Corruption in the education sector
Budget transparency
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Budget transparency is defined as "full disclosure of all relevant fiscal information in a timely and systematic manner" in the OECD Best Practices for Budget Transparency. |
Budget transparency in the education sector has to be seen in the broader context of public sector reform. Little research and few tools on budget transparency deal exclusively with the education sector; thus, this input is based on broader social sector research and tools.
Transparency - a prerequisite for public participation and accountability
Achieving Universal Primary Education (UPE) by the year 2015 is the second Millennium Development Goal. Donors have pledged support to the UPE goals and aid-recipient countries have incorporated them in national Poverty Reduction Strategies (PRS). Foreign donors currently support basic education with US$ 1.5 billion per year. For example, in Uganda in 2003 almost half of the funds available through the Poverty Action Fund (PAF, consisting of Highly Indebted Poor Country - HIPC - and other grants) was allocated to primary education. The education budget actually represents the largest (or second largest) component of public expenditure in most countries.
But are those funds spent on the intended purposes? Does leakage of significant parts of allocated resources not pose a serious threat to achieving the intended educational results?
Opaque budget processes, off-budget activities (i.e. outside the formal budget), weak and poorly managed expenditure systems and a lack of public control provide manifold opportunities for corruption. As a result of a lack of financial accountability in public spending on education, resources disappear. The quality of education suffers. Students drop out of school and, if they stay, they do not learn much.
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Open and democratic societies require an informed citizenry, public participation and governing processes that are transparent. Transparency is an important means of achieving participation and democratic control of budgetary processes - it allows an engaged and informed citizenry to have input into the budget process, and to monitor whether policies and political commitments have indeed been translated into action. Parents who do not know that the government has released funds for textbooks for their children are less likely to hold public education officials accountable than those who are informed. |
Regulation for budget transparency exists on national and international levels, and applies to the education sector as well as to other sectors. Many developing and transition countries have legislated, and maybe to a lesser degree provided, greater availability of budget information in recent years.
The IMF Code of Good Practices on Fiscal Transparency developed in the context of the collapse of the Asian financial system and adopted in 1998, provides a coherent framework to assess the transparency of public finances, to identify priorities for reform, and to monitor progress. It defines:
(i) clarity of roles and responsibilities in public finance,
(ii) public availability of information,
(iii) open budget preparation, execution and reporting, and
(iv) independent assurances of integrity (external audit).
The IMF also issues country reports on fiscal transparency ("Report on the Observance of Standards and Codes" ROSC) that measure country performance against the IMF Code. The OECD has developed "Best Practice on Budget Transparency" (2001) that also provides a benchmark for government performance. On the national level, some countries have enacted specific regulations for fiscal transparency.
Opportunities for corruption in the budget process
1. The budget cycle
Breaking down the budget process into consecutive stages makes it easier to understand the various steps of the budget cycle:
- The cycle starts with the government’s policy perspective, including an analysis of the previous fiscal year, the setting of priorities, and estimates of income.
- It is followed by the government's budget formulation: including setting the resource framework, objectives and priorities.
- Upon enactment through the legislature, the budget is actually executed (or implemented) during the fiscal year: Revenues are collected, funds released, personnel deployed, and the planned activities are carried out.
- The budget cycle ends with the monitoring and evaluation of achievements: Expenditures are accounted for, the achievement of targets is measured, and the audit institutions provide their feedback to the legislature. Their information is used to analyse and formulate next year's budget. Figure 1 illustrates the various stages of the budget cycle.
Figure 1: The budget cycle
2. The budget formulation process
The budget is the main policy instrument of the government. However, policy objectives and priorities often do not find expression in annual budgets. For example, even though government policy documents may pledge adherence to the UPE goals, sectors like defence and large infrastructure projects often receive a disproportionate share of the budget because they provide more opportunity for kickbacks and pay-offs for politicians. Distortions also occur in budget revision processes: The education budget (as part of the social sector) is usually more affected by reversals of budget allocation decisions than, for example, interest payments and programmes with a high political profile. Stated priority issues are often the first to lose funding, whereas others, such as state residences and defence, receive their full amount.
