to support the expansion of educational offerings in core areas. As Chapters 1 and 3 address, public vocational education and training enrolment has expanded tremendously in the past 10 years. In the three convergence regions (North, Centre and Alentejo), 85% of the operational costs of these programmes are funded by the European Social Fund in support of Axis 1 (see 0). Similarly, Portugal has expanded its support for struggling students and communities through the development of equity funding strategies, particularly in the form of the TEIP programme.
The TEIP programme – primarily funded by the European Social Fund – continues to be the core targeted equity funding scheme to support schools serving large proportions of low-income students. Furthermore, the progress the Portuguese system has made over the past 10 years towards the goal of extending the vocational offer to 50% of secondary enrolment has also only been possible through leveraging EU funds. The Structural and Investment Fund has clear rules on the principle of “additionality”, i.e. that European funds supplement national investment and that the member state should not reduce its commitment in the area (European Commission, 2015, pp. 163-164[6]). However, because the European investment coincided with expanded vocational offers and equity provisions, Portugal satisfies the “additionality” requirement while simultaneously relying on international funds to support core educational services. This creates serious challenges to the long-term sustainability of core educational offerings (i.e. VET) and key equity priorities (i.e. TEIP).
On the implementation side, the effectiveness of targeted programmes is often hindered due to long delays between schools’ application and Portuguese disbursement of EU funds. Financial or human resources made available to school cluster administrations often come late during the intervention period, hindering the overall quality of the planned initiative. Stakeholders during the review visit repeatedly voiced these concerns, though national officials contend that this was primarily an issue at the start of the 2014‑20 European funding cycle and that these funds now flow in a timely fashion.
The ESF has been a critical tool to enlarge and improve the Portuguese education system but the level of investment is unpredictable. Brexit is anticipated to lower ESF funding levels (Wishlade, 2017[11]) and, as regions approach convergence, they may see their funding decline. Further, the Algarve and Lisbon do not receive ESF funds, so European programmes must be replicated at the national level to ensure all regions have access to these kinds of support. Portugal faces a serious challenge to replace these resources with national funding. So far, no publicly developed strategy has been formulated to face this challenge, other than through ongoing negotiations within the European Commission to maintain this source of funding.
Funding streams are fragmented
There is fragmentation of decision-making authorities and budgetary responsibility within the central administration and between vertical levels of government. Different funding streams come from different units within the ministry and the municipal levels. Schools are supervised by different local and national authorities (IGeFE, IGEC, DGEstE, DGE), which supervise whether resources are being managed according to legal frameworks and principles of good management of public resources. The processes for the approval of schools’ human resources and the distribution of funds for teacher compensation are under the responsibility of different entities within the Ministry of Education. Moreover, this fragmentation is heightened due to the absence of a single entity or a co‑ordinated formal network that has an integrated overview of school resources allocation and use. Not surprisingly, there is no systematic assessment of cost effectiveness.
Decision-making about staff or non-staff allocations is insufficiently linked to quality and efficiency considerations, as the departments making these choices do not bear the cost of decisions. Specifically, different sub-entities within the ministry are responsible for the planning of the school network, the allocation of staff and the payment of salary and non‑salary expenses. DGEstE estimates the anticipated population of students by schools and establishes the network of classes, thereby assuming primary responsibility for developing the school offer plan. DGAE then assigns teachers to school clusters, based on teachers’ contractual status and priority in the teacher assignment ranking (see Chapter 4). IGeFE, on the other hand, is responsible for ensuring the sound financial management of the system, including ensuring that the appropriate amount of resources is allocated. Neither DGEstE, which defines the network, nor DGAE, which assigns teachers to the network, are responsible for the financial implications of these decisions. Neither DGEstE nor DGAE directly incurs the financial costs of defining too many classes or assigning too many teachers. This may partially explain the fact that the actual student-teacher ratios fall far short of the statutorily defined maxima (see Chapter 4).
Furthermore, different departments within the Ministry of Education and other ministries co‑ordinate different pro-equity policies. There is a lack of strategic system- and schoolwide views, as well as weak management and evaluation of goals, either related to quality, efficiency or equity of the educational system. The separate management of specific programmes creates additional burden and fragmented reporting for schools (see below for more on this).
At the school level, there are similar divides between responsibility for spending and managing budgets. Principals have no incentives to spend less than the amount they receive in their non-salary budget, as this might reduce next year’s allocation. On the other hand, it is unclear whether requests for additional funds should be granted or should result in future-year penalties as it is difficult to observe whether this over-spending is due to real, unanticipated needs or a mismanagement of resources. Since budgets are not fungible, principals have no incentives to find efficiencies in operational expenses to be able to secure, for example, more teaching aides or teachers.
There are limited transparent and efficient mechanisms for allocating funding to either staff or operational funds, with negative consequences on efficiency
The criteria and decisions underlying the yearly estimation of school budgets are opaque to all stakeholders at all levels throughout the system (school administrators, municipal administrators, parents and citizens, politicians, etc.), including most officials in the Ministry of Education and related ministries and services. The criteria for the distribution of funds across schools are regarded as a technical detail, relevant only to the financial department within the Ministry of Education, with a lack of internal stakeholder understanding of how funding is determined.
Salary expenditures represent nearly the entire operating budget in Portugal but the processes by which different schools end up with different per-student allocations of teaching and non-teaching staff are unclear. Variation in student-teacher ratios occurs as a result of school size, population density, compensatory funding, special projects and various other factors. To stakeholders, it is not evident which of these variations are functions of strategic school system investments and which variations are only circumstantial. There is no transparent mechanism for funding in which compensatory amounts to address varying levels of student need and community challenge are discussed. Contrary to other OECD countries, there are no criteria established for how much additional resources a school should receive depending on the level of need of its student body. Instead, equity funding efforts exist as separate categorical funds that operate largely independently from the primary distribution of funds and whose totals depend on the schools’ proposed strategies.
Non-salary expenditures are equally fraught with opacity. An algorithm exists to set the level of each school’s non-teaching budget, but its contents are not public. Furthermore, the process for assessing schools’ operational funding needs is ineffective as principals propose operational budgets every year but they are overridden the operational funding algorithm. Other than encouraging school leaders to think about their budgetary needs, the purpose of principals going through the exercise of proposing their budget when it is always superseded by the algorithm seems unclear.
