Revista Electrónica de Investigación Educativa

Vol. 4, No. 2, 2002

Financial Models for Public Education
in Chile and the Requirements
for their Adjustment

Sebastián Donoso Díaz
sdonoso@utalca.cl

Instituto de Investigación y Desarrollo Educacional
Universidad de Talca

Casilla de Correos 747
Talca, Región del Maule, Chile

Rodolfo Schmal Simon
rschmal@utalca.cl

Facultad de Ciencias Empresariales
Universidad de Talca

Casilla de Correos 747
Talca, Región del Maule, Chile

(Received: April 10, 2002; accepted for publishing: August 2, 2002)

Abstract

The article analyzes the public financing of primary and junior high school education in Chile, after twenty years’ application of subsidy for the demand. Based on this, there was formulated a change to remedy or reduce the identified weaknesses, particularly those related to the need to take into account an uneven socio-economic reality and the existence of an imperfect education market.

Keywords: Educational economics, educational financing, financial policy, elementary education.

Introduction

This work was born out of the authors’ interest in analyzing the topic of public financing of elementary and high school education in Chile, with the conviction that the existing form of subsidy should be modified. Therefore, we propose correcting the shortcomings related to two key aspects. First, the extreme formalism of the model, based on financial contributions allocated according to students’ daily attendance, presuming that this means an improvement of the quality of the school, an assertion that deserves further analysis of the possible theoretical and empirical support sustaining it. Second, the apparent neutral effect of students’ socioeconomic status on school costs, and hence on the quality of education.

1. Financing Education in Chile

The funding of public education is a significant issue in the current political agenda of developing countries, owing to the direct implications of education in the society, and the kinds of resources involved. Often, discussion of this matter has been pushed aside either by reason of the specificity and aridity of the subject, or due to the biases that exist concerning their discussion. The latter can be characterized by two diametrically-opposed dominant approaches. The first, identified as “educentric”, establishes that educational activities should be funded regardless of cost. Alternatively, the “efficientist” approach centers its concern on the relationship between revenues and costs of educational projects, bypassing the issue of quality in education. The perspective in between—still emerging—associates financial resources with the quality of education and type of population served.

Certainly, financial resources are a major component of the public education system, especially when in many countries the government is the main source of income. On the other hand, education is an essential component of public policies and strategies for progress in the country, given its instrumental role in increasing productivity as well as its contribution to the improvement of its inhabitants’ quality of life. Thus, education has significant implications for social equity, although its role in this dimension requires—as presently maintained—adaptations and adjustments necessary for the effective achievement of this.

The model for financing public education in Chile has changed since the beginning of the eighties, from subsidizing the offer to subsidizing the effective demand for education in each school. This transformation brought with it important implications in various fields, such as the emergence of new institutional actors, the reinforcement of some former agents and the deterioration of others. These changes intensified some of the system’s traditional problems, for instance, the inequity of educational results and genuine opportunities to access a quality education, increasing the existing gaps, issues directly related to the resources associated with educational financing.

Finally, it is important to emphasize that, in the Chile of the nineties and on, the model of subsidizing the demand was accepted uncritically, almost without further discussion; however, we believe it deserves a careful analysis of the negative effects it entails.

2. Public funding of education

2.1. The role of the government and the change of regime in education funding

Free public education in Chile dates back to 1887 (Vial, 1987). Since then, the government has assumed a leading role in this area, which increased from early in the second quarter of the twentieth century with the rise of so-called “welfare government” (Nuñez, 1998).1 Thereafter, the government has been the primary architect of the Chilean education system, consistent with the social model in force until the seventies, when education was assumed to be a public good that provided significant contributions, first, in growth , and later, in the country’s development, a concept supported by the theory of “human capital” (Becker, 1993; Pedro and Puig, 1998). In this context, the explosive educational development which Chile experienced beginning with the middle of the nineteenth century is unthinkable without considering the role played by the government, including, of course, the area of funding.