Secondly, within the education budget, reversals and changes (as a consequence of corruption) frequently affect non-wage expenditures, e.g. learning material and school maintenance. In contrast, salaries that represent on average 80% of the overall education budget are less likely to be cut. While it may be difficult to decrease spending on salaries, it is obvious that a shortage of textbooks and stationery and poor school infrastructure provide a disincentive for parents to send their children to school, and have a negative impact on enrolment rates.
Thirdly, within the education budget, there may be distortions between sub-sectors of education. Disproportionate funding may be allocated to post-primary education, which is more expensive than primary education, and benefits the elite. Howerver, it is the primary education sector which ought to receive the bulk of the budget, especially in the context of the UPE goals.
Also, budgets are frequently built on unrealistic estimates, either over- or underestimating tax income, which makes it difficult to understand and act on a budget proposal. A comprehensive budget analysis therefore needs to look at both the revenue and the expenditure side of the budget.
All these distortions and manipulations of the budget can constitute acts of corruption in that they favour the political and economic elite of a country.
Another problem in the budget formulation process is that significant parts of resources may not appear in the budget: they are off-budget. This is often a consequence of donors that do not trust a country’s financial management system, and that often compete for projects. As a consequence, substantial components of education expenditure may simply fail to appear in the government’s budget. Education ministries may also prefer not to disclose donors’ project grants and internally generated funds because they fear that these may decrease their share of government funds. While off-budget activities may make financial accounting easier for donors, they are detrimental to a country’s culture of accountability in that they create non-transparent, parallel systems that make comprehensive budget analysis and monitoring of expenditures difficult.
There are many challenges to the construction of a realistic and sound budget. Particularly important in the context of development aid is the unpredictability of resource flows. Planning of education budgets as a long-term endeavour needs to be based on sound and realistic projections.
3. Budget execution and evaluation
Once the budget has been approved by the legislature, the executive has to ensure that it is implemented in line with what was enacted into law. However, in many countries budget management systems are so poor that it is difficult for the executive to monitor how resources are spent. Often, the system of accounting and budget controls is in such a poor state that it is almost impossible to monitor spending, even for authorising education officers. Financial information on expenditure is frequently late, often incomprehensible and inaccurate. To gauge the extent to which public resources actually filter down to the school level, researchers frequently have to carry out field surveys - the public accounting system simply does not produce or provide this information. Crucial data are often non-existent, and the data that are available are plagued by problems of timeliness, accessibility and frequency. Lack of access to accurate budget information makes it virtually impossible in many countries to check public expenditure in education.
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In Azerbaijan,[...] the budget document is published as soon as it is accepted by parliament. However, there are only a limited number printed, available only in the Ministry of Economic Development, and only in the capital. These documents are often not accessible to ordinary people as they contain many figures and nobody understands their meaning.[...] (T)o get the real figures one needs to know people in the ministries, access them through the back door. Oxfam, 2004 |
In practice, budgets are not always implemented in the exact form in which they were approved. Funding levels in the budget are not adhered to and authorised funds are not spent for their intended purposes. These practices are not necessarily corrupt. However, if, for example, trips abroad for high-level public officials are well over budget, whereas the budget allocated for recurrent charges, such as supplies, is not spent, then corrupt behaviour of public officials may have played a role. As a consequence, children may have to do without textbooks, and stationery may be missing in the schools.
Once the fiscal year is over, the public (and the legislature which represents the public) should be able to measure whether public resources have been spent effectively. Again, this is often hampered by delays in providing information and a lack of access. Even when data and statistics are accessible in time, they may be inappropriate, faulty and organised in a way (e.g. aggregated) that readers cannot draw any conclusions from them.
Also, if control institutions such as audit courts and parliamentary budget committees lack independence and resources, this may impact on the quality of audit reports, which in turn will make it difficult for the public to evaluate the budget.
Measures to promote budget transparency
Obviously, if the budget were open to public and effective legislative scrutiny, there would be less scope for deviation from policy decisions and reversal of budget allocations. There would probably be fewer distortions between the sub-sectors, and the ruling elite would be less likely to manipulate the budget. Budget transparency, while not a goal in itself, is a prerequisite for public participation and accountability: a budget that is not transparent, accessible and accurate cannot be properly analysed. Its implementation also cannot be thoroughly monitored, nor its outcomes evaluated. There are a variety of measures and tools that enhance budget transparency; most of them promote transparency not only in education budget planning and spending, but in all social sectors.
