Kyambogo University

Faculty of Education
Foundations of Education Department
YEAR III SEMESTER I
COURSE TITLE: ECONOMICS OF EDUCATION AND SOCIOLOGY OF
EDUCATION
COURSE CODE: EPS 3102
COURSE UNITS: 2

COURSE DESCRIPTION:
This course is designed to introduce teacher trainees to economic theory and practice as it
pertains to educational systems and their impact on economic growth and development. The
course material applies general economic principles and theories to the context of education.

COURSE OBJECTIVE:
The general objective of the course is to enable the teacher trainees conceptualize the
application of economic principles theories in educational investment.

Specific objectives
By the end of the course, teacher trainees should be able to:
1. Explain the major issues and problems relevant to the relationship between education
and economic growth and development.
2. Examine the economic nature of education and the economic factors that affect
educational institutions.
3. Discuss efficiency in education as it relates to educational institutions at secondary and
university levels.
4. Analyze educational costs and how to manage costs at secondary school level.
5. Analyze the various education financing mechanisms available, their applicability and
equity implications in Uganda.
6. Help students develop the capacity to think critically and systematically about education
in equality and education reform.

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CONTENT OUTLINE:
1. The nature and scope of economics of education:
a) Definitions of economics
b) Definitions of economics of education
c) The education problem from the economics perspective
d) Education as consumption and investment expenditure
e) Implications of the distinction for educational investment
2. The link between education and development
a) Education and economic growth
b) Education and poverty
c) Education and income distribution
d) Education and democratic governance
e) Education and health
f) Education and gender
3. The human capital theory; Background of the theory, its assumptions, application and
shortcomings
4. Efficiency in education
The different dimensions of efficiency
a) Technical efficiency
b) Economic efficiency
c) Internal efficiency
d) External efficiency
e) Scale efficiency
f) How to improve efficiency in education in LDCs
5. Introduction to cost analysis in education
a) Costs in the education context
b) Economic costs Vs financial costs
c) Different ways of expressing educational costs
d) Unit cost and its different dimensions
e) Methodological; technical and socio-political considerations in educational costing

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 f) Suggested cost-minimizing measures
g) Determinants of education costs
6. Introduction to educational financing analysis
a) Importance of educational financing analysis
b) Public financing of education: - advantages and disadvantages
c) Private financing of education: - advantages and disadvantages
d) The student loan scheme: - advantages and disadvantages
e) The voucher system: - advantages and disadvantages
f) Current funding crisis in education
7. Equity considerations in education
a) The concept of equity in education
b) Different dimensions of equity in education
c) Equity and efficiency implications of tuition-free education
d) Suggested ways of improving the equity situation in Uganda’s education system

Modes of delivery
Lectures, Group discussions, seminars

ASSESSMENT
The following instruments will be used to assess the teacher trainees: Course work 20%; Test
20%, Examination 60; Total 100%. The pass mark is 50%.

Suggested reading list

Atkinson, G. B. J. (1983). Economics of Education. London: Hoddler and Stoughton
Ayot & Briggs. (1990). The Economics of Education. Nairobi, East African Publishing House.
Bagonza, G. (2010). The Economics of Education: Perspectives on the Economic value of
Education, Kampala. The New Vision Printing and Publishing Co. Ltd.
Barr, N. A. (2004). The economics of the welfare state. (4th Ed.). Oxford University Press.
Don, A. & Bjork, M. R. (1969). Education in Developing Aras. David Mckay Company, Inc.
New York, USA.

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Graham, S. B. (1991). Education in the developing world: Conflict and Crisis. World University
Services, UK.
Hanushek, E. A. & Welch, F. (2006). Handbook of the economics of education. Amsterdam:
Oxford Elsevier North Holland.
Levacic, R. (1982). Macroeconomics: The static and dynamic analysis of a modern economy.
Macmillan Press Ltd, London, United Kingdom.
Okurut, H. E. (2001). Economics of Education. Department of Distance Education, Makerere
University, Kampala, Uganda.
Psacharopoulos, G. & Woodhall, M. (1995). Education for Development: An analysis of
Investment choices. World bank publication, Oxford University Press Washington D.C. USA
Todaro, M. P. (1977). Economics for a Developing World. An introduction to principles,
problems and policies for development. Longman Group Limited, London, United Kingdom.

