Between inputs and outputs, and between outputs and outcomes, are the institutional and public sector actions that define performance. The budget and resource management solutions aimed at improving governance and thereby education sector performance listed below vary in scope and design but all share common elements: the need to put in place effective incentives, increase oversight, and introduce accountability.
Performance based budgeting
One potential way to address poor governance in public financial management is performance based budgeting, which links allocated funds to measurable outputs or outcomes to improve resource allocation and resource-use efficiency to enhance the quality of public expenditures and, ultimately, public service provision (OECD 2007; World Bank 2008). Two main characteristics set performance-based budgeting apart from traditional budgeting systems: “the greater focus on the achievement of public program objectives and their alignment with government policies” and “an emphasis on holding senior officials accountable for deliverables – often with an accompanying change in the nature of expenditure controls, away from detailed ‘line item’ input controls to one where managers are held accountable for both results and the use of inputs” (World Bank 2008: 6). Only some qualitative evidence on the effectiveness of overall performance-based budgeting in improving performance exists for developing and transition countries, and evidence for the education sector in particular is lacking.
Increasing internal transparency: information and its systematic application
Internal transparency, which ensures that information and data are recorded accurately and on a regular basis, and are available to decision makers on demand, is a vital component of good governance in budget and resource management. When internal transparency is strong, monitoring of management is more effective and detection of irregularities in the budget process easier. To strengthen internal transparency typically requires the creation of effective information management systems, training of staff in their application and use, and, crucially, the introduction of incentives for accurate reporting of data and their use. The importance of getting incentives right is illustrated by the Sierra Leone example. Comparing EMIS data on student enrollment with those from two other sources and from random checks it became apparent that some districts were significantly over-reporting their student numbers as school principals had strong incentives to over-report but no incentives to report accurately (Hamminger 2008).
Management control and oversight are necessary to implement financial and budget rules, establish civil servant accountability, and improve performance. Audits can detect a range of financial irregularities and provide information on means to rectify problems when incentives to follow up and respond to audit findings are in place. To help minimize the time and cost of audits, education and finance ministries can undertake record simplification and procedural streamlining. Improved oversight, follow-through on recommendations, and institutionalization of audit procedures can promote progress in these areas.
Strengthening external accountability mechanisms: parental and community involvement
Improved access to information on education budget allocations and disbursements for stakeholders (e.g. parents and civil society) can complement initiatives such as those mentioned above. This is particularly relevant to primary education (whereas at tertiary level there is less potential for influencing policy or its execution). These measures have been shown effective in Uganda where a campaign publishing monthly inter-governmental transfers of education funds in the main newspapers and posting details of primary education funds transfers on notice boards in schools and district centers provided parents with information, which enabled them to hold local officials and providers accountable for funds transfers (Reinikka and Svensson 2005). Still, this type of action arguably only works when parents and communities have the ability and means to discipline providers if they perform poorly, and also tend to depend on the education and income levels of parents. More evidence is needed to determine how and when access to information can help strengthen external accountability.
Payroll cleanup and management
Regular updating of employee lists and payroll commitments is a basic management tool and is a high priority for education systems, which have large numbers of employees. While politically difficult and not inexpensive, accurate, up-to-date employee records are a critical starting point for improving staff management and reducing payroll irregularities. Physical verification where teams visit points of pay and verify that teachers on payroll exist and are being paid the correct salary can be carried out. A less costly method is to have auditors carry out spot checks at schools to verify that teachers on payroll exist. Uganda has undertaken several payroll cleanups and has seen a decline in the share of ghost teachers from roughly 20 percent in 1993 to 4 percent in 2005/06 (World Bank 2007c). However, it is not possible to determine how large a share of this decline is attributable to payroll cleanups although they have likely contributed.
Tracking the flow of funds
PERs and PETs in the education sector can provide information on where budget leakages take place during the flow of funds. Quantitative Service Delivery Surveys (QSDS) provide a useful complement since they track services instead of flows of funds, providing further information on areas that are prone to leakage. Once the main governance weaknesses contributing to leakages have been identified priority actions can be outlined. For instance, education PETS for Tanzania and Uganda served to determine at which administrative level of the education system leakages were most likely to occur (local level) and a Zambia PETS addressed what type of funding, rules-based or discretionary was more vulnerable to leakages (discretionary funding) (Savedoff 2008).
Outsourcing disbursement of funds to independent third-party
Contracting out disbursements to an independent third-party can substitute or complement government efforts, and are particularly useful in fragile states with little existing capacity to ensure that public funds reach their destination. In general, contracting out should be a temporary strategy until public financial management systems have been sufficiently strengthened (see Sierra Leone example in Budget Leakages section).
Facilitating the receipt of education funds by making disbursement directly to front-line providers may help ensure that schools receive funds if check and balances are in place to avoid frontline providers capturing public funds (instead of officials at higher levels in the education system). In Kenya, a primary education project arranged to have textbook grants transferred directly to primary school bank accounts. School Committees could then purchase books locally (World Bank 2003). Recent INT audits showed virtually no leakages.