Budget processes that encourage schools to negotiate the amounts they will receive can generate decision-making distortions at the school level. This is a well-documented phenomenon worldwide. According to OECD/The World Bank, the “distribution of funding on a discretionary or incremental basis is rarely efficient or equitable and tends to be associated with low levels of budget transparency” (quoted in OECD (2017[2])). Schools have no incentives to reduce their expenditures, improve their efficiency or the quality of their provision. Moreover, they might expend in excess hoping “that others absorb” their deficits and “inflate their expenditures with the aim of obtaining larger allocations in subsequent years – a practice known as “deficit budgeting” (OECD, 2017, p. 120[2]). Negotiation processes might be influenced by the strength of local actors. These sorts of incentives may lead to an extensive regulatory framework, with a simultaneous system of unwritten “norms” used to lower the expected allocation (OECD, 2017[2]). The new non-salary funding algorithm should work to minimise these negotiating strategies but the maintenance of back-and-forth proposals and counters by schools to IGeFE preserves some of these inefficiencies.
Based on stakeholder reports, “gaming” the budget system is an accepted practice. According to interviews, some school principals appeared expert in applying the rules and taking advantage of them. One example shared during the review visit was principals strategically distributing students with special educational needs across as many classes as possible, to take advantage of the legal requirement to reduce class sizes in response to the presence of one SEN student. Some stakeholders also suggested that labelling students “special needs” is at times intended to reduce class size and generate additional support. The recent important increase of the total number of SEN students might reflect this fact (see Chapter 3). Nevertheless, two national agencies (DGEstE and IGEC) analyse samples of schools to determine irregularities in both class constitution and identification rates of students with SEN.
As a consequence of strict allocation rules, schools have limited budgetary autonomy to respond to challenges
Neither school clusters nor schools, even those in municipalities with inter-administrative autonomy contracts, have budgetary autonomy. All staff is centrally authorised and financed, either through standard staffing assignment or special programmes. Furthermore, resources for non-wage expenditure are earmarked and residual, going almost exclusively to cover utility costs, leaving limited room for strategic investments such as professional development and ICT, which are mostly centrally defined.
Within the staffing portion of budgets, schools are constrained not only by the rules for standard staff assignment (see Chapter 4) but also in the strategic projects and investments they plan yearly. Limited financial flexibility exists in the context of schools’ proposals for their improvement programme, either TEIP or PNPSE. In practice, all proposals’ key expenditures rely on requests for additional human resources, which are ultimately satisfied by centrally allocated staff.
These same conditions of constrained local decision-making exist for the non-teaching salary component of schools’ budgets. Despite the fact that on paper schools have wide discretion in how they spend their current expenditures other than teaching salaries, in practice the amount of this budget is so small that it must all be dedicated to minimal investments required to run schools – utilities, classroom materials, cafeteria staff – thereby limiting the possibility of strategic use of these funds. During the review visit to some schools, stakeholders reported that the regulations on non-teaching staff allocation were not strictly enforced and some schools did not receive the non-teaching staff that they should, based on the regulations. In other schools, stakeholders reported they did not have enough resources to turn the heating on during the winter. By contrast, even on paper, capital expenditures are closely regulated or directly determined by DGestE and Parque Escolar, in the case of secondary schools, or the municipality, in the case of pre‑school and basic education.
A key concern with these strict norms is that homogenous rules do not allow differentiating resource levels according to particular school needs. In particular, at present, there is no transparent mechanism for funding in which compensatory amounts to address varying levels of student need and community challenge are discussed, defined and applied transparently across the board.
Centralised budget management can translate into ineffective management practices to respond to unplanned events. Several interviewees complained about the lengthy approval process by DGEstE or the municipality for even minor expenditures. When teachers are on sick leave for less than 30 days, no replacements are assigned. Even when absences extend past 30 days, schools must follow extensive bureaucratic procedures to secure a replacement. It is not surprising that replacement teachers take a long time to be assigned when the entity experiencing the most difficulty due to the absence (the school) is not the same as the entity responsible for procuring the replacement (the central authorities). Not surprisingly, therefore, the institutional culture that predominates in schools is one of bureaucratic compliance, not of creative use of resources to respond to challenges.
Portugal’s centralised resource allocation procedures are similar to those in Southern European countries (Italy, Spain and Greece) and France, but other systems such as the Netherlands, the United Kingdom and Sweden have decentralised many more responsibilities to schools so that they can be more responsive to the unexpected (OECD, 2017, p. 79[2]).
Funding is not related to goals and assessment of results; therefore, the capacity for system learning and planning is insufficiently developed
There is not a systematic definition of shared outcome goals on which stakeholders at the school, municipal and national levels agree. Interventions are not systematically evaluated to determine their efficacy. Further, there are rarely course corrections when project goals are unmet.
The budgeting process in Portugal effectively provides seats in schools and teachers for all students, but it is still insufficiently designed to achieve the more complex objectives such as learning quality or equality of opportunities. The budgeting process lacks the key mechanisms to effectively link budget planning to these policy objectives. Specifically, i) although there are strategic objectives defined for educational policies, budgets are insufficiently informed by these as inputs and rules still take primacy in planning; ii) there are no expenditure frameworks that connect spending decisions to education priorities; and iii) there is no formulation of clear targets, corresponding indicator frameworks or mechanisms to report on the system’s use of resources to achieve these goals (OECD, 2017[2]).
Strategic planning is further hampered by a generalised shortage of formalised institutions to support evidence-based analysis and policy. At the central level, no unit is in charge of formulating a long-term educational strategy, neither to conduct cost-benefit or cost-effectiveness analysis of policy alternatives. In practice, there is no long-term strategy to formulate a meaningful medium-term expenditure framework or to guide annual budget planning. The possibility of strategic planning is also hindered by a lack of integration of reporting on funding outcomes, expenditure outputs and school system quality and equity. Cost-benefit and cost-effectiveness analyses are limited by the lack of integration between financial reporting and school management outcomes and outputs. There is no use of performance information in the budgeting process. Although there is the production of valuable information such as external evaluations of schools and students, this is not linked to the budgeting process.