Chapter One
Origin of Economics of Education
The birth of economics of education is said to have occurred on 28th December 1960 when
Theordore Schultz delivered a lecture to the American Economic Association on the topic
"Investment in human capital." So, the subject is a relatively new one and there are two basic
reasons to explain why. First, education is often regarded as a human right which should
therefore be freely available to all. Economic considerations were, therefore, deemed to be
unnecessary in debates on issues about education. Second, educational institutions are, in the
main, not profit-making organisations - especially those owned and controlled by government.

However, even when such educational institutions are providing a service which is widely
considered to be a basic human right, scarce resources or factors of production (inputs) such as
land, labour, capital assets and entrepreneurship get used up. Like any other productive-
organisations therefore, educational institutions must make economic decisions relating to how
best to utilise these scarce resources to satisfy a variety of educational needs.

At the same time, widespread reforms of educational systems, rapid expansion of enrolment
figures, dwindling national education budgets together with the negative effects of Structural
Adjustment Programmes (SAPs) on education have combined to give economic analysis of
educational matters a new significance.
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The Education Problem
Among other things, the education problem arises because of:
a) The insatiable or infinite (unlimited) nature of educational needs i.e. they are too
many compared to the limited means (resources) available for their fulfillment. The
insatiable character (i.e. cannot be met in totality) of educational needs arises partly due
to the fact that they are:
• Recurrent in nature i.e. they give only short-term or temporary satisfaction before re-
curing; e.g. your particular learning need may get satisfied after attending a given lecture
but that very satisfaction may generate new interests, insights or questions which will
call for another lecture or series of lectures. Your thirst for knowledge thus becomes a
recurrent phenomenon.
• Complementary: certain types of knowledge and skills are mutually supportive
(interdependent) and must therefore be acquired at the same time. For instance, to grasp
certain concepts in Chemistry or Physics, some amount of knowledge in Mathematics
may be required. Physics and Mathematics or Chemistry and Mathematics enjoy a
complementary relationship i.e. the learning of one aids or necessitates the learning of
the other.
• Rapidly increasing: owing to the sharp increase in popular demand for educational
products (i.e. educated or trained human resources) associated with:
- scientific and technological improvements
- population growth
- the belief in education as an important tool for any development programme.
b) The relative scarcity of educational resources: The amount of real or true resources
available for the provision of education is declining in percentage terms. In Uganda, for
example, the pressures brought about by the AIDS epidemic, civil wars and increased
military spending, environmental degredation, structural adjustment policies, falling
real purchasing power of the local currency, inadequate employment opportunities,
declining export earnings etc, have greatly reduced budgetary allocations for the
education sector.

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 Consequently, the consumers of educational service are unable to meet all their
educational needs and must choose between competing (alternative) educational needs
(ends). For instance, they have to choose between:
• What type (academic Vs vocational, Formal Vs Non-Formal, etc) and level (pre-
primary, primary, secondary or post-secondary/tertiary/higher education) of education
to provide. Priority will be given to those types and levels of education that are
considered to be most beneficial to the individual recipients and to society as a whole.
• How much of each type and level of education to provide.
• How to deliver (supply) the different types and levels of education.
• For whom are we providing the education service? That is. who are going to be the
beneficiaries?
• At what rate should the education sector grow? Here one has to be mindful of the
possible manpower shortages (in case of underproduction) or unemployment or brain
drain (in case of overproduction).

Definition of Economics of Education

• Economics is a social science subject that concerns itself with making choices and
finding alternatives. It studies how society decides what, how and for whom to produce
goods and services.