1. Avoiding off-budget activities
In the budget presentation, the full picture of the government’s financial status must be given. Many developing countries have lost control over their financial affairs due to the segregation of budgetary execution data from other financial data, and/or due to the maintenance of ad hoc budgetary execution records outside the accounting system. Donors should be particularly aware that off-budget programmes should be avoided. Aid practices can distort the budgetary process and undermine government accountability, e.g. when textbooks are directly supplied by donors, bypassing government systems and processes. Off-budget activities can also be created if, on the revenue side for example, the returns from natural resources are not included in the budget.
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Until recently most donor support came in the form of projects, which meant that government didn't actually know how much was being spent. ... Few bilateral donors fund recurrent costs; aid often produces a bias towards infrastructure projects with inadequate support for ongoing costs (e.g. lots of classrooms, but not enough teachers or books). Sometimes, donors have a preference for funding certain parts of the country and this can result in uneven (or duplicate) provision of services, projects that are expensive to manage, and a lack of sustainability. ... The erratic and unpredictable nature of donor disbursements can cause budget instability and can lead to the bunching of expenditure at the wrong times. Oxfam/TENMET (2003) |
2. Donor co-ordination
Donor co-ordination is crucial, especially in the budget formulation stage. It has been institutionalised in many countries, e.g. in the modalities that govern the Uganda Poverty Action Fund. All releases of PAF resources have to be published and implementation has to be discussed at quarterly meetings of donors and representatives of the line ministries. NGOs and the media are also invited so that the public is kept informed and encouraged to demand accountability for public spending
3. Sound budget and expenditure management systems
The budget system should be built in such a way that it is transparent and open to public scrutiny. Improved public expenditure management systems are currently put in place in many developing countries in the context of the Poverty Reduction Strategies (PRS). They are part of an overall “reform package” consisting of macro-economic and budget reform, civil service reform, and changes in the legal and regulatory structures, and often appear as conditions attached to International Monetary Fund (IMF) and World Bank lending and debt relief.
The PRS establish the longer-term priorities for the education sector, built on a consensus between donors and the government. The specific features of PRS include a strong link to the 2015 Millennium Goals, including Universal Primary Education (UPE) by 2015. The “Public Expenditure Management” (PEM) approach promoted by multilateral agencies aims at establishing a sound budget system that helps (amongst other objectives) delivery on the UPE goals.
The overall idea is that government and donors should work together to implement a single expenditure programme which prioritises the use of all sources of funding for public expenditure, across all sectors. This aims to be medium term (3-5 years), to cover all sources of funding and to link the money allocated in the budget to the objectives which have been agreed upon. Donors on their side are meant to offer flexible budgetary support to an agreed programme of policy reforms, rather than to individual pet projects.
4. Making Information Available
PEM is often associated with the Medium-Term Expenditure Frameworks (MTEF) approach to budgeting. These frameworks attempt to strengthen the links between planning, policy-making and budget at an early stage in the budgeting cycle. MTEF allows for efficient allocation of government and donor resources between competing priorities, a reduction in the imbalance between unlimited demands and limited resources, and for regular adjustments. It goes without saying that where a country heavily relies on donor assistance, predictability of donor grants for education is crucial for adequate planning.
The establishment of MTEF is usually preceded by a Public Expenditure Review (PER), a methodology used primarily by the World Bank but also by the United Nations Development Programme (UNDP) and other donors to assess the allocation and management of public expenditure in a given country region or sector. The PER provides the foundation for planning and carrying out budget reform and building an efficient and equitable expenditure management system.
The budget system should be designed in such a way that it “produces” comprehensive, timely information - not only to the education administration, but also to the “users” of the education service: parents, students, teachers and headmasters. Communication technology (integrated financial management systems) can play a crucial role in this. Electronic records of all the transactions (revenues and expenditures) of executing units can contribute to avoiding expenditures without previous authorisation and proper justification. For example, in Peru an Internet Portal of Fiscal Transparency (SIAF-SP in Spanish) provides free access to extremely detailed information on the budget and its execution since 1999.