During the review visit, the review team frequently asked stakeholders at both the central government and school levels: What are the goals and metrics you hope to accomplish with this initiative? Do you know if you’ve been successful? Stakeholders were rarely able to articulate what the specific goals they held were, nor whether these goals had been accomplished. School leaders could not, for instance, say what the current school dropout rate was, nor what their goal was for improving it. Central government officials could not articulate what the measurable outcomes targeted by the TEIP or PNPSE programme were, and the extent to which they were making progress towards these goals. Various progress monitoring processes and metrics for TEIP and PNPSE do exist on paper, so it is possible that stakeholders’ lack of awareness of them was either specific to the groups with which the review team met or was a function of the dynamics of the interviews. However, the near universal inability of stakeholders to articulate goals and assess progress towards them suggested to the review team a divide between the progress monitoring processes articulated on paper and the reality of how these were implemented in practice.
Similarly, there is a lack of culture of outcome-based decision-making at the ministry level with few internal stakeholders able to articulate goals and metrics for assessing the impact of system-wide initiatives. Projects are launched without a mechanism to evaluate them, either ex ante or ex post. In particular, new initiatives are not designed to be evaluated for their effectiveness or efficiency. For instance, to the review team’s knowledge, there is no formal mechanism to evaluate the causal impact of programmes such as the Curricular Flexibility Project (Projeto de Autonomia e Flexibildade Curricular), autonomy contracts (contratos interadministrativos), tutorial support (Apoio Educativo Tutorial and Apoio Tutorial Específico) or Turma+. The only such evaluation of which the review team has knowledge is the 2012 evaluation of the More School Success Programme (PMSE) (Barata et al., 2012[12]; Barata et al., 2015[13]); however, this type of evaluation is the exception rather than the rule. The evaluations that do exist typically measure process improvements or conduct stakeholder surveys, rather than estimating changes in student learning outcomes causally generated by the programmes. Not even targeted programmes such as TEIP or PNPSE – that require the explicit formulation of an improvement programme, goals and indicators – use impact evaluation for their internal budgeting or allocation.
Pilot projects are developed in a subset of schools and then extended without a formal assessment of their impact. Programmes persist and are extended nationally, even in the absence of clear knowledge about their impact or effectiveness. This results in a series of overlapping and coincident projects without an overall strategy and goals under which all the projects fit. To the review team, this appeared to be particularly true as it relates to the priority area of addressing school failure, where such interventions as Projeto Fenix, Mais Sucesso Escolar, Ancoragem, Turma+, TEIP, Apoio Tutorial Específico, Apoio Educativo Tutorial all exist simultaneously and whose purposes appear to significantly overlap.
No formal mechanisms exist to evaluate the impact of the allocation or use of resources on processes, outputs or results. To the knowledge of the review team, there is no assessment of the impact of resources allocated and used by schools and their learning results and this possibility is limited due to the delay in the publication of the overall report of the 2nd cycle of school evaluations (see Chapter 3). Furthermore, even in its planned design, the evaluation process is not linked to the allocation of resources. Even a basic indicator such as per-student funding and expenditure data is not readily available across different sectors, programmes and levels. For instance, ministry officials were unable to provide current and historic expenditure data on programmes to support non‑native Portuguese speakers, distance learning for itinerant students or even prior-year expenditure levels on the PMSE/PNPSE programmes. Similarly, requests by the review team for per-student expenditures on 3rd cycle and upper secondary vocational schooling were met with surprise by ministry officials that such information would be of interest. To the best of the review team’s knowledge, regular collection of financial data for strategic policy purposes does not occur; such data is necessary for effective planning and cost-effectiveness analysis.
Portugal has a rich wealth of education data. Progress has undertaken steps to make it more accessible, with several initiatives attempting to make data more open for research purposes and protocols have been developed between the ministry, the national statistics office and research centres. Nevertheless, administrative data (MISI) might be linked to resource data (such as the SIGeFE database) to obtain an assessment of the relationship between resources and internal efficiency at the school level. While there have been recent efforts to provide access to administrative student- and teacher-level data (MISI), there is no systematic mobilisation of knowledge generated through research, programme evaluations and auditing activities. An additional challenge is the lengthy delay before individual, school and system data are made publicly (or privately) available. Currently, data for the system, schools and individuals must be validated, a process that results in a delay of around one year between the end of a school year and the release of the data. This creates significant challenges to system and school leaders interested in making rapid decisions in response to current data.
There is a lack of a system-wide strategy, vision or sufficient levels of investment to promote equity
There is a lack of a coherent strategy to promote fairness (as defined in Box 2.1) in Portuguese schools. Instead, there are multiple programmes managed by different ministerial departments. Financial supports for the educational needs of disadvantaged students are modest, uninformed by cost models to estimate additional resources required to equalise results and, overall, are likely to be insufficient to overcome disadvantage.
The lack of a system-wide strategy for equity is reflected in the lack of goal-setting and progress monitoring plans to support it. Although there is the possibility of: i) combining different sources of data for quantifying gaps between different student populations – such as family educational background, ethnic, gender, nationality or racial group; ii) estimating resources requirements to reduce them; iii) setting targets according to resources mobilised; iv) monitoring progress; and v) taking decisions on the basis of results and outcomes achieved, this is not systematically done. These types of exercises would be valuable not only at a system-level analysis but also for school and cluster management. It should be noted that some of this information, such as ethnic and racial group membership, is prohibited from being collected by official statistics, as is common in many continental Europe contexts.
Because the above process is not adhered to, it is difficult for Portuguese authorities to determine what levels of resources are necessary to address student-level challenges. As a result, the amount spent on educational fairness is likely too small compared to what is needed. The amount spent on PNPSE (including PIICIE) and TEIP is only 1.4% of the overall education budget. This is small compared to what is spent in other educational systems and with respect to the empirical estimation of what is needed to overcome disadvantage in other countries (see Box 2.2).
In fact, flagship targeted programmes, such as TEIP, do not provide sufficient additional staff resources to meaningfully alter the student-teacher ratios in schools receiving these in-kind allocations. As Figure 2.4 indicates, the student-teacher ratio in TEIP and non‑TEIP schools is nearly identical (13.4 students per teacher in non-TEIP schools vs. 12.9 students per teacher in TEIP schools). In fact, as Panel B shows, within quartile of disadvantaged schools that receive TEIP support actually have slightly higher student-teacher ratios than those that do not.