• Economics of Education as an area of study cannot be said to be a separated field of

inquiry that is totally different from the ordinary economic. Economics of Education is
the application of Economic principles, concepts and laws to the process of Education.

• In fact, Economics of Education studies human behaviour [in terms of human decisions,
actions(s) and reaction(s)] about schooling (Babalola, 2003). It further looks into how
human behaviour affects economic development. Economics of Education employs the
use of some elementary concepts commonly used in labour economics, public sector
economics, economic growth theory and development economics.

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 • On the whole, economics of education is the marriage between Education and
Economics. The two merge to become one and thereafter referred to as Economics of
Education.

Note: There is a difference between Economics of Education and Economics education.

• Individual wants are virtually unlimited whilst the resources available to satisfy those
wants are scarce. Educational wants create a demand for scarce resources, and this
implies that wants are competing for the same resources. Consequently, economics of
education concerns itself with how to use the limited educational resources to satisfy the
unlimited educational wants.

• The difference between economics of education and ordinary economics is the

dominance of education as a variable in every arguement and application of economic
principles laws, and concepts to education issues.

• The fundamental problem of economics of education is how the decision makers shall
make use of the limited resources at their disposal to best satisfy their unlimited
educational wants.

Economics of education is therefore a branch of economic theory which uses tools and
techniques of economic analysis to study input -output relationships in education (i.e. the
relationships between the injections into the education process herein called resources or inputs
and the benefits or outputs arising from that process) and the relationship between an education
system and its wider environment (social, political, cultural and economic) with a view to
ensuring optimum (best) use of the scarce educational resources to attain given educational
goals (ends).

Economic analysis of education therefore aims at assisting educational planners administrators,

policy makers and other stakeholders in making realistic investment choices (decisions) and in
setting achievable educational targets (goals) which are compartible with the development
needs of a given country.

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c) The concept of opportunity cost
Given the scarcity of means and the unlimited demand for their production, consumers of
education are unable to meet their educational needs and for that matter they must choose (make
a choice) between the competing education wants. Choosing to satisfy a given education want
or the other implies that there are alternative wants one has to forego or sacrifice (opportunity
cost). For instance, when government chooses to build a secondary school other than a primary
school per sub-county, the opportunity or alternative foregone is the primary school project.
The forgone alternative whenever choice is made is what economists call the opportunity cost.

The concept of opportunity cost is important because it helps us to measure the sacrifice of our
choices. For instance, the primary school project undertaken is the true measure of the cost of
the choice taken.

A rational individual would make a choice where the cost of the foregone alternative is less than
the benefit expected from the chosen alternative. Thus the central concern of economics of
education is that of making the best choices i.e. choices that will ensure that scarce educational
resources are used in a way that maximizes the benefits from those resources. Once that is
achieved, then the education resources are said to be optimally allocated.

Economic Analysis of Education

Economic analysis of education aims at assisting educational managers, planners,

administrators, policy makers, in making realistic choices and decisions that are consistent with
the development needs of the country.

The interest of economists of education extends to large category of knowledge and there are
two broader categories of knowledge. The production of knowledge is an economic activity
because it involves using scarce resources. This therefore calls for an economic analysis of the
production of knowledge, and among the major subdivisions of knowledge industry, formal
education is the most important.

An economic good is one that: is scarce i.e. limited in supply relative to demand; is a utility
maximize i.e. generates benefits or value to the people who use or consume it and cannot be
consumed at zero cost/ cost-free i.e. its consumption involves a cost be it direct or indirect.