3. Economic criteria underpinning the education subsidy

The subsidy (also called the grant) is the key economic concept for discussion approached from the perspective of educational funding. It is identified as any transfer of financial, physical or service resources—in this case by the government—to economic agents or production activities under certain conditions or situations. The grant reflects society’s interest in the development of the market for a specific product or service, seeking to stimulate supply and demand.

The initial sense of the subsidy was to facilitate access to the subsidized product or service by a sector of the population; to encourage an increased supply at a lower price than it would have without the subsidy, providing it gives the producer an additional income not achievable under real market conditions. Therefore, it would constitute an incentive to add new suppliers and to increase the quantity and quality produced by the current suppliers.

The Government’s interest in subsidizing education is based on the conviction that education provides a social benefit greater than the private benefit, so that it is often in the public interest to develop the education market’s reach beyond that which it could reach without subsidy.

Consequently, education is perceived as a significant contribution to economic development. Both the costs and the benefits expected of education can be analyzed from a private perspective and from a social point of view. The first involves a financial analysis in which direct costs and benefits are compared, valued at market price, seeking to maximize utility. The second involves an economic analysis in which are also considered indirect costs and benefits at shadow prices, and where the objective is to maximize profitability in the society. Thus, at present, it is understood that the utilities or benefits provided by educational services are both social and economic.

Until the eighties, public interest was focused on extending the coverage of the regular education system—that is, on reducing illiteracy and increasing the number of educated people and the population’s average years of schooling. These objectives are still in force to some degree, since the illiteracy rate has not dropped to zero,7 and the exigency of the population’ average schooling has risen. However, current concern focuses on quality, an attribute that crosses the discussion of experts, politicians, educators, employers, workers and families, and whose net effect is its impact in both the private and the public dimensions.

We must emphasize that for a society, having people with more education implies a correlative increase in productivity and improvements in their levels of self-esteem. It also leads to savings in the fields of public health, government pensions and social networks—dimensions which, in general, report education. As a result, the profitability of most educational services is more social than private. However, this is not a “blank check” that guarantees that education should be invested to whatever extent may be “necessary”, without measuring fundamentals (studies, pre and post assessments) that would allow us to define and quantify its social returns. This is because, under this same pattern of public profitability, it competes with other social services that generate similar benefits.

To date, it has not been possible to find studies or reliable records that would support the current level of subsidies provided for education, in order to determine their aggregate impact on other sectors such as health. Also, based on that, with better background information there could be estimated the impacts which the increases in educational quality would generate, and then there could be evaluated the return on the investments and the proper subsidy.

4. Analysis of the subsidy models

4.1. Considerations regarding analysis

This section discusses the models of subsidy for the supply and the demand, applied in Chile to the educational field. This is done based on the strengths and weaknesses observed for each model. These were then compared, which requires defining evaluatory criteria leading to the issuance of an opinion on the results achieved and the way they were achieved.16

Social functions of education are grouped into three dimensions. First, as a good in itself, so that its achievement (and increase) is a positive factor in any scenario. Second, from the operational perspective, as a tool for the social and economic development of society. Finally, from a values perspective, for its role in the ideological-cultural field, where it socializes and legitimizes the social order. Because of this, education can be regarded as a complex social function.

The funding of education is related to the second of the functions described: the operational or instrumental, without losing because of it, its impact on the other dimensions presented. It is understood that the mode and magnitude of the financing has to help reduce some of the most important problems of education. Just as yesterday the political emphasis on educational funding was covered by the school system, resolved totally or partially today, the emphasis has been shifted to the quality of education, an issue closely related to inequalities under which the educational system operate, a mirror of the society’s inequities.

The most persistent social inequalities are rooted in socioeconomic factors. Their incidence is key in education, since it is found among the primary factors explaining the educational performance of any area or level. Also, socioeconomic variables are associated with specific inequities not adequately compensated for by other variables, and they generate negative results. Thus, the link social inequality and socio-economic variables forms part of the conceptual nucleus of the theme: the quality of educational results and the funding model that supports them.