Box 2.2. Equity funding in education
Why and how much does it cost?
There is widespread academic agreement about the need to give more resources to certain groups of students to achieve equality of opportunities in education. Differences in learning outcomes between groups of students are substantially influenced by their educational opportunities and home and community environments. In particular, the influence of family characteristics has been extensively documented since the Coleman Report’s (Coleman, 1966[14]) finding that learning outcomes are positively correlated with family socio-economic variables such as household income and parent’s education (Hanushek, 1997[15]), which poses a threat to equality of learning opportunities. It is interesting to note that one of the first articles using international data on student achievement (Hanushek and Luque, 2003[16]) found that in several developed countries, schooling reduced the effect of family background through time with the sole exception of Portugal, where the gap in learning outcomes between socio-economic groups increases with the age of students taking TIMMS (Trends in International Mathematics and Science Study).
Literature founded on John Roemer’s work on social justice (Roemer, 2008[17]) estimates the amount required to compensate for family socio-economic factors on labour market outcomes. Betts and Roemer (2007[18]) found in the United States context that in order to equalise black students’ future wages with their white peers, school systems would need to invest eight times the current resources spent on their education. Similarly, Waltenberga and Vandenberghe (2007[19]) estimated that in order to guarantee equality of opportunity for the lowest achieving students in Brazil compensatory funding would need to increase by 6.8 times level then invested. The simultaneous redistribution of monetary and non-monetary inputs, like peer group quality and school effectiveness, considerably reduced – by around 23% – the magnitude of financial redistribution.
Finally, González and his colleagues (2004[20]) estimated that ensuring equality of opportunity in Chile required an increase between 50% and 200% of the resources allocated to the lowest two income and educational quintiles to grant this group of students similar learning results as the rest of the student population. This estimation was later translated into policy as explained in Box 2.5.
Sources: Coleman, J. (1966), Equality of Educational Opportunity, US Government Printing Office; Hanushek, E. (1997), “Assessing the effects of school resources on student performance: An update”, Educational Evaluation and Policy Analysis, Vol. 19/2, pp. 141-164.; Hanushek, E. (2003), “Efficiency and equity in schools around the world”, Economics of Education Review, Vol. 22, pp. 481-502; Roemer, J. (2008), Equality of Opportunity, Harvard University Press; Betts, J. and J. Roemer (2007), Equalizing Opportunity for Racial and Socioeconomic Groups in the United States through Educational Finance Reform, Schools and the Equal Opportunity Problem, MIT Press; Waltenberga, F. and V. Vandenberghe (2007), “What does it take to achieve equality of opportunity in education?: An empirical investigation based on Brazilian data”, Economics of Education Review, Vol. 26/6, pp. 709-723; González, P., A. Mizala and P. Romaguera (2004), Recursos Diferenciados a la Educación Subvencionada en Chile (Differentiated Resources for Subsidized Education in Chile), http://www.dii.uchile.cl/~cea/sitedev/cea/www/index.php?page=view_publicaciones&langSite=es&agno=2002&id=20030325135657.
Figure 2.4. Average student-teacher ratio for TEIP and non-TEIP schools, by quartile of disadvantage
Note: Index of socio-economic need measured by rank percentile-ordering the proportion of students within a school receiving Social Support A and average years of maternal education at the school level. The average of the 2 ranks was then demeaned (mean = 0) and assigned a standard deviation of 1. Schools divided into quartiles of disadvantage. Q4 has highest levels of disadvantage (high SSA and low maternal education).
Source: DGEEC administrative data 2015/16.
There are a handful of other targeted equity strategies such as Portuguese as a Second Language (PNML) and Distance Learning for Itinerant Students, but ministry officials do not disaggregate expenditures on such programmes. Failure to account for such expenditures precludes a complete summary of equity efforts, but the totals spent on these interventions are small and unlikely to alter the overall conclusion that Portugal spends less than most countries and these amounts are insufficient to address disadvantages.
Equity resources are also insufficiently tailored to the specific needs of under-served students and communities, limiting the effectiveness and equality of opportunities. Targeted funds result in an in-kind attribution of additional teaching staff, but these are often not matched to school-specific challenges and there is insufficient specific training of these teachers to support at-risk students. Chapter 4 treats this problem in greater detail.
While Portugal has some clear strengths in its inclusion of students with special educational needs (see Chapter 3), there are some concerns with respect to the inclusion (Box 2.1) of all students and schools in its equity funding scheme. Several of Portugal’s equity funding measures are based on school and student applications and not on needs, as in the case of inclusion mechanisms that follow a rights-based approach. As a result, the capacity to acquire compensatory funding depends on schools’ initiative and the capacity to apply for supplemental funding. This raises additional equity concerns in the levels and strategic value of funds. Figure 2.5 presents evidence that while schools with the highest proportion of students receiving social support and with the lowest levels of maternal education are most likely to receive TEIP support, there are nevertheless schools educating primarily students from favoured backgrounds that also receive TEIP funding. This may be partially due to the fact that school clusters were placed into the TEIP programme in 2007. Even if their student population changed or they added economically advantaged schools in the clustering process, all clusters (and newly added schools) remained in (or were added to) TEIP. Nevertheless, the pattern revealed in Figure 2.5 runs counter to the fairness principle of targeting equity funding to students with the highest level of need and is only possible in the absence of defined funding criteria for students from under-resourced backgrounds.
Figure 2.5. Proportion of TEIP-recipient schools by quartile of disadvantage
Note: Index of socio-economic need measured by rank percentile-ordering the proportion of students within a school receiving Social Support A and average years of maternal education at the school level. The average of the 2 ranks was then demeaned (mean = 0) and assigned a standard deviation of 1. Schools divided into quartiles of disadvantage. Q4 has highest levels of disadvantage (high SSA and low maternal education).
Source: DGEEC administrative data 2015/16.
Central officials support schools in applying for TEIP and PNPSE projects, PO CH in the case of ESF funded projects and DGE for national initiatives requiring applications. Nevertheless, during the review visit, some schools receiving TEIP funds reported much higher levels of support and sophistication in the project they developed than others. Moreover, additional equity concerns have been expressed regarding the unevenly distributed capacity for project management, although national authorities are aware of the issue and supervise such processes and target support to some schools.