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Economic Benefits of Education

Economists are interested in education because of the various benefits that it contributes to
society as well as to individuals. These benefits include the following;
1. Direct financial returns which originate from the positive relationship between
educational attainment and earnings. It has been established that the higher the
educational attainment of an individual, the higher the earnings. This however, is the
ideal situation but in real terms the situation may be different.
2. Financial option (the optional value of education). This refers to the fact that each level
of education attained provides an opportunity to the individual of acquiring yet another
levels of education thereby enjoying the extra benefits attached to the higher levels of
attainment.
3. The hedging option. This refers to the fact that education increases the probability that
an individual will be able to adopt in different situations as circumstances dictate. For
instance, in a situation of technological change, utilization of complex equipment or
switching jobs, an educated individual will be at an advantage.
4. Non-market returns. Such benefits result from the do-it-yourself kind of work that one
can perform as a result of his/her education. For example, an educated person can help
his child with homework, can change a blown fuse or bulb, change one’s car tyre, etc
which an illiterate person may not be able to do.
5. Residence related benefits; these are the benefits enjoyed by the people who reside
around the educated especially one’s current or future family. Such people may enjoy
comfortable life because of high education, low crime rates in neighborhoods dominated
by the educated.
6. Employment related benefits; these are the effects of the educated individual on the
overall productivity of his or her work-mates in situations where productivity involves
cooperative effort. Examples may include the way headteachers may determine the
productivity of all staff members in their schools.
7. Social benefits; these originate from the fact that literacy is a prime condition for an
intelligent community, prosperous economy, democratic governance, the rule of law,
etc. Social benefits are enjoyed by society as a result of having educated people.
Furthermore, education reduces the financial burden of society by;

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 a) Minimizing the need for corrective action.
b) Minimizing the need for welfare services.
It is important to note that the first four (4) benefits above are primarily enjoyed by individuals
and are therefore referred to as private benefits; while the last three (3) are enjoyed by society
as a whole hence they are referred to as social benefits.

The Consumption and Investment Aspect of Educational Expenditure

INVESTMENT AND CONSUMPTION EXPENDITURE
For analytical purpose, all expenditure can be subdivided into:
• Investment expenditure
• Consumption expenditure
Investment expenditure refers to the acquisition (purpose) and/or use of’ ‘assets’ which generate
(yield) benefits (outputs) over a long period of time.it is characterized by:
• Increase in the stock (volume) of capital assets (i.e produced means of production or
man-made assets) which are, in turn, used for the production of more goods and services.
for example, a hand hoe or ox-plough is a capital asset since peasant farmers need it, not
for its own sake, but for assisting them in producing agricultural products such as maize,
matooke, millet, etc. Capital goods (assets) are therefore not an end in themselves and
are, as a result, not needed for their own sake: they are just a mean for acquisition of
other products.
• Increased productive capacity’ (capability to produce good and service) of the individual
or society at large. This improved capacity to produce is reflected (indicated) in
increased output of various goods and services.
• Increased aggregated(total) demand for demand for goods and services. This comes
about because, increased output of goods and service means that, the individual or
society is likely to have an excess supply (surplus) of such goods and service. The
individual or society can thus sell the surplus amount of that output so as earn money
which can then be used to buy others commodities (goods and services). The ‘demand’
for these commodities (i.e. the need to acquire them coupled with the ability to buy
them) will have increased as a result of the increase in the productive capacity of the
individual or society in question.

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 • Demand can be defined as the amount (quantity) of a good or service that people
(consumers) are prepared to buy at a given price within a given period of time. ‘Demand’
is thus different from a mere ‘want’ or need or desire to acquire something. It is “an
effective need” since the person expressing the need also has the capacity to pay the
capacity for it.
On the other hand, consumption expenditure refers to the purchase and/or use of goods and
service which generate immediate but short-lived direct satisfaction. For instance, the
purchase of a cold drink or food yields direct and immediate satisfaction since their use
(consumption) solves the problem of thirst or hunger. Consumption items are therefore an
end in themselves since they are needed for their own sake. Such items usually get used up
or reduced in quantity and quality fairly quickly.

Economists such as Adam Smith, Ricardo, Mathius, Marshall and Schultz have applied the
concepts of investment and consumption to analyses expenditure in education.

Education as Consumption.