Proactive information campaigns, carried out at the right time by government or by NGOs, can generate public interest in monitoring education spending and thus prevent leakage of funds. Means as simple and cheap as putting budget information on school notice boards or doors can give a tremendous boost to preventing corruption.
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Expenditure tracking Surveys (PETS) A groundbreaking survey of public spending in primary education in Uganda (1998) revealed that less than one-third of intended non-salary public spending reached the schools in the early 90s, and that the bulk of the non-wage resources was retained and used by the district authorities. Primary schools and district administrations had to post notices of all inflows of funds. As a consequence, the level of leakage fell significantly: Whereas in 1995 only 20 cents out of one dollar spent by central government on non-wage education items actually reached schools, the figure had increased to 80% in 2001. Support
to Public Expenditure Tracking Surveys (PETS) - Sierra Leone
(DFID) |
5. Build Budget Literacy
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To my surprise, I found the state and district budget documents fascinating. These documents are not just numbers. They speak about the expressed intention of the government, its policies, and its allocation of financial resources, which create the rich and poor regions and groups within the state.[...] Budget numbers express an enormous volume of information. With eyes trained in budget analysis, one can discover the government’s hidden priorities. M.D. Misha, Director of DISHA, IBP Guide (2000) |
Understanding and analysing budgets is not an easy task. However, if parents and students, and civil society at large, are to hold schools and the education administration accountable, they have to be able to understand the budget. Budget transparency will only be useful if there is a broad base of knowledgeable observers. The legislature is also more likely to monitor the budget process effectively if there is widespread public interest in budget issues. The media and NGOs play a particularly important role with regard to generating interest and sparking public debate about the budget. Building budget literacy has been recognised as a prerequisite for engaging citizens in the budget process. In recent years, many NGOs have specialised in budget analysis and offer training for other civil society organisations.
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Budget Literacy Courses
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6. Develop capacity of parliamentarians
Budget literacy is particularly important for Members of Parliament (MPs) who should be able to analyse the budget proposal with regard to education policies, to comment on it, and also to monitor expenditures and evaluate the budget outcomes at the end of the fiscal year. MPs have an important role to play: They can initiate public hearings and debates, establish special committees and request further information from the executive. However, they do not necessarily have the skills to adequately assess and evaluate a budget.
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The South African Institute for Democracy (IDASA) has provided a Budget Information Service (BIS) since the 1990s. Its comprehensive analysis includes reports on the effects on specific groups (e.g. the poor, children, women etc.), on the budget process, on provincial budgets, etc. IDASA has also produced studies on budget transparency and carried out training. |
Public Participation in the Budget Process
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Citizens believed that bribery was the most effective way to request and receive services, and they viewed the public sector as an institution not for public service but for personal enrichment. Moreover, citizens were not motivated to participate in the public sector because they judged such participation to be an utopian impossibility. UNODC Anti-Corruption Toolkit |
- Community participation in budget execution: The public can also be actively involved in budget execution at school level. There are examples of school management committees administering school funds, including teacher salaries, with a very positive effect on the efficiency and effectiveness in spending. School committees may directly contract suppliers, for example of desks and meals, or parents may become partial owners of materials, thus reducing the risk of material being stolen. Similarly, teachers are more likely to support school policies and protect financial resources if they play a role in preparing the school plan and in managing implementation.
- School Boards, comprising parents and community members who work with District Education Boards and Local Education Boards, may be involved in the review and approval of key decisions, including the allocation of central government transfers as well as contributions in cash and kind from the community. Community Education Associations, comprising parents of the children served by the schools, may manage the budget with the direct transfer of Ministry of Education funds to their own account. Further on, Parent-Teacher Associations (PTAs) may be responsible for collecting the rental fees for textbooks, and directly manage the school meals.
- Budget monitoring by Non-Governmental Organisations (NGOs):
An increasing number of NGOs carry out independent research and training with the aim of building public awareness on budget issues. NGOs are involved in budget analysis, providing comprehensive information to the public and to the media and often enabling them to comment on budget proposals and to monitor expenditure. NGOs also carry out surveys to compare budget transparency across countries, thus putting pressure on governments to improve budget systems.