A similar concern about the effects of the unequal distribution of capacities relates to the possibility of local fundraising. While some municipalities and school clusters have been active in raising additional local resources from business communities and families, the amount of resources is unknown. This raises equity concerns as more affluent local communities are likely to have stronger resource bases and capacities to mobilise in support of their schools. There is no proper accounting of these resources and some might be difficult to quantify in financial terms. An accounting peculiarity makes tracking this money particularly challenging. Schools do not have Fiscal Identification Numbers (Número de Indentificação Fiscal – NIF); therefore, all donations must go to a central account, and then the school must request to use the money in a lengthy process. Due to this complicated process, schools avoid taking on donations themselves and have parents contribute to the parents’ association which acts as a legal entity but is not tracked as part of schools’ resource utilisation.
Policy recommendations
Improve governance using combined budget and education information systems, moving from a focus on inputs and rules to results and processes
While resources alone are not sufficient to ensure excellent and equitable outcomes, they are a pre-requisite to design smart policies that invest limited resources wisely. A funding system based on the allocation of inputs and the compliance with rules, even with an inclusive focus, does not maximise the capacities that are available in each school and local community to respond creatively to each student needs.
A first step is to improve governance mechanisms to reduce inefficiencies and bureaucratic controls. One simple initial practice would be to eliminate duplicative budgeting efforts on all non-teaching staff and operational expenditures so that school administrators do not complete tasks rendered irrelevant by central algorithms. A more fundamental improvement would be the establishment of a co-ordination mechanism that aligns the goals of various entities responsible for planning and implementing the budget. The goal would be not only to eliminate duplications and improve processes but to achieve a more systemic vision towards the achievement of long-term objectives based on outcome measures. A management and control system based on key educational and financial indicators might be built, allowing online monitoring of expenditures and activities, and evaluating whether the ways in which funds are currently spent impact student outcomes or other educational objectives in close to real time.
Portugal might also consider increasing school level responsibility for management of budget on non-staff expenditures to promote responsivity to local needs while gradually increasing the allocation for this purpose to bring the country more in line with international standards (this would improve the physical and IT infrastructure challenges outlined in Chapter 3). It is impossible that all relevant decisions for student learning flow adequately from bottom (the classroom or the school) to top (the Ministry of Education) such that timely decisions are taken in the best interest of the child learning at the classroom or school level. This requires giving teachers and principals more control over their environment while making them fully responsible for their decisions. Concerned officials could still ensure appropriate fiduciary responsibility through standard accounting procedures and periodic auditing. These shifts should be accompanied by strengthening management capacities at the school cluster level (see Chapters 3 and 4).
At the same time, centralised support systems should be strengthened. Distilled information, useful for decision-making, must be offered to principals and teachers. Systematic approaches (such as Deming’s (2000[21]) Plan-Do-Study-Act Cycle) that provide practitioners and policy makers with sound information, support them to design clear interventions utilising widely agreed on outcome measures, generate regular process and outcome data, create opportunities to review this progress and adjust course are critical to school and system improvement efforts. This cannot occur without intentionally designing an information system capable of facilitating learning of what works and what does not.
At the same time, there are some elements of non-wage expenditure that are more efficient if managed at the central level. A good example is a national auction for the provision of textbooks. If different printing houses compete to supply a large number of the same textbook to students, economies of scale might be achieved. On the other hand, schools might benefit from selecting the textbooks that are best suited to their students’ needs. A combination of choice and central provision might achieve both objectives. Countries such as Chile have achieved up to a 90% reduction of the price of textbooks thanks to a well-designed public tendering while allowing schools to choose between 3 or more centrally provided textbooks.
Finally, in the long term, Portugal could consider strategies to devolve full budgetary responsibility, including decisions over staffing to the school level (see Chapter 4). This should be framed in appropriate funding formulas discussed next.
Initiate steps to shift to a transparent, publicly-debated weighted student funding formula
The complex and non-transparent budgeting process generates too many distortions that might be corrected by shifting gradually to a transparent, publicly-debated weighted student funding formula. This formula should be based on the true costs of school provision and equity considerations. Costs of school place provision should be determined by the number of students in a school and its geographic location, followed by a public discussion about the values implied by funding different levels of schooling at different amounts. More resources should be allocated to students from disadvantaged backgrounds and to schools educating large proportions of these students to respond to equity concerns. Key considerations in the design of a funding formula are described in Box 2.3. Box 2.4 presents various estimates of the costs of achieving an equalisation of opportunities across different student populations.
When funds are distributed via formula rather than the allocation of staff and resources, it creates the potential for local decision-making on the use of these funds. Important considerations exist to ensure these funds are used wisely. Ross and Levačić (1999[22]) recommend retaining, when designing a funding formula, a proportion of funding at a central level. This allows the system to respond to immediate or emergency expenditures with uneven incidence across schools (e.g. structural repairs, early staff retirement). Moreover, a funding formula increases efficiency only insofar as principals and school clusters have the managerial capacities to take advantage of this flexibility and allocate and use this funding with effectiveness. This requires capacity building at the school level. At the same time, localities should be made responsible and accountable for results achieved with this funding or whatever other degrees of freedom are transferred to the local level.
Box 2.3. School funding formula development
“A general principle for a more effective funding distribution is to ensure that funds are allocated in a transparent and predictable way. Ensuring a stable and publicly known system to allocate public funding allows schools to plan their development in the coming years. This requires stability in the principles and technical details of the funding distribution system” (OECD, 2017, p. 21[2]).
A well-designed funding formula avoids the fragmentation of the budgeting process, the lack of strategic co-ordination and transparency, the incentive problems against efficient decisions and the absence of rewards for good management and planning.
Adequate stakeholder consultation is important to increase the perceived fairness of an allocation system and can help ensure that funding mechanisms respond to challenges that are not anticipated. Design of the funding formula must take into account horizontal equity (ensuring similar funding levels are allocated to similar types of provision) and vertical equity (differential amounts can be added according to the degree of educational need).