The focus on inequalities is a fundamental perspective of the current economic and social theories (Sen, 2000). It is understood that equity involves providing each person the opportunity and resources, according to the situation in which she finds herself, so that she can reduce the initial inequality.

In Chile, starting in the nineties, educational policies were based on the attainment of higher levels of equity. Towards this end, some theories postulated a more active role in the market to get more efficiency in the allocation and use of resources, and because of this, to attain higher pedagogical results. This affirmation is certainly open to debate,17 since it has not been shown with enough empirical force that by this means better results would be generated, nor are there greater antecedents regarding its contribution to improving the redistribution of resources and opportunities.

In the case analyzed, changes and adaptations of approaches and methodologies applied to the financing of education effected beginning in the nineties, are still in the paradigm model of subsidy for the demand, seeking correctors directed toward its optimization without generating alternative principles outside its boundaries, much less postulate a return to the model of subsidy for the offer.

Based on the above, we analyzed the two models for financing public education in Chile applied in the past fifty years: subsidy for the offer subsidy and subsidy for the demand, to the demand, applied to the various existing types of education: urban and private.

4.2. The model of subsidy for the offer

The model of supply subsidy prevailing in Chile until 1981 operated on the basis of the past contribution from the government, updated by the annual change in prices, plus the contribution centralized in some larger specific items such as equipment and infrastructure, to which are added at times, projections of variables associated with the offer of other educational services: population birth rate, behavior of population factions, migration movements, etc. In practice, basically the grant allocated to each school is “explained” by the budgets of the years immediately preceding.

It is important to confirm that for this model of long-standing and widespread financing use, little history and few studies exist to enumerate its strengths and weaknesses (Jofre, 1988).

4.2.1. Strengths

A first feature of the model is its operational simplicity and ease of implementation in a centralized government like that of Chile. Under this model, the allocation of financial resources requires only a reduced apparatus of planning and control capable of sustaining it. In effect, programming the amount of resources for each of the schools for the relevant budgetary was exercise routine task, because its basis of calculation lay in historical projections with marginal markers that have slowly evolved over time.

From the perspective of the administrator, in this case the government, it means a low-demand technical plan, of information and evaluation requirements for the human resources necessary for its operations. In sum, it is a model that operates under a basic management plan, simple and reduced.

When the government assumed the responsibility for the planning and control of the educational offer regardless of how the demand behaved, at least over the short term, school personnel tended to conduct their activities without exerting great pressure to attract and win a greater portion of the student demand.

From the point of view of the system’s direct beneficiaries, families could freely choose the school where they wanted to enroll their children. This freedom was limited at best, when the school was reaching its maximum enrollment capacity, either because of quality, location or other factors.18 In practice, the variable with greatest impact on the family’s decision was the location of the school; since the demand did not affect the level of funding, it was not necessary to attract a higher enrollment than in the past,19 and therefore no families were informed about it in detail.

Furthermore, since the schools’ funding was not directly associated with the behavior of enrollment, attendance, dropout, performance or other variables, they operated primarily on the basis of internal characteristics rather than the market indicators. As a result of this autonomy, schools arrive at more homogeneous educational achievements, without demanding from the user more information to determine types and qualities of education, since the results were structurally more uniformly among different types of schools.20

Under this model, based on past budgetary history, it was possible to find schools that, with similar levels of enrollment, would perceive different subsidies supported by operating costs also different, a product of the attention to school populations of different socioeconomic strata. The model assumed the possibility that there are schools with greater cost requirements based on the socioeconomic conditions of their enrollment, as well as their location.21

From the point of view of the school’s financial sponsor, this model ensured the provision of a stable short and medium-term income, since it operated independently of the any changes in the demand.

Finally, it was not possible to ignore that, under this modality of financing and operation, in Chile universal basic education was achieved in less than 50 years, with over 95% coverage (Nuñez, 1999).