- Public hearings and citizen score cards
Two examples of tools that generate public awareness and citizen engagement in budget processes are public hearings and score cards for education services. Public budget hearings at local level raise citizens’ awareness of goods and services that are supposedly delivered to them. Presenting expenditure records in easy language to the public, or at schools, and confronting local politicians with the discrepancy between policy statements and actual delivery can trigger civic action against corruption in education, and thus contribute to accountability. Report cards on education services are another powerful tool to mobilise the public if education funds go missing. A report card is a survey that assesses the performance of, for example, schools and school administrations. It measures both quantitative and qualitative indicators of service delivery through direct citizen feedback. If the results of report card surveys are fed back to schools and administrations, they provide an incentive for increased accountability. If they are widely disseminated amongst the public, together with budget information, they provide an opportunity for citizens to get involved in the budget allocation process, and to ensure that the budget addresses their needs. Then the budget cycle starts again.
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Mazdoor Kisan Shakthi Sangathan (MKSS), or the Workers and Peasants Power Association, is a grassroots organisation based in India. MKSS organises public meetings (jan sunwai) in which detailed accounts of expenditure records and other documentation are read aloud to the public. In a public hearing in which funding of public works was debated, for example, it was revealed that a majority of the funds had gone into fictitious and untraceable projects which were a pretence for channelling public money into private accounts. In addition to promoting transparency and public participation, this revelation resulted in the arrest and conviction of three individuals on charges of criminal conspiracy, fraud and corruption. |
Conclusions
Budget transparency is not a goal in itself. If a budget is built on distorted priorities and if it does not represent all expenditure, then there may be room for corruption even though the budget data are available. Similarly, a budget that is transparent but not accurate will make public scrutiny impossible and again provide room for corruption. Furthermore, budget transparency is only useful in combination with budget timeliness and accessibility. If data are provided too late, or if information is not made available in a reader-friendly format, the public will not be able to monitor the budget process. Finally, a transparent budget will only be useful if effectively used by the public. Transparency and participation complement each other.
Budget transparency has to be seen as one component of a broader
framework of fiscal transparency and public expenditure management. Transparency should be a standard feature of a sound budget system
that is built on realistic assumptions. Expenditure management should
promote adherence to the budget and allow for public scrutiny.
This section has predominantly
used information provided on the excellent website of the
International Budget Project. It is also based to a great extend
on the Oxfam/ TENMET publication "A simple Guide to Working with
Finances and Education" (2003).
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Donors’ Contributions to Anti-Corruption in the Education Sector| RECOMMENDED READING |
 Transparency International (2009) This report presents a regional overview of accountability and transparency in primary education management in seven African countries. It focuses on the effects of decentralisation policies on corruption levels and increased oversight and accountability, based on the presumption that bringing the management of the sector closer to the user leads to increased monitoring and control and decreased graft and corruption. The findings and recommendations are interesting for those working to implement decentralisation in poor countries. Maximizing the performance of education systems: The case of teacher absenteeism Patrinos, H and Kagia, R (2007) Teachers correspond to the most important feature of the education system, not only because their salaries account for most of expenditures in such sector but also because they are the gatekeepers of education service.Teachers’ absenteeism is associated with a reduction of pupils' achievement, overall denigration of school’s performance as well as the provision of negative models to students. Therefore, losses associated with it pose a threat to the country’s growth potential. This paper presents various findings and and studies, as well as strategies and examples on how to combat absenteeism Guidelines for the design and effective use of teacher codes of conducts Poisson, M (2009) To increase the professionalization of teacher, several countries have developed codes of conduct in the education sector. But even when such codes exist, their impact is sometimes questionable due to a variety of reasons. UNESCO has developed comprehensive guidelines not only to guide countries willing to design (or review) their code but also to implement and monitor how the code is used at all levels in the sector, including its integration into teachers’ education and professional development. |
| RESOURCES FROM CIHE |
The Higher Education Corruption Monitor Academic Corruption in The News:
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