To determine the exact amount to be transferred per student, coefficients should take account of different costs of educating students from different locations, social backgrounds and studying in different levels or sectors. A balance needs to be struck between a simple formula, which might fail to capture school needs with full accuracy, and a sophisticated formula, which may be difficult to understand and discuss (OECD, 2017[2]).
Funding formulas should include the following four elements: i) a basic allocation per student or per class that may be differentiated according to the school year or stage of schooling; ii) an allocation for specific educational profiles or curriculum programmes, such as a focus on the arts, sports, different vocational fields or special educational needs programmes; iii) an allocation for students with supplementary educational needs adjusting for different student characteristics or elements of disadvantage; and iv) an allocation for specific needs related to school site and location, adjusting for structural differences in operational costs, such as for rural areas with lower class size.
Source: OECD (2017), The Funding of School Education: Connecting Resources and Learning, http://dx.doi.org/10.1787/9789264276147-en.
Box 2.4. Funding formulas to reduce inequalities of opportunity
There are different approaches embedded in school funding formulas to reduce inequality of educational opportunities between different social groups.
In Belgium, operating grants for staff allocation to schools include weightings for student socio-economic characteristics and special educational needs and also for school location. The payment of educational staff salaries takes into account student socio-economic characteristics and special educational needs. There is also additional targeted funding for specific groups, including students from disadvantaged backgrounds, newly arrived immigrants and refugees (OECD, 2017[2]).
Lithuania’s formula has 67 weighting coefficient values that include student (school year, special educational needs and ethnic minority) and school characteristics (size, location and type) (Shewbridge et al., 2016[23]).
Levačić (2006[24]) reviews school funding formulas for seven European countries (England, Finland, Iceland, the Netherlands, Poland, Russia and Sweden). In the Netherlands, the funding formula encourages inclusion. If a student with an indication for a particular type of special school, in fact, attends a mainstream school, this generates additional funding for both the mainstream school and the special school, which plays a supporting role.
Chile introduced a means-tested voucher in 2009, which allocated schools 50% more resources for students from vulnerable families and provided incremental funding according to the concentration of vulnerable students in the school. To use this extra funding, some schools are required to present to the Ministry of Education an improvement plan and contract the services of an accredited external agency. Well before, in 1994, a correction to the flat voucher introduced by the dictatorship in 1981, recognised differences in average costs between urban and rural schools that varied according to the degree of dispersion of the population in the area.
After democratisation, South Africa introduced a progressive funding formula for non‑salary expenditure prepared with the support of the World Bank (Crouch, 1996[25]). Schools are classified into quintiles according to the average household income in the area and the allocation increases with the level of vulnerability of the student population, going from a minimum of 5% of the total allocated to schools in the lowest need quintile to 35% of the total distributed to schools with the highest need (Mashau, 2015[26]). In other words, schools attended by the most vulnerable students received seven times more resources for other current expenditure than schools attended by the least vulnerable households. To deter high- and middle-income families from leaving the public school system due to this progressive funding formula, schools serving the two upper-income quintiles were allowed to charge fees. This provision has been widely criticised for generating further inequities.
A common shortcoming of these experiences (e.g. Chile, Lithuania and South Africa) seems to be that there is little systematic evaluation of their results by the Ministries of Education. Evaluation is limited to inputs, not processes or outcomes. This is an area that might illustrate the importance of a strong research community and a fruitful communication with the Ministry of Education. For instance, Fernández (2017[27]) finds that the introduction of the means-tested voucher had a positive impact in vulnerable students results but an additional 50% increase of the means-tested voucher is required to level the playing field between the two lowest income quintiles and the rest of the population. Moreover, the very introduction of a means-tested voucher in Chile was based on academic work (González, Mizala and Romaguera, 2004[20]) contracted by the Ministry of Education and the fortunate circumstance that one of the researchers was later appointed Undersecretary of Education. Conversely, despite rhetoric in favour of inclusion, research has also shown that Chile’s funding formula has a bias in favour of segregated schools for special needs, as the special needs voucher for mainstream schools is below the costs of properly integrating a student with special needs while segregated schools’ costs are covered with amplitude, generating a profit (Bosch, 2005[28]).
Sources: OECD (2017), The Funding of School Education: Connecting Resources and Learning, http://dx.doi.org/10.1787/9789264276147-en; Shewbridge, C. et al. (2016), OECD Reviews of School Resources: Lithuania 2016, http://dx.doi.org/10.1787/9789264252547-en; Levačić, R. (2006), Funding Schools by Formula; Crouch, L. (1996), “Public education equity and efficiency in South Africa: Lessons for other countries”, Economics of Education Review, Vol. 15/2, pp. 125-137; Mashau, T. (2015), “Equity, equality and fairness: Funding for quality education in South Africa”, International Journal of Educational Sciences, Vol. 10/3, pp. 435-441; Fernández, A. (2017), Análisis de la Eficiencia Técnica Escolar en Chile para la Propuesta de un Monto Eficiente de Subvención Preferencial [Analysis of the Technical Efficiency of Schools in Chile for the Proposal of Sufficient Levels of Preferential Subsidies, Masters Thesis in Public Policy and Management], Tesis de Magister en Gestón y Políticas Públicas; González, P., A. Mizala and P. Romaguera (2004), Recursos Diferenciados a la Educación Subvencionada en Chile (Differentiated Resources for Subsidized Education in Chile), http://www.dii.uchile.cl/~cea/sitedev/cea/www/index.php?page=view_publicaciones&langSite=es&agno=2002&id=20030325135657.
Improve strategic thinking around use of funding to increase equality of opportunity
Portugal should consider shifting away from addressing inequality of opportunity through a series of nationally-managed, application-based, categorical funding initiatives that lack an overall strategy to a comprehensive strategy for equity funding. The most straight-forward way this could be accomplished is through the funnelling of these equity funds into the weighted-student formula described above. However, in the near-term, Portuguese authorities could consider implementing a process inclusive of a broad cross-section of educational stakeholders to develop a comprehensive equity policy that ensured programmes did not duplicate efforts and were adequately funded. This approach would be facilitated by an estimation of the true costs required to provide equal educational opportunities.