4.2.2. Weaknesses

One of the weaknesses attributed to the model, from the users’ perspective, is that they do not directly or knowingly participate in financing the schools where they have chosen to enroll their students, and it is the government which determines how much funding each facility receives, regardless of the population’s preferences and interests—a situation that reduces the participation of the local citizenry.

Moreover, the low participation of the population in school financing reduces the chances of an adequate management control by users of the educational process and its related results, at least in the subject’s classical format, which is different from the perspective in which they participate in the financing, and therefore, in the control of management and results.

The fact that the subsidy granted to schools is independent of the socioeconomic status of the students enrolled gives a regressive bias, in that it does not focus public resources on the poorest sectors, and allows access without pay to population sectors who are able to pay for—at least partially—the educational services received. Thus, scarce public funds, usually scarce, are taken away instead of being aimed at potentiating and extending education in those areas most in need.

Considering the educational purposes, the model of subsidy for the offer did not strongly encourage the improvement of the schools’ educational quality, since the subsidy was allocated on the basis of past criteria rather than on results associated with the objectives the schools needed to meet. In this sense, it was argued that the model tended to perpetuate the efficiency/inefficiency achieved in each school without regularly, in any way, stimulating its improvement.

From the standpoint of economic efficiency, one of the strongest criticisms was centered on the fact that the plan operated independently of the demand, which made the assumption that it “pursued quality.” The search for alternative models of subsidizing for the offer came from those who held the view that all funding not taking into account the behavior of the demand tends to create inefficiencies, whether they be goods, or public or private services.22 This implies that the behavior of the educational market follows the patterns of other products and services: the logic of profit. However, there are precedents indicate that in education there are also other rationales as well, especially as related to religious or philosophical values.

Finally, from the standpoint of efficiency in meeting the objectives and their link with costs, the absence of formal, systematic and indexed ties between performance and the cost structure that supports it, produces no advantageous relationship between those who strive and achieve better results, and those who do not.

4.2.3. Analysis

This model sustained a large part of the educational development of Latin America, and Chile in particular, allowing the population generalized access to elementary education, and access for a number of middle and lower-middle-class social sectors to high school or even college education. We believe that these sectors could not have reached those levels of education under a more restrictive financing plan.

Notable as a contribution of the model is the stability it generates, principally because its calculation is based on past standards progressively and marginally adjusted without generating short-term uncertainties. It also allows scheduling a job with more extended time horizons, independently of the cost structure supporting it, since this is not compelled by sudden, unplanned changes.

From a technical standpoint, its operational requirements have a low threshold together with reduced costs.

Its main weakness is that the incentive to improve processes and results do not respond to an economic logic charged with a tendency toward inefficiency in this area in the medium and long term. This absence of economic incentives in its regular operation would be explained by the financial factor’s not being associated with the degree of fulfillment of the system’s objectives at various levels. However, it should be noted that this weakness is valid only in cases where the prevailing logic is economic.

The Chilean educational development which took place up until 1980 operated under this plan—generally—detached from the materials of cost and also from the scholastic results. While the latter made possible a certain social mobility and had an impact on the reduction of inequities, as well as generating a quality education, according to the canons in force, the educational processes of massification developed beginning with the second half of the twentieth century increasingly placed in evidence their limitations in meeting the objectives set. In particular, from the standpoint of social equity, in which its contribution was significant and important, it was not great enough to reduce the majority of the population’s great social inequities.

4.3. The model of demand subsidy

This model assumes as a prerequisite for its proper functioning, the existence of a competitive education market, with freedom of entry and exit for those offering and those seeking, properly informed of the characteristics of the educational offer. The central criterion for the allocation of financial resources is the accounting of each student’s daily average class attendance per month, multiplied by the MEGU, whose result determines the amount of subsidy per student that should be delivered to the respective school.