Introducing (and enforcing) clear and transparent procurement rules
Establishing clear and transparent procurement rules including clear and objective criteria for prequalification and bidding procedures with explicit specifications to avoid hidden wires (specifications in proposed bids that are written in such a way as to benefit certain manufacturers or a single group) is crucial to assure competition and efficiency.
E-procurement allow governments to use information technology in the procurement process to create more transparent and efficient arrangements for bidding on and awarding of contracts by improving access to information, increasing efficiency, and promoting competition, ultimately lowering costs and raising the quality of purchased education goods and services. The introduction of e-procurement (for all sectors) has been highly successful in reducing costs and corruption in several countries including the Republic of Korea, Mexico, and Chile (Ware et al. 2007).
External monitoring of procurement: engaging stakeholders
In countries where central governments do not have the resources or capacity to monitor each local school district to check if supplies reach schools, participation of civil society and community volunteers in monitoring the procurement process can improve the procurement and delivery of school supplies. These volunteers can also serve as checks on government officials and agencies engaged in the procurement process. One example is the national textbook delivery program, Textbook Count 1-2-3, in the Philippines started in 2003 to address corruption in textbook procurement (Leung 2005; OECD 2006). The program ensured that the tendering process selected the best qualified suppliers relied on volunteers from the Scouts, the National Movement for Free Elections, church-based and other local groups to monitor, and in some cases physically deliver textbooks to schools. The program succeeded in decreasing the cost of each textbook by roughly 50 percent and in providing nearly all schools with timely supplies of textbooks (Department of Education 2007).
Acting on findings of corrupt behavior
Random forensic audits in which auditors select specific procurement projects and scrutinize actual submitted invoices, check on the quality and quantity of contracted supplies, investigate whether a contractor actually exists and so on, can help government detect irregularities and deter firms from inappropriate behavior. If audits detect corruption but the prospects of being disciplined are small or non-existent, corrupt officials and firms will not be deterred from further corrupt behavior. The stringency of sanctions for procurement fraud varies substantially across countries, from dismissal to prison in Hong Kong to virtually none in Bangladesh (ADB/OECD 2006). For effective sanctioning, a complaints system staffed by independent investigators with the authority to scrutinize contracts is necessary, and when corruption is discovered, publication of sanctions can serve to deter other firms and officials from wrongdoing.
Establishing voluntary disclosure programs
The creation of voluntary disclosure programs that allows contractors to report on corruption in exchange for immunity or milder sanctions and do not prohibit reporting firms from participating in bidding on future contracts, can help reduce procurement corruption. Several countries already have some version of such programs, e.g. Argentina, Brazil, and Pakistan, and so far there has been some success in discouraging procurement irregularities (Ware et al. 2007).
4. Performance of Human Resources
Teachers represent one of the largest groups of civil servants, and as a result, the education sector claims a substantial fraction of national budgets. Because education is labor intensive, human resource management and the performance of teachers largely define the scope and performance of education service delivery. How public sector teachers are recruited, deployed, monitored, and perform is governed by underlying education system incentives and lines of accountability.
Hard evidence on these topics is scarce; most of the available measures of teacher performance are negative and include indicators such as absenteeism and reliance on bribery or personal contacts to obtain jobs and promotions. This section outlines the main governance issues and potential performance indicators, and examines existing evidence and possible solutions to the persistent challenges facing human resource management in education.
Designing recruitment and assignment to improve performance
Civil service regulations and recruitment systems are intended to ensure a professional, politically neutral workforce with appointment and promotion based on transparent civil service regulations and pay scales. With those advantages can come disincentives for performance including compression of pay differentials that make rewards minimal, promotion based on seniority rather than performance, lack of mechanisms to monitor effort, and limited or no freedom of managers to reward and discipline staff. Civil service reforms can address some of these limitations but pose political and operational difficulties.
Teacher performance can be enhanced through policies that promote the recruitment, hiring, transfer, and assignment of adequately trained staff; appropriate performance incentives; and effective accountability mechanisms. While it is relatively simple to outline the processes, implementation is complex. Without consideration of these components human resource management becomes susceptible to some combination of political manipulation, mismanagement, nepotism/favoritism, and fraud, which tend to compromise performance.
A modified version of the teacher education and development framework designed by the US Educational Testing Service (ETS) summarizing how high-performing country systems screen for high-quality teachers is shown in Table 6. These systems include the following components: standards for entrance into and exit from teacher education programs, certification requirements, and minimum academic qualifications (Wang et al. 2003).6
Table 6. Potential controls for teacher training and hiring
These components are useful for controlling the quality of the flow of teachers into and out of teacher education systems, and into public sector jobs. The existence and application of controls can help avoid or reduce irregularities such as favoritism and nepotism in hiring and sale of teaching posts (e.g. hiring based on national test scores), and bribery (e.g. certification based on systemwide examinations). Clearly, the number of controls, their design, intensity, and where along the teacher education pipeline they are implemented will vary across countries depending on country circumstances (Table 6).