1.0 on the budgeting and transferring of federal funds

1.

0 Introduction Adequate funding ensuresquality of educational services. The availability of school funds and how theyare allocated, distributed and spent in the different areas of the schoolsystem determine the achievement levels of school goals. Without sufficientfinance, in-service programs that are designed to improve teaching and supportstudents’ learning cannot be developed.

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Hough (1993) stated that, financialmanagement in education is an integral part of general educational managementwhich comprises curriculum, staffing and all of which relate directly toessential function of the educational institution and also essential noninstructional activities. School finance is one vital component in everyeducation system. World bank (1986) claims that financial management in developingcountry is seen primarily as the process by which funds are allocated orbudgeted, transferred, expended and evaluated or audited, a prime focus beingon the budgeting and transferring of federal funds to the various states withinthe country. This paper will address the education financing in developingcountries. All over the world, education system of countries are assessedthrough various indicators. One of the important indicators of education is thepublic expenditure on education as percentage of Gross Domestic Product (GDP)of the country and expenditure on education as percentage of the totalexpenditure by the government.  2.0 Recent Studies from Developing Countries 2.

1 Management ofschool finance in Malaysia             InMalaysia, federal government is the sole provider of national education. Thiscan be seen through free education at primary andsecondary levels, a centralized education system, and minimuminvolvement by the state government, local authority and private sector in theprovision of primary and secondary education. The importance of finance foreducation can be seen by the annual allocation given by the Federal Governmentto the education sector. Every year the education sector receives about onefifth, around 20% to 22% of the total federal government allocation and about5% to 6% of educational allocation against Gross National Product (GNP) .             The government of Malaysia has allocated a huge amount ofmoney for the education sector with the foundation of school as ResponsibilityCentre or Pusat Tanggungjawab (PTj) to guarantee the utmost quality ofeducation for Malaysian society. Therefore school finance has to be managed tacticallyto ensure the best educational outcome through efficient resource allocation.

The state education department will act as the Head of PTj schools withresponsibility in the distribution of the allocated warrant, supplying relatedfacilities and monitoring the financial administrative tasks. The findingsshown a few crucial strategies that need to be emphasized by schools both atindividual level and school level so as to successfully manage school finances.The collaboration and shared effort from all stakeholders are expected to bringtransformation toward effectual school based financial management in Malaysia.Throughout the years of establishment of PTj schools in Malaysia, one issueinvolved a certain group of schools that still demonstrated a weak quality offinancial management. Even though the PTj schools are appointed based on goodfinancial management, they were reported to be in poor condition in terms oflacking resources and unsatisfactory financial performance. This was especiallycertain in the aspect of internal audit and financial controls. It was foundthat most of the schools fail to follow the rules on cash saving, salaryremuneration and bill payment. Another problem identified was the principals’lack of knowledge and necessary skills in school financial management.

At mostcases, the principals simply delegate their duties of managing the schoolfinance to the administration clerk.  Therewas no constancy in monitoring the financial records during the school expensestransactions. In some cases, principals merely ignored duty in supervising theschool financial management because of their other responsibilities (Mohd NoorSaid, 2004; Rusli Wahab, 2005; Wan Shamsiah Wan Yusoff, 2008). The School AuditDivision in its Annual Report has reported that some principals of PTj schoolsfailed to list their objectives based on priorities and to provide a properstrategic plan for schools to reach their objectives (Kementerian PelajaranMalaysia, 2007). In another case, some principals used the money for wrongpurposes in a large and significant amount even though the specific allocationhad been planned in the school budget every year (Kementerian PelajaranMalaysia, 2007.             The attitude of readiness and awareness is important forall stakeholders to strengthen the effort towards quality education outcomethrough improvement in school financial management.

The profile of effectiveschool-based financial management in Malaysia is organized into four mainfinancial functions. To be exact; planning, financial acceptance, asset and expenditure,and control and evaluation. The function of planning consists of five elements:school vision and mission establishment, financial purposes, school financeorganizational structure, role of financial planner, and budget managementprocedures. 2..2 Management of school finance in Indonesia In Indonesia, equity andequality of educational opportunity have been a fundamental issue and theIndonesian government has introduced a variety of programmes to widespreadnine-year compulsory basic education. In 2015,public spending on education as a share of GDP for Indonesia was 3.