Those who ascribe to this model hold as a central argument for its justification, that there is found in the generation of funding and free access to it, independent of the school property, a system of full competition for the probity of the educational service (Gonzalez, 1999).

The method of allocating financial resources materializes “the demand for education,” since it expresses, first, the number of students being educated in the school, and second, the average attendance per month is considered as the effective demand for education.

4.3.1. Strengths

Unlike countries such as the Netherlands and Israel (Shapira and Cookson, 1997) in which this model is also implemented, in the Chilean case, the central variable is the class attendance of students rather than their scholastic registration.

A school gains nothing by having a large student enrollment if it does not have a high class attendance. This concern is not inherent in the models based on subsidies for the supply, nor in those of other versions of funding for the demand, where attendance is not considered as a variable for the allocation of resources. Thus, financial dependence on the demand for education would be a stimulus to promote students’ enrollment/attendance.

Greater daily attendance by students means more hours in the classroom, and therefore more time devoted to controlled learning. The model assumes, then, that increased classroom time goes along with greater learning. This would tend to generate, in schools, a greater concern for families’ preferences and interests.

The aspiration to increase the enrollment and attendance of students should create a more competitive market, because different suppliers are interested in capturing the largest possible market. This “move toward the market” is perceived by the education seekers, who would “dynamize” the market, forcing the family to get involved in education as well as in the concerns and requirements that may have an effect on the management of the school.

Moreover, an appropriate educational strategy may also increase the willingness of families to help supplement educational funding by increasing the volume of private resources invested in the system (shared financing).

Under this model, the resources allocated to the schools would be directly proportional to the service they provide, a situation which was not necessarily part of the model of subsidy for the offer. Therefore, with subsidy for the demand, the distribution of resources to an school is much more sensitive and varies monthly depending on the behavior of attendance. Consequently, provision is guided by the market rather than by the government, and is therefore more dependent on the behavior of the demand than on the political actors who control the government.

Assuming that there is symmetry of information in the education market,23 freedom of choice in this model is identical to that in the model of subsidy for subsidizes the offer. There are restrictions in both when the school is operating at full capacity, in which case another model that would provide the service.

4.3.2. Weaknesses

From the operational point of view, the implementation of the model requires an important bureaucratic apparatus that would control the variable by which resources are allocated: attendance, which should be measured daily.

This monitoring is complex, given how decisive is this variable in school financing and because it is very sensitive to climatic variations, public safety, transportation, public health, etc. Monitoring attendance requires a large bureaucracy to prevent its distortion; this involves implies redoubling efforts in this area and fortifying the associated bureaucratic entities.

Similarly and indispensably, the model requires one to assume that the market is homogeneous and competitive market, when it is actually not, except with some exceptions. This is especially true when size does not warrant the existence of more than one school, as is the case of rural localities, towns and small villages where the option to choose is more fiction than fact. Unfortunately, the information available in the education sector is neither abundant nor easily understood by the user, so that the choice of education with full foundation, based on the rationale of verifiable quality, becomes a phenomenon difficult to attain for most middle-class, lower middle-class or lower-class families—the average population covered by the service. This makes debatable one of the model’s basic principles: the “symmetry” of information between suppliers and users.

On the other hand, in contradiction to its indirect purpose, even though the model seeks to increase the quality of education, the allocation of resources through the subsidy has no direct relationship with that variable, since it assumes a formal process based on students’ school attendance, without directly taking in what is fundamental: the increase in student learning. This is not a minor, and presents an enormous gap in the model’s design. Society pays for students to attend school, but not necessarily for them to learn.

Like every personnel-intensive process, in its cost structure the heftiest component is wages, so that the proportion of fixed costs is high. In contrast, the income structure has significant margins of variability in terms of student attendance. Having a rigid cost structure accompanied by variable income has led, on occasion, to negative financial effects, which have been usually been solved by destabilizing the faculty, and making wages flexible. Hence, this funding plan, from its inception, did not have the support of the teachers.

