ECONOMICS IN EDUCATION
Freddie C. Gallardo
Discussant
FINANCING EDUCATION
A. Prioritizing Education
B. Increasing Cost of Education
Financing Education: An Overview
In all countries, a large portion of national resources,
both public and private, are devoted to education. The rationale
sustaining this fact is compelling. A quality education, beginning
with primary education, is fundamental to endow individuals
with the capacity to successfully pursue their private goals,
while at the same time equipping them with the knowledge and
skills, as well as the values and attitudes, necessary to contribute
effectively to the economic, social and political development of
their societies.
Education not only empowers individuals to live a better
life, and one of their own choice, but also makes an enormous
contribution to the development of a country by, among several
other things, reducing illiteracy, poverty and fertility, while at
the same time improving nutrition and health, the productivity
of labor and the quality of governance (Saavedra 2002)
Sources of Education Finance
Education funding comes from many different sources. The total level of
funding a country dedicates to education is the result of the total level of funding
provided by each one of these sources. The main sources of education finance are the
following:
•Public finance. They represent, on average, the bulk of national educational
expenditure or about 80% or so of the total. Refers to the total of the resources allocated
and spent in education by the various levels of governments (central, regional and local)
as well as by public educational institutions.
•Private sources of finance. They represent, on average, close to 20% of total
national educational finance. In some countries, however, they represent a significant share of
resources and even the larger portion of total educational expenditures. Private sources include,
in general, mostly households, but also communities, civil society organizations and the
private sector. With few exceptions, households pay for the overwhelmingly largest share of
total private financing.
•International sources. International sources of finance, including loans, represent,
according to data of 1997, about 2% of total educational expenditure by developing countries.
In 1997, the sum of all educational resources provided by international, bilateral and
multilateral agencies, including loans (which actually account for about close to half of this
total), was between 6 and 6.5 billion dollars, while developing countries spent about 290
billion. Countries thus need, generally, to look inwards to search for more abundant sources of
funds. There are some exceptions. Small economies and least developed countries may benefit
from more significant external sources of finance. Still, with few exceptions, national
resources are the key to educational spending.
A. Prioritizing Education
We all know the extent of importance of
education to any country, and with no exemption to the
Philippines. Reason why K12 was created due to the
call for a change in our educational system that justifies
the fact that the government is taking it seriously. A
very serious matter that needs to be prioritized, in the
national budget, in legislation, and even in the
promotion of education to be globally competitive, the
government is doing its best to ensure that we have the
best educational system and putting it as one of the top
on the list of their priority.
THE EDUCATION FOR ALL (EFA) 2015 : An initiative of
the government
General Introduction
1. Filipinos have deep regard to for education. Education occupies a central place in Philippine political,
economic social and cultural life. It has always been strongly viewed as a pillar of national
development and a primary avenue for social and economic mobility.
2. A clear evidence of the value placed on education is the proportion of the national government
budget going to the sector. The Department of Education (DepEd), the
country’s biggest bureaucracy 1 , is given the highest budget allocation
among government agencies each year as required by the 1987 Philippine Constitution.
3. The 1987 Constitution likewise guarantees the right to education of every Filipino. It provided that,
“The State shall protect and promote the right of all citizens to quality education at all levels and
shall take appropriate steps to make education accessible to all.”
.
4. The right of every Filipino to quality basic education is further emphasized in Republic Act 9155 or
the Governance of Basic Education Act of 2001. Along with Republic Act 6655 or the Free
Secondary Education Act, these laws reaffirm the policy of the State to protect and promote the
rights of all Filipinos by providing children free and compulsory education in the elementary and high
school level. This pertains to six years of free tuition fees for children aged 6 to 11, and free four
years of secondary schooling for those aged 12 to 15.
4. The right of every Filipino to quality basic education is further emphasized in Republic
Act 9155 or the Governance of Basic Education Act of 2001. Along with Republic Act
6655 or the Free Secondary Education Act, these laws reaffirm the policy of the State to
protect and promote the rights of all Filipinos by providing children free and compulsory
education in the elementary and high school level. This pertains to six years of free tuition
fees for children aged 6 to 11, and free four years of secondary schooling for those aged 12
to 15.
5. Along with “Education for All”, the Philippines is also committed to pursue eight time-
bound and specific targets under the Millennium Declaration which it signed on
September 2000. The Declaration, in general, aims to reduce poverty by half in 2015
(22.65 percent proportion of the population below poverty incidence and
12.15 percent below subsistence incidence by 2015). With the adoption of the
Declaration, the Philippines likewise affirmed its commitment to the Millennium
Development Goals (MDG) geared towards reducing poverty, hunger, diseases, illiteracy,
environmental degradation and discrimination against women. These goals have been
mainstreamed in the country’s Medium Term Philippine Development Plan (MTPDP)
2004-2010 including policies and plans related to children, access to primary education
and gender equality. Specifically, Part IV of the MTPDP focused on “Education and
Youth Opportunity.”
Top Benefeciaries of 2015 Budget
The following amounts have been allocated to the following departments:
• Education – P367.1 billion, up 18.6% from 2014
• Public Works and Highways – P303.2 billion, up 37.9% from 2014
• National Defense – P144.5 billion, up 17.3% from 2014
• Interior and Local Government – P141.4 billion, up 3.8% from 2014
• Health – P108.2 billion, up 19.2% from 2014
• Social Welfare and Development – P103.9 billion, up 24.6% from 2014
• Agriculture – P89.1 billion, up 11.4% from 2014
• Transportation and Communications – P59.5 billion, up 21.7% from
2014
• Environment and Natural Resources – P21.5 billion, down 10% from
2014
• Science and Technology – P17.8 billion, up 35.9% from 2014
B. Increasing Cost of Education
• Campuses had to expand to meet the new
demand. As a result, tuition increased at a rate
somewhat greater than the increase in the
overall cost of living.
• That dramatic increase occurred because
during this period many countries developed
large budget deficits.
• When the public universities increased their
tuition, the elite private universities took notice.
Anxious to maintain their higher status and
simultaneously bring in more revenue, they
raised their tuition as well, setting off an
escalating spiral. The result is visible today in
the eye-popping tuition rates that now
confront students at private colleges and
universities.
• With the budget cuts temporarily neutralized by tuition
increases, college administrators saw the expanding
student population (the market for their services) as an
opportunity to enlarge the size and standing of their
campuses. Universities competed for prominent faculty
by offering larger salaries. They expanded and
modernized their laboratory space to attract
prestigious government grants. New sports facilities
were built along with dormitories that advertised
comforts unheard of when I was a student. Some
schools, to their credit, responded to the growing
demand for fairness by offering more scholarships to
disadvantaged students. All of these factors played a
role in increasing the cost of tuition, but the main
reason it went up was that legislative appropriations
for higher education went down.
• In addition, it is so sad that nobody has yet
figured out a way to run a university
using drastically fewer professors
without sacrificing some educational
quality . While schools have managed to
restrain their spending by paying masses of
part-time adjunct faculty a pittance, the
cost of instruction is still going up.