Independent, but concomitantly necessary, of a comprehensive equity strategy, Portugal should consider increasing the share of the educational budget targeting students from under-resourced communities and who face learning obstacles. As detailed above, Portuguese equity resources are trivial portions of the school budget and lower than international norms. Portuguese authorities could achieve increases in educational equity funding by adding resources to the overall budget. Alternatively, resources from the general school funds could be re-allocated for equity purposes. This would require clear, public communication explaining the rationale for this re-allocation and justifying it on equity grounds to avoid potential conflict over shifting resources away from more resourced students.
Finally, resources deployed to address inequality should be targeted to fit the actual needs of schools, including specialised autonomies and flexibilities in how these funds are spent. Chapter 4 suggests some strategies for how this might be accomplished for human resources.
Improve learning capacity of the system through more transparent and widely shared performance indicators, data access and a culture of planning and evaluation
Portuguese central authorities should consider re-establishing a division within the Ministry of Education with planning and evaluation responsibilities similar to those of the former Office of Foresight and Strategic Management in Education. This unit should co‑ordinate the formulation of a shared strategic medium- and long-term vision and estimate resource needs to achieve this vision. It might then prepare a medium-term expenditure framework in close collaboration with the Ministry of Finance, to guide each annual budget process.
Portugal can connect financial and educational indicators to better evaluate whether the ways in which funds are currently spent impact student outcomes and produce a better monitoring system for resource management. Having done so, both internal and external researchers could conduct cost-effectiveness, cost-benefit and multi-criteria analysis to decide on the allocation of new resources or the reduction of allocations. Pilot programmes should be designed with an embedded experimental evaluation to support scaling up decisions and with a proper theory of change for system learning. Over the long-term, Portugal could consider a gradual shift to outcome-based budgeting procedures that increase funding for successful initiatives and cut those that are unsuccessful.
While limits exist regarding the collection of certain kinds of demographic data in the Constitution, ad hoc processes with the authorisation of the National Data Protection Commission could be explored to receive special permission to conduct analyses of educational outcomes for disfavoured groups. This could take the form of voluntary surveys, sophisticated sampling and imputation methodologies. Such an effort was recently undertaken to conduct the Questionnaire within the Framework of the National Strategy for the Integration of Roma Communities and similar efforts could be pursued for other groups.
Broad-based discussions should be initiated involving multiple stakeholders to identify measurable outcomes for the system: performance targets, metrics and progress monitoring processes. Critically, a culture change this significant will require building national and local staff’s capacity to use outcome-based approaches to guide their work.
Portugal can continue to expand partnerships with external researchers to deepen the empirical knowledge base on the Portuguese education system. Various countries support research that has utility for policy purposes through public investment. Others have established knowledge brokers to fill the gap between research and policy making, to reach more informed decisions (see Box 2.5). To maximise efforts in these areas, Portugal can expand links across datasets, including those administered by different Ministries and make them available to researchers. Linkages across existing individual-level microdata sets such as school education records (MISI for public and INQ-PRIV for private school students), students’ reported expectations and experiences at entry, during and after upper secondary education (OTES) and labour market outcomes in the form of personnel records (Quadros de Pessoal) would permit better estimates of the impacts of policies, which would in turn allow research to better inform policymaking and public debate.
Box 2.5. Linking educational research and policy
One of the key problems in promoting the use of research-based insights in schools is that researchers, on one hand, and policy makers, school administrators and teachers, on the other, have different training, agendas and pressures that lead to a serious communication gap between both communities. Early solutions proposed the “appointment of formal positions at the state or local level whose occupants, sensitive to both audiences and their work styles, would link basic and applied research to educational policy analysis” (Hallinan, 1996[29]).
Several organisations perform this function of mediating the research, practice and policy connections in countries around the world (OECD/CERI, 2007[30]):
What Works Clearinghouse (United States)
Evidence for Policy and Practice Information and Co-ordinating (EPPI) Centre (United Kingdom)
Iterative Best Evidence Synthesis Programme (New Zealand)
Canadian Council on Learning (Canada)
Knowledge Clearinghouse (Denmark)
Knowledge Chamber (Netherlands)
Social Care Institute for Excellence (United Kingdom).
Drawing on the cases presented in Finnigan and Daly (2014[31]) and concurrent efforts in the field, Tseng and Nutley (2014[32]) suggest four ways to improve these connections: build relationships and trust; shore up capacity; create conditions for evidence integration; and develop partnerships.
Chile is a case where educational research was limited and not connected to policy issues. Until 1994, the country lacked proper strategic planning and research departments, except for the production of statistics requested by the United Nations Educational, Scientific and Cultural Organization (UNESCO). The development of planning and research departments were critical to the 1996 educational reform that included a move from double and triple shift use of school buildings to a single school day and actions to improve the social status of the teaching profession (Elacqua and González Soto, 2013[33]). Educational research outside the Chilean administration started to flourish in 2006 with the creation by the Ministry of Education of the National Fund for Research and Development of Education, with the explicit mission to bridge the gap between research and policy through an annual competition with focus on relevant policy issues, and two educational research consortiums that were awarded by the National Science Commission (CONICYT) through open competition to leading universities. The research department of the Ministry of Education produces regularly compendiums of evidence in different policy-relevant issues and makes available data that link individual students’ results, teacher and school characteristics.
Sources: Hallinan, M. (1996), “Bridging the gap between research and practice”, Sociology of Education, Vol. 69, pp. 131-134; OECD/CERI (2007), Evidence in Education: Linking Research and Policy, https://doi.org/10.1787/9789264033672-en; Tseng, V. and S. Nutley (2014), Building the Infrastructure to Improve the Use and Usefulness of Research in Education, Springer; Elacqua, G. and P. González Soto (2013), Education: Freedom of Choice or Enterprise?, Lynne Rienner Publishers.
Initiate plan to incorporate core budget priorities into national budget, reducing reliance on European funds
Portugal currently relies on international funding to support what have become key priorities in its educational strategy. To buttress against the potential decrease of these funds, Portugal should consider gradually absorbing some of these funds into the national budget. The first priority should be to shift the funding of equity programming to national funds. Equity funds currently represent a much smaller portion of the overall budget than other priorities supported by international funds, so this is a more easily accomplishable goal in the short term given fiscal realities. Such a step will likely require hard trade-offs between such goals as universal reductions in class size and targeted support for students from under-resourced communities. However, this might be somewhat cushioned if efficiencies are captured in the system planning process by aligning responsibilities for setting the school class network and paying for it (see above). When economic conditions permit, Portugal can explore assuming more national responsibility for the budget for vocational programming.