Early philosophers as Socrates and Plato considered knowledge acquisition as a pleasurable

endeavor in itself. Knowledge, in this case was to be enjoyed as an end was accordingly sought
for its own sake. Similarly, there are several aspects of education which give the consumer
(beneficiary) direct satisfaction in just the same way as other consumer goods do. For example:
• Education improves the social status of its clients (consumers). The possession of a
degree or diploma certificate accords the educated persons a respectable position in
a group or community and boosts his or her personal satisfaction.
• Education enables its consumers (beneficiaries) to enjoy a wide range of goods and
services. For instance, an educated person can play and enjoy a wider range (variety)
of indoor games; can watch, follow and enjoy a wider variety of drama plays or
films, can effectively use a wider variety of contraceptive materials, etc.
• Educated people often have happy and psychologically satisfying memories of their
school or college days.

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 • The recipients of education just enjoy learning. this explains why one may choose
to buy a novel, newspaper or magazine instead of say, food or a drink.

Education as Investment.
1. Educated people have acquired valuable productive attributes (characteristics) through
their schooling and those attributes are recognized and rewards in the labour market by
employers. Once such attribute is the new knowledge acquired in the classroom, which
the beneficiary subsequently uses to perform a specific job. Civil engineers, for
example, have learned through schooling how to calcite the load-bearing capabilities of
differently constructed bridges. Without these skills, acquired through the education
process, the civil engineers could not successfully perform their jobs. Besides the
inculcation of specific job-related skills (which have more to do with mental attitudes
and abilities), education is also said to positively influence social attitudes e.g.
confidence in dealing with people, confidence in tackling mechanical problems, respects
for logical argument, respect for community valves, etc.
2. Indeed, Bowles and Gintis (1976) argues that schooling creates different attitudes at
different levels of education: higher education, they contend, develops such attributes
as independence of thought, creativity the ability to give orders etc. as opposed to
secondary education, which encourage docility, punctuality, obedience to authority, and
so on. These attributes, according to Bowles and Gintis are highly rewarded in the labour
market.
3. Education and training therefore also create “human capital” assets in the form of new
knowledge, skills and desirable attitudes all of which increase the employability and
productive capacities of the beneficiaries (employees) in just the same way as
investment in new physical capital assets (e.g. a new hoe, ox-plough, tractor) raises the
productivity of a farmer.
4. It follows from this observation that, expenditure on education is a form of investment
since it generates long term benefits for the individual beneficiary (in terms of higher
wages/salaries, improved social status) and for society as a whole in terms of improved
services and products resulting from use of better educated manpower, a morally upright
citizenry, reduction in crime rate, higher tax income, etc.

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Chapter Two
The Human Capital Theory
Human capital refers to the stock of knowledge, skills, progressive attitudes and experiences
possessed by an individual. The major mechanism of acquiring human capital is through
education and training, therefore expenditure on education can be treated as investment because
it generates a flow of future benefits to the person receiving it.

The HKT introduced by Theodore Schultz in 1961 and elaborated by Gary Becker in 1964
suggest that individuals acquire skills and knowledge to increase their value in the labour
market. Individual’s decision to invest in training or education is based upon an examination of
the net present value of the costs and benefits such as an investment.

Assumptions of Human Capital Theory

The human capital theory is based on the following assumptions;

▪ An educated population is a productive work force, in other words education enhances

the productivity of workers.
▪ Formal education is the major mechanism for the formation and development of human
capital.
▪ Expenditures on education can easily be divided into the investment and consumption
components.
▪ The benefits of investments in education can easily be measured
▪ Human capital is time investment.
▪ The labour market in which the educated workers compete is a perfect one.
▪ It is easy to specify the relationship between educational inputs and outputs.
▪ Workers are paid according to their productivity. This means that the more educated an
individual is, the more productive he becomes and the more he earns.

Characteristics of Education as Human Capital.

▪ An individual’s stock of human capital cannot be sold neither can it be given to

somebody else.