6 %. ThoughIndonesia public spending on education as a share of GDP fluctuatedsubstantially in recent years, it tended to increase through 1972 – 2015 periodending at 3.6 % in 2015. School Based Manaegement (SBM) in Indonesia wasexpanded throughout the country in 2001. SBM in Indonesia is targeting fouraspects of basic education namely; quality, equality, relevance and efficiency.Schools receive government subsidies from the district bureaus of education. Basedon the situations and academic performance of the school, the amount of thebudget to each school is determined by its immediate district bureau. So as toreceive their budgets, schools are required to generate their own annual plansand implementation programmes.

The annual plans are submitted first to thecounty offices, and the county offices submit the plans to the districtbureaus. The participation of pupils or students, parents and other communitymembers are required in the generation and implementation of the plans andprogrammes. Sartono (2010) claimed thatthe percentage of education budget provided by the Provincial Government inindonesia tends to decline due to limited authority. The percentage ofeducation budget provided by the District Governments remain slothful and evendeclining. School teacher’s salary and allowance use up approximately 60% ofthe national budget. Budget for improving the access and quality of educationmostly coming from the central government. The Bantuan OperasionalSekolah (BOS), school grants program introduced in Indonesia in 2005 as afinancial support scheme of the central government that visioned to improveaccess to and the quality of basic education for every child in Indonesia. Inthis view, the BOS program in Indonesia represented a crucial and innovativeapproach to the trend found in many countries of the world towards “free” basiceducation.

The funds were provided from the central government to support theoperational costs of schooling previously endure by families through a varietyof fees and other voluntary or involuntary contributions. The objectives of theprogram are to reduce the public’s financial burden of education in theframework of providing 9-years of good quality compulsory education and tosupport school based management reforms. The program is financed by the centralgovernment and allows schools to utilize funds according to lists of authorizedand unauthorized categories of expenditure. The program aims to ensure thatschools have sufficient funds to operate, reduce the education costs faced byhouseholds and improve school based management. The program is huge and coversapproximately 43 million primary and secondary school students acrossIndonesia.  2.3 Management of school finance in Rwanda Since 2005, the educationsector in Rwanda has been decentralized. Schools at the basic education levelare controlled by district education officers, school principals, and PTAs.

Although PTAs have no authority over budgetary decisions or management of staffbut they do have the power to reprimand permanent teachers and to be consultedin the hiring of contract teachers Whereas, budget allocation and distributionof resources to federal secondary schools in Nigeria is independent of schooltype, ethnicity, school composition, and region of school location.The NigerianNational Policy on Education (2014) stated that, in order to achieve humandevelopment through education, the educational goals must be consistent withthe basic needs of citizens and those of the society, with respect to therealities of the changing environment and the modern world. Based on theNigerian educational policy, education is seen as means or vehicle forachieving national development. At the administrational level, managing ofschools as well as funding is more or less distributed between the variousState Ministries of Education, the National Secondary Education Commission(NSEC) and other agencies respectively.  The ministry of education received the highestshare in the budget allocation.

The Federal Government allocates funds tofederal secondary schools (Unity Schools) while the State governments areresponsible for funding and managing the rest of the state secondary schools.However, at the administrational level, managing of schools as well as fundingis more or less distributed between the various State Ministries of Education,the National Secondary Education Commission (NSEC) and other agenciesrespectively. Bahamas, Jamaica and Suriname’s educational budget system highlydepend on external factors which in turn affect their economic and educationaldevelopment; education is the largest item of their government expenditure; andall of the 3 countries are faced with rapidly-increasing staff costs.

Thisstudy concluded that various factors need to be considered in the fundingallocations to ensure all students regardless of their socio-economic statushave access to quality education.  2.4 Management of school finance in Kenya The government of Kenya recognizeseducation as the primary means of ongoing economic development, socialmobility, national cohesion, and social development. This has led to theimplementation of programs that rapidly expanded the education sector. The challengesand gaps in the education sector include lack of comprehensive strategies forteacher development and provision of holistic early childhood care andeducation. Ineffective and uncoordinated monitoring and evaluation of educationoutcomes and programs has worsen the weaknesses.