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[19] Waltenberga, F. and V. Vandenberghe (2007), “What does it take to achieve equality of opportunity in education?: An empirical investigation based on Brazilian data”, Economics of Education Review, Vol. 26/6, pp. 709-723.
[11] Wishlade, F. (2017), Brexit and the Implications for European Structural and Investment Funds, http://dx.doi.org/10.1111/pirs.12351.
Annex 2.A. The funding of the education system through European funds
Portugal benefits from European Structural and Investment Funds (ESIF), the main investment policy tool of the EU, for the period 2014‑20. It combines five different major funds: the European Regional Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund (CF), the European Agricultural Fund for Rural Development (EARFD) and the European Maritime and Fisheries Fund (EMFF). The country also receives support from the Youth Employment Initiative (YEI).
The country has been allocated a total amount of EUR 25.79 billion, about 15% of the GDP for 2016, with an additional EUR 6.89 billion of national contribution. Figure 2.A.1. depicts the relative prominence of each fund in the total amount for the period 2014‑20.
Annex Figure 2.A.1. Distribution of ESI Funds in Portugal, 2014-20
Note: ERDF: European Regional Development Fund; ESF: European Social Fund; EAFRD: European Agricultural Fund for Rural Development; CF: Cohesion Fund (CF); EMFF: European Maritime and Fisheries Fund; YEI: Youth Employment Initiative.
Source: European Commission (2016), European Structural and Investment Funds – Portugal, http://ec.europa.eu/regional_policy/sources/policy/what/investment-policy/esif-country-factsheet/esi_funds_country_factsheet_pt_en.pdf.
The application of European funds will have an important impact on the education system. For instance, education and vocational training is the second highest priority for the allocation of the ESIF budget, totalling EUR 5.2 billion. The funding dedicated to the education system is mainly channelled through the Human Capital Operational Programme (PO CH).
The PO CH aims to improve the quality of school education, support the access to higher education and raise the education level of workers and job seekers. It is targeted at reducing early school leaving rates to 10%, supporting secondary vocational courses to better prepare young people to find employment and broadening the access to pre‑primary, primary and secondary levels of education, thereby reducing the risk of social exclusion. At the higher education level, it aims to provide grants to 124 000 graduate and undergraduate students and 4 300 doctoral students and to open short-cycle tertiary education programmes (ISCED 5) to 23 000 students. Financial support will also be directed to adult and lifelong learning. The programme seeks to improve the level of qualification of the working-age population, with around 30 000 adults expected to complete training courses that lead to certified skills. The distribution of funds is structured according to five main axes. Table 2.A.1 provides the programmed actions and measurable goals under each axis, as well as the funding sources for fulfilling the stated objectives.
Annex Table 2.A.1. Main programmed actions and measurable targets by axis of the PO CH, 2014-20
Source: PO CH (n.d.), Programa Operacional Capital Humano [Operational Programme for Human Capital], https://www.poch.portugal2020.pt/en/Pages/default.aspx%20 (accessed 31 July 2017).
Annex 2.B. Expenditure by educational level
Between 2008 and 2016, public education accounted for between 93.9% and 96% of the total budget of the Ministry of Education, while transfers to private education represented between 3.7% and 5.4% (above 5% until 2010, around 4% thereafter). Programmes abroad attained a maximum of 0.7% before 2010, where they declined abruptly to 0.2%, increasing slightly afterwards, attaining 0.4% or EUR 19 million in 2016. Expenditure in pre‑school education represented between 9.1% and 10% of the public education budget between 2008‑11, increasing until attaining 12% in 2013, subsequently declining until attaining 10.8% in 2016.
Spending in special education has remained more or less stable since 2010, at between EUR 220-240 million, except in 2012. Budget for initial VET (targeting young people under 25 years old), nowadays an alternative path to general secondary education, increased from EUR 389 million to a peak of EUR 551 million in 2010, declining gradually (except for a short-lived recovery in 2013) to EUR 388 million in 2016. Similarly, expenditure on after-school programmes attained a peak of EUR 103 million in 2009, declining systematically thereafter.
Annex Table 2.B.1. Expenditure by educational level and sector, 2008-16
In EUR millions (nominal)
Source: Ministry of Education (2018), OECD Review of Policies to Improve the Effectiveness of Resource Use in Schools: Country Background Report for Portugal, http://www.oecd.org/education/schoolresourcesreview.htm.
Notes
← 1. The POCH programme is managed by an Inter-ministerial Co-ordination Commission (CIC PT2020), supervised by the ministers of the ME, MTCES and MTSSS. The Agency for Development and Social Cohesion (AD&C) is responsible for the co-ordination with the EC, while the Inspectorate-General of Finance (IGF) audits the management of the funds. The decisions for the application of the financing were delegated to IGeFE and ANQEP.
← 2. Allocation mechanisms refer to the different approaches to distributing and transferring resources and funds for current expenditure to different levels of governance and administration, to school providers and to schools. The mechanisms are primarily based on the level of discretion that the recipient has in deciding on how the funding is used. Block grants consist of funds that recipients (subcentral authorities or schools) can use at their own discretion for current expenditure in early childhood or school education. Restricted block grants consist of funds that recipients (subcentral authorities or schools) can use at their own discretion, but within given areas of spending (e.g. operating costs). Earmarked grants consist of funds that recipients (subcentral authorities or schools) are required to use for specific elements/items of current expenditure in early childhood or school education (e.g. teacher professional development, extra funds for special needs education). Dedicated grants consist of funds which are not administered by the school but are passed through the school or government unit for payment to another entity (e.g. teacher salaries which are directly paid by the relevant authority; operating costs directly paid by the relevant authority). In this case, funds are not transferred to schools’ administration, rather they are responsible for distributing the funds to others.
← 3. Data collection is carried out through the export of information from ME-certified school management programmes in educational establishments. DGEEC runs daily a sequence of queries to the MISI database for information validation and control and has a team that liaises directly with schools to request the necessary corrections and to provide clarifications and support in the correct insertion of the data.