The “natural” results of the model lead schools to try to attract and retain students with a higher attendance level, since these generate the lowest possible costs. Thus, those who have the most absences are indirectly excluded. It also tends to marginalize those who have more learning problems, since they are often the ones who provoke higher costs. This ultimately brings about socio-economic discrimination toward the poor; tending to marginalize those who are different, and seeking to attract those who are different in a positive way. The application of this logic ends in segmenting the schools’ market on the basis of socioeconomic criteria, with different facilities for the poor and for the rich, since when there are no factors to compensate for these characteristics, they discriminate more than homogenize.

4.3.3. Analysis

One of the main hypotheses for the application of the models the existence of a competitive market. This is not fulfilled, except in some sectors where the population has greater socioeconomic power; while for the lower-level socioeconomic sectors, the competitiveness of the market is more restrictive. On the other hand, a minimum number of schools is required to generate an educational market, which requires access to a market that operates with certain characteristics of homogeneity. This is not the case in most of the country’s small communities (about 50% of the total), and even less if one considers the population’s socioeconomic distribution and the test results of the System of Measurement of the Quality of Education (SIMCE).24

Complementarily, one of the key elements that reduces the positive effects of the demand model is the asymmetry of information between users and suppliers. The information available about quality to those who seek educational services has no relation to what they really should have in order to make decisions adhering to the rationale of “orientation toward quality” which the model claims. In practice, decisions are propelled by the locale of the school and how much it costs, which restricts its operational framework. This is more restrictive in that children are minors, and these variables were found to lie outside the model’s quality rationale.

On the other hand, the model assumes—as an efficient cause of learning—that more attendance means more quality of training (including learning), thus endorsing the funding associated with that variable. However, to date there is no solid evidence to support this correlation. This factor reduces the funding of the educational process only to the student’s presence in school, ruling out other avenues of training. It would seem that the purpose of the education system, which is to achieve students’ learning, is confused with school attendance. While the latter may be instrumentally necessary to achieve the above objective, with the new tele-education processes which are developing with dizzying rapidity, learning is becoming increasing detached from the classroom. In fact, to insist on this plan rigidifies the use of learning time, confining it to a scholastic plane of daily attendance, rather than intensively using time in school and out of school to its fullest extent.

The model considers an insufficient number of categories or types of schools, or learning conditions, for the allocation of financial resources (level, type and condition of teaching), assuming that each presents a homogeneous interior reality in usually heterogeneous circumstances. For example, two schools with the same level of student attendance, the same modality and teaching condition, receive a similar subsidy amount, although one of them is geared to a population of extreme poverty and the other to a population of higher socioeconomic status. While the incomes of both institutions are similar, operating costs are different. This fact is not contemplated in the present model.

In sum, it could be affirmed that the benefits of demand subsidy are to increase competency, reduce costs and create greater transparency in the allocation of resources. This would lead to greater competition by delivering higher quality among schools.

Among the most obvious disadvantages is the assumption that the market is homogeneous when it is not. Second, the great asymmetry of information does not allow parents to make decisions based on a solid rationale concerning quality. Third, it does not create competition in the areas most dependent on government support, which are the neediest socio-economic levels of the population, with lower education options in other ways. Finally, it creates uncertainty in the calculation base on which the subsidy operates.

5. Proposed mechanisms and instruments for financing public education in Chile

After nearly two decades of applying the model of subsidy for the demand in education, we believe it appropriate to make relevant changes, aimed at overcoming the main shortcomings analyzed, to address the weaknesses of the prevailing model, particularly in terms of educational equity and quality, essential elements of public education policy in Chile, and in the rest of Latin America as well.

Replacing the current funding model with one that would drastically reduce educational inequalities seems a short-term goal unattainable, although debatable, because basically we share the approach of Yunus (1997), who says that the issue is more a factor of the political will of the agents in power, than of the resources needed to achieve that goal.

