Governance in Education: Raising Performance


Measuring budget performance



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Measuring budget performance


It is difficult to assess budget performance directly but some very useful process indicators exist based on the Public Expenditure and Financial Accountability (PEFA) framework. This uses a comprehensive set of 31 indicators to assess overall performance of public financial management systems (PEFA Secretariat 2005).3 Indicators especially relevant to education are shown in Table 4.

Table 4. Selected Public Expenditure and Financial Accountability (PEFA) indicators relevant to education



The PEFA indicators are rated from 1-4 with + modifiers (4 indicating strongest performance).4 Scores for three PEFA indicators especially relevant to education: (1) aggregate expenditure compared to original approved budget (in some countries there are large discrepancies suggesting that allocated resources do not reach service providers), (2) effectiveness of payroll controls (a particularly critical issue for education given that the payroll costs in education are the largest among government sectors), and (3) availability of information on resources received by service delivery units.

The PEFA indicators are useful for identifying where in the budget process governance and performance problems exist. For example, a poor score on the aggregate expenditure outturn compared to original approved budget indicator may be a sign of poor management, inadequate monitoring of processes, and/or of weak disbursement systems. In any event, there is a clear absence of accountability in financial management. If a country scores low on the effectiveness of payroll controls indicator, the problem of payroll irregularities may be serious. A low score on availability of information on resources received by service delivery units indicator suggests some combination of inadequate transparency, poor recordkeeping, low budget management capacity, and insufficient accountability.

Data for five countries are shown in Figure 2 to illustrate relative performance across these three areas. Bangladesh scores relatively poorly on all three indicators; the Dominican Republic scores the worst on aggregate expenditure outturn compared to the original approved budget; Macedonia scores comparatively poorly on information on resources received by service delivery units; and Mozambique and the Ukraine both score poorly with respect to the effectiveness of payroll controls. PEFA indicators can thus be helpful in pinpointing and prioritizing areas where action is needed to strengthen budget processes and help bolster good governance in PFM.



Figure 2. Selected public expenditure and financial accountability (PEFA) indicators for five countries, 2005-07

Source: PEFA Secretariat (various years).



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