Study done by Erick OchiengMagak (2013) shows that there are challenges faced by head teachers infinancial management in public secondary schools in Kenya. The major kinds ofchallenges included over spending and under-spending, entry into books ofaccounts, low salaries of bursars and accounts clerks incompetent bursars, teachersfailure to handover accounting supportive documents, delay in disbursement ofFSE funds, school fees defaulting, unauthorized levies, inadequate knowledge bythe head teachers, inadequate knowledge by the head teacher, incompetency ofcommittee, inadequate auditing knowledge by the head teacher, irregularauditing of schools by district auditors, inability to prepare books ofaccounts up to final accounts. Parents no longer were required to pay fees, withthe introduction of free primary school in Kenya. This resulted in largeincreases in student enrolment, but it meant that school committees no longercould raise sufficient funds to pay for PTA teachers, so pupil-teacher ratiosincreased significantly in Kenyan primary schools. Budget planning is animportant activity in financial management, where it is necessary to involveall stakeholders to make it more acceptable and realizable. Failure to involvestakeholders will lead to deficiencies in the budget where some areas will notbe catered for. In the study done in Lurambi Sub-county, it was evident thatschools did not involve all the people in the school system in budget building.The budgets produced were therefore the work of the principal and the bursarand this could have been poor.

It was clear that monitoring and supervision wasonly done by principals and the (Board of Governors) B.O.G and this raisedopportunities for corruption.

In this study, it was found that schools have notfully established other ways of raising funds and depend mostly on parents andthe government and therefore burdening them. Parents paid heavily in terms oftuition (recurrent expenditure) and capital expenditure through P.T.A fund.

Whereas,the government on the other hand bear the payment of man-power. Data analysis shownthat budget approval was mainly carried out by B.O.Gs while the government wasnot consulted on this.

  It is recommendedin the study that schools should find other ways of raising finance to lessenthe strain on parents and the government as far as funding is concerned. Thiswill help open up the budget to include items that are necessary to make theschools offer quality services. Besides, principals should involve other peoplein the school system in budget building to provide cost effective educationalprograms that meet children’s needs. Those included should be those that aredirectly involved in the provision of education because they are in a betterposition to know the needs of their areas of authority.             In Kaloheni, like in all other districts of Kenya,principals have to administer and manage their schools. Moreover, principalhave to carry out the financial management of their schools.

Section 21 of the Education Act of 2010 (MOE 2010) states that, theprincipal is the head of accounting  of the school and is he or she is responsibleto the management committee or school board for the effective control anduse of school finance. Findings of the study on the financialmanagement in Kenyan secondary schools, repudiate the argument that theexistence of a financial policy will inevitably lead to good financialmanagement in Kenyan schools, and consequently quality education. Proper management offinances in secondary schools is very essential to their operations. However, thereare serious financial challenges in public secondary schools in Kenya ascharacterized by unexpected high fees charged on students. Study on the factorsinfluencing financial management in public secondary schools  by Munge, Kimani and Ngugi (2016)  shows that budget management and financialcontrols positively and significantly influenced financial management. Thestudy concluded that existed policies and procedure of how funds were utilizedwas the key in tracking funds and enhancing sensible financial management inpublic secondary schools and there were instances of strong financial controlsobserved in monitoring of how finances were utilized by involved departmentsand persons and more so existence of control activities in the schools. Thestudy recommended that public secondary schools should have effective budgetmanagement and sturdy financial controls.

  2.5 Management of school finance in Thailand In Thailand, it is reportedthat 800,000 children, or 15% of primary school-age children, are still out ofschool, out of which 54% are females. To overcome these inequalities ineducational opportunity, the Thai government identified major target groups andrecognised the importance of delivering education to those groups.

The groupsinclude children from low-income families, the underprivileged in overcrowdedcommunities, those residing in remote areas, child labourers and orphans. In1997, Thailand launched SBM reforms with the purpose of overcoming thedeterioration in the quality of education. Thailand’s educational reforms putspecial emphasis on decentralising administrative and financial authorities tolocal and other educational institutions.

In order to accelerate the reforms,in 2003, the Ministry of Education legally incorporated every public primaryand secondary school. The incorporation of public schools gave them theresponsibility for their financing, allowing them to receive funds fromoutside, for example, their communities, NGOs and private companies and primaryand secondary schools in Thailand are no longer under the direct jurisdictionor control of the government. A school itself is entirely responsible for theimprovement of its teaching and learning environment.  2.6 Management of school finance in India Education in India is given by the public sector as well asthe private sector. The funding was controlled and coming from threelevels: central, state and local.