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 ▪ To take advantages of human capital, an individual must invest his/her own time along
with other resources.
▪ It is more efficient to invest in human capital when one is still young.
▪ Not all forms of human capital turns out to be worthwhile investments because one may
fail exams or fail to get a job.
▪ Human capital depreciates over time. It is there important to distinguish between short
and long life investments in the case of education. It is therefore advisable that educated
people go for refresher courses.

Criticisms of the Human Capital Theory.

✓ It has been argued that education does not improve productivity by imparting knowledge
and skills, but simply acts as a screening device by employers; Individuals who possess
innate abilities or certain personal characteristics such as the rights attitudes towards
authority, punctually, motivation that employers value and which are there rewarded by
means of higher earnings.
✓ The theory assumes that the labour market in which the educated workers must compete
is a perfects one, such that the better educated get jobs for which they have been trained.
It assumes that jobs are available and that employers’ recruits people on merits. This,
however, not the case.
✓ It is not easy to draw a sharp distinction between the consumption and investment
aspects of education i.e. when does education become an investment? people demand
education for purposes of both earning a living (investment component) and for enabling
people to enjoy fruits of living (consumption components). Some economists have
attempted to distinguish between expenditures on vocational oriented training as
consumption. This view however overlooks the fact that general education is a necessary
precondition education for vocational education.
✓ Both the individuals and society use education as a means of preserving and developing
their valued systems and function that do not fall either under investment or
consumption in the economic sense.
✓ As human capital is embodied in members of the labour force, the return on human
capital is mixed up with the return on quantity of labour and it is difficult to isolate i.e.

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 both the educated and the uneducated do practice. How does one distinguish the
productivity of the educated from that of the uneducated?
✓ The human capital theory explains differences in levels of development in terms of
difference in quantity of labour available in various countries. It ignores the role played
by nature of the international relations especially the exploitative relationship of the
developed countries against the LDCs is ignored.
✓ The theory relies on a linear equation model whereby gains in productivity usually
measured as GNP are explained in terms of known factors such as capital/ investment
goods. The residues-gains in productivity left after all known factors have been taken
into account are attributed to improvements in human capital. This is wrong.
✓ The theory underestimates the contribution of non-formal educational approaches to the
development of human capital.
✓ The theory underestimates the role of other factors besides human capital like land,
physical capital’s contribution to national development.
✓ The theory makes a wrong assumption about the direct cause-effect relationship
between education and development.

EDUCATION AND ECONOMIC GROWTH.

Economic growth in simple term refers to an increase in the amount or volume of goods service
produced in a country or an economy, i.e. over time. Economic growth refers to an increase
monetary valve of all the life sustaining goods and service produced in a country in a year. It is
generally believed that expanding educational opportunities promote or even determines the
pace at which the economy grows (the rate of economic growth). this is supported by the
following arguments;

1. None of the resources of a country i.e. agriculture land minerals deposits, water bodies
(rivers, lakes) by themselves and unimproved can yield useful goods and services. It is
only after these resources have been exploited by man with acquired abilities (human
capital) that they can produce goods and service over a period of time.
2. Developing countries are still backward because they are largely deficient in their supply
is obtained through education, there will lack of able leadership in both the public and

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 private sectors. Without such leadership to plain, manage and run the economy growth
would be deterred.
3. Educated people (human capital) are fruitful/useful because they facilitate the
application of well-known concepts and practices in society e.g. application of
fertilizers, irrigation, artificial insemination, which Will improve agricultures
production.
4. Similarly, labour skills (human capital) are not only developed by education but they
are also discovered. One of the functions of education is to serve as a mechanism for
searching out and potential talents.

EDUCATION AND DEVELOPMENT.

Development can be defined a persistent increase in a country’s average income (per capital)
accompanied by institutional changes in the social, political and economic spheres. Economic
development requires sustained increased in income. The concept of development involves
economic growth. (the quantitative dimension)) and improvements in the institutional structures
(qualitative dimension? A key component in development process is that people must actively
participate in it. Participation implies taking an