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Eurydice report: Financing Schools in Europe

The recent Eurydice report Financing Schools in Europe: Mechanisms, Methods and Criteria in Public Funding – just as the title suggests – looks into how primary and secondary schools are funded in different education systems in the EU, and it does so from three perspectives: mechanisms, methods and criteria used to allocate funds to primary and secondary schools in Europe. In other words, it looks into the following questions: who funds schools, how and how much? Below are the areas of investigation and the results of the study.

1. The study investigates which authorities are involved in funding (national, regional, local) and the extent of top-down support transferred by regional and local bodies to schools. 

The results show that in more than one third of the countries central/top level ministries are responsible for transferring resources for teaching staff directly to schools or for paying teachers’ salaries. This group of countries includes Ireland, Spain, Croatia, Cyprus, the Netherlands, Portugal and Slovenia, Belgium, Germany, Italy, Hungary, Malta and Liechtenstein. In the rest of the countries, this responsibility is shared with regional and/or local authorities. The purchase and delivery of goods and services, or funds transfer is mostly the responsibility of local authorities – although in most countries the funds come from the top level.

2. It examines how relevant authorities decide on the allocation of funds, i.e. which methods they use to do so – whether they make allocations on certain commonly agreed rules or on the basis of their own estimations and/or needs-based requirements by schools. 

The report presents three distinct trends which were observed:  
  • ‘formula funding’: funds are allocated on a universally agreed principle. In most countries, this is used to determine resources for teaching staff. Allocations are either based on block grants, which are used to cover parts of educational provisions, or they are part of lump sums for a range of public services, including education. 
  • ‘budgetary approval’: schools or other responsible bodies submit for approval a budget request for funds to the relevant authority.  
  • ‘discretionary determination of resources’: the relevant body has total discretion in allocation of funds and it is done on a case-to-case basis, depending on the needs 
3. It explores the criteria used to decide on the scope of funds allocated to schools and analyses both input- and performance-based criteria. 

Input-based criteria are used in quite a few countries to allocate resources for staffing, which is the largest portion of total education expenditure in Europe. The only two countries using performance-based funding are the Netherlands and England, where these are used as a means of reducing early school leaving. The authorities is the Netherlands use incentivising steps in school funding, i.e. increasing funds for good results, whereas in England performance-based funding relies on the reverse logic - penalising mechanisms - meaning that funds for schools decrease if objectives are not met. 

The study covers 27 EU Member States (except Luxembourg) plus Iceland, Liechtenstein, Norway and Turkey. The aim of the study is to help understand and learn about different school funding structures throughout Europe in order to initiate dialogue and exchange between European countries. 

Report (PDF)