Free and compulsoryeducation is provided as a fundamental right to children between the ages of 6and 14 under various articles of the Indian Constitution. 7:5 is the ratio of public schools toprivate schools in India. TheUnion Budget 2017-18 has fixed an outlay of Rs79,685.95 crores for theeducation sector for financial year 2017-18, up from Rs72,394 crore in 2016-179.

9% rise. Of the total expenditure, Rs46,356.25 is for the school sector andthe rest for higher education. India still lags behind most countries in termsof its education spending. At around 4% of GDP, India’s expenditure oneducation is behind that of comparable economies. World Bank data for 2012shows that countries like Brazil and South Africa were spending at least 6% oftheir GDP on education.  Educationis equally a mean to enhance India’s competitiveness in the worldwide economy.Therefore, making certain of the  accessto quality education for all, for the poor and rural population, is vital forIndia’s economic and social development.

Since 2000, the World Bank hasexecuted over $2 billion to education in India. World bank also providestechnical support for education in India. In India, education is the joint responsibility of state and uniongovernments. Ever since decentralization has been promoted in the field ofeducation, different states in India have undergone various decentralizationprocesses with distinct outcomes.   2.7 Management of school finance in Pakistan In 2010, Pakistan’s constitution made education alegal right, deeming it the state’s responsibility to provide free andcompulsory education for children aged 5-16 years. However, Pakistan’s education sectorhas continuostly suffered from under-investment by the state, irrespective ofthe governments in authority. Years of lack of attention to the educationsector in the form of inadequate financing, poor governance as well as lack ofcapacity, has translated into insufficient number of schools, low enrolment,poor facilities in schools, high dropout rate, shortage and incompetent teachers,etc.

All of this has led to poor quality of education for those who arefortunate enough to get enrolled and no education for the rest. Pakistan spends 2.4% GDP on education.At national level, 89% education expenditure includes current expenses such as teachers’salaries, while only 11% includes development expenditure which is not adequateto nurture quality of education. The official data shows the allocation offunds for educational projects but there is no mechanism which ensures theproper expenditure of those funds on education. The issues faced by theeducation system are enormous, requiring a lot of financial resources forinterventions to put the system on the right track. It has been agreed by theworld community that economic development of a country is dependent on the goodquality of education system.  The Constitution of Pakistan does notfix a specific percentage of GDP, or of total budget, to be provided foreducation sector, each year.

Thus the respective governments are not bound toallocate enhanced education budget allocations, as recommended in policies andplans.There are a number of issues and challenges related to financing ofeducation in Pakistan. The Education Sector in Pakistan suffers frominsufficient financial input, low levels of efficiency for implementation ofprograms, and poor quality of management, monitoring, supervision and teaching.Despite some improvement in different education indicators, Pakistan has notkept pace with other countries, and so ranks among the world’s worst performingcountries in education.The government of Pakistan is committed to improvingboth the quality and the coverage of education through effective policyinterventions and expenditure allocations. While literacy and enrolment ratesare lagging behind other countries in the region, they have been improving overthe past five years.

To achieve the goals of providing higher quality educationand expanding the coverage of educational services, more resources will need tobe allocated to providing training and high quality facilities. The existing infrastructureis not being properly utilized in several parts of the country. There arevarious challenges that include expertise, institutional and capacity issues,forging national cohesion, uniform standards for textbook development, andquality assurance.The Government of Pakistan islooking to increase resources for the education sector by ensuring proper andtimely utilization of funds in order to achieve the target of 4.0 percent ofGDP by 2018.

The provincial governments are also spending sizeable amount oftheir Annual Development Plans (ADPs) on education to achieve the target. 3.0 Conclusion In conclusion, countries around the world, particularly the developingones, the government sector primarily has the obligation to manage the publicmoney to ensure a successful flow of money for education.the management ofschool finances is one of the most challenging task if there is little or notraining or expertise. Financial management involves budgeting, granting themoney, accounting and financial reporting, evaluating and the critical aspectof auditing and internal control.

To ensure a continuous provision of educationto society, educational resources have to be directed and allocated to theestablishment and improvement of the teaching and learning process. Asresources are essential and finances are necessary to get the resources,financial aspect thus plays a role in ensuring a continuous access to educationfor society.