That is why we consider it important that, in the future, this topic be discussed at two levels: one, relating to the improvement of criteria for the allocation of economic resources, following the principles of fairness essential in this task; and the other, concerning the revision of the conceptual bases and societal projects, in order to propose a funding system that would be consistent with these objectives.

In this section, based on the explanations already given, and paying attention to the dimensions of equity and quality which under the current funding system have not been duly considered, given evidence that the socioeconomic context is blatantly unfair, proposals to correct some of the weaknesses identified are presented and discussed.

5.1. Provision of funding according to the average socioeconomic level of the school population

First, it is essential to create a system of financing that would consider, in its basic structure, the socioeconomic status of the school population it serves, since this has decisive impact on the costs favoring a model that would seek similar equity and quality. Currently, this mechanism, called an “educational grant unit” (EGU) operates as a fixed value independent of the socioeconomic status of the students who attend a certain school, in circumstances where it is known that the cost of education for the most vulnerable sectors is significantly higher than that associated with higher-income social groups. Consequently, it is appropriate to apply a positive discrimination towards the population having higher costs for education, establishing an EGU with a broad empirical basis,27 clearly sensitive to the socio-economic variables of the population of students and families it serves.

It is proposed to differentiate the MEGU by socioeconomic status, according to the average income of the families, grouped into deciles,28 generating a structure more sensitive to economic reality, where their values would be significantly higher for the most vulnerable socio-economic levels; which would allow it, in that way, to be adjusted to actual costs, produce positive effects on learning and reduce the inequality the current system generates. The resulting MEGU vector would form the basis for the function of calculation, establishing 10 levels, which would be complemented by the weights detailed in the following points.

5.2. Replace the variable “average daily attendance” with the effective quarterly enrollment of students

Currently, the key variable for the allocation of resources is the monthly average daily attendance of the school’s students. The objection has been made that it is a variable of high cost control for the system, whose impact on scholastic performance is less significant than believed, since the margins of variance for the variable are reduced.29 Therefore, it loses significance as a criterion for estimating quality, and hence for the efficient allocation of resources in a role as crucial as the allocation of funds.

Consequently, we propose replacing the variable “average attendance of students” with “effective quarterly enrollment for each school,” since the existing international experience recognizes that the latter behaves properly when there are mechanisms for controlling it. Moreover, this option demands significantly lower costs than the current modality.

Carrying out the proposed change of the basic variable involves recognizing that the educational process goes beyond attendance, and that since this is a very important factor, the allocation of economic resources cannot be based on a variable so sensitive to changes, thereby generating—as mentioned above—uncertainty in revenues, with consequent negative impacts.

On the other hand, this form of resource allocation contradicts the purposes of non-presenciality of the current learning models which invade the proposals of the area’s learning models, which rigidify the allocation of financial resources, thereby giving certain clues that the processes must be presencial. Another thing different is to discuss the issue of the full school day (which means the extension of scholastic activities throughout the day), and relates to the cost/opportunity of access and exposure to training experiences for the most vulnerable social sectors.

Modifying the basis for calculation considering the quarterly enrollment of students of each institution is not complex, since, at present, schools now report it twice a year: at the end of the second month and on the next-to-last month of classes; consequently, it would mean introducing an interim measurement. Therefore, its implementation is easy, fast, and much less costly than the current system of control. Also, it tends to stabilize earnings, making them independent of attendance; this is obviously fairer, because most of the costs of a school are fixed, whereas variable costs per number of students attending are marginal.

5.3. Incorporate indicators associated with the quality of schools’ educational results

It was established earlier that the current funding model neglects a fundamental aspect of the process: scholastic results. It is therefore necessary to incorporate markers aimed at encouraging schools to improve teaching, with the ultimate aim of increasing the quality of the educational product delivered.

Initially, these markers should be associated with the test results of the System of Measurement of the Quality of Education (SIMCE), since it is the only existing evaluation instrument in the field of comparative achievements (subject to certain limitations). However, regarding this, it should be executed with extreme caution to avoid producing an effect contrary to that desired. Later, incorporating other indicators of the National System of Performance Evaluation (SNED) associated with the qualification of teachers could also be considered.

Because of the use of SIMCE we propose two complementary markers: the first, generated from the comparison of the results of the educational school with itself, which would correspond to a value attributable to the scale of the advance/reversal of the results of the school regarding itself, considering the final result of SIMCE as opposed to the previous measurement. The second marker comes from the comparison of the school’s results with those of its peers in the same decile; that is, with those that serve students of the same socioeconomic level, type of teaching, and location. Based on this comparison, assign a financial marker that would reward those who in a better relative situation would be assigned.

The first marker proposed is relevant for every school, since it measures it in respect to its previous state. The second complements the vision by comparing the school with its group of peer institutions.

Both editors are suitable for measuring quality achievements. The first might have more weight when the school is below the average of the group to which it belongs. In this way, there could even be considered a more flexible marker, which could be adjusted (decrease its weight in the role of resource allocation) to the extent that the school approaches the confidence interval of average SIMCE achievements in the group of schools to which it belongs.

The second spell placed the comparison with the group of peers, adapting it to the fairness criterion assumed to have the allocation of resources.

6. Conclusions

In this work, allusion has been made to the fact that the norms for the matter are not equivalent for urban and subsidized private schools. Consequently, this proactive framework, to be successful, requires additional measures (recommendations) designed to even up both markets positively.

The preceding involves establishing the same rules for allocating resources, for both urban and private sponsors, so that they adopt the channel defined in the law. This point is very significant because since the monies are transferred to the sponsors, sometimes left to their discretion is the spending of the largest amounts collected on improvements in wages, equipment or infrastructure, to name a few. It should therefore be expected that the proposed function should have the legal instruments that not only would allow its calculation, but the proper allocation of the revenues generated.30

The same thing happens in terms of the practices schools use for selecting their students, since many subsidized private schools now choose students under plans that urban schools are not authorized to use. Therefore, these often recruit students who habitually bring together learning problems and the costs associated with them.

It is also necessary to devise mechanisms that would allow the urban patron, subject to the Teacher Act, to adapt teaching resources to the real needs demanded by the community under the same conditions as those of the subsidized private schools. This process is complex because the labor market should not be protected. Recent announcements by educational authorities and the College of the Order in favor of applying an evaluation system for teachers should be aimed in that direction.

Since the central criterion for the operation of the financing system demands in its origin a market in which families have a real choice of schools, the availability of adequate information regarding educational projects offered and their results to date is essential. That is, it is required to reduce the level of information asymmetry, which requires that the Ministry of Education, or a bureau of education, have powers aimed in that direction, periodically report the results recorded by the educational establishments in various fields (SIMCE, promotion, repetition and dropout of students, appropriate success rate, rate of teachers’ attendance, and other indicators such as “value added per monetary unit invested”), which would consider the results obtained in relation to knowledge input and resources invested.

Concerning the subject, it is essential to evaluate regularly the system of funding public education based on the fulfillment of the objectives to be achieved in various spheres and fields of activity: pedagogical results, management of facilities, correction of social inequalities, etc.

A new formula for calculating funding is proposed as follows:

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Translator: Lessie Evona York-Weatherman
UABC Mexicali

1During the colonial period up to the end of the second third of the nineteenth century, the embryonic Chilean education system was essentially private, with little input from the public sector. The demands of the early twentieth century aimed to improve its financing and quality, bringing about the contribution of the State, which, although from that moment it brought increasing financial resources, has always been lagging behind the demands. This situation has had several stages, but it is the dominant feature of public funding for education.

Please cite the source as:

Donoso, S. & Schmal, R. (2002). Financial models for public education in Chile and the requirements for their adjustment. Revista Electrónica de Investigación Educativa, 4 (2). Retrieved month day, year from: http://redie.uabc.mx/vol4no2/contents-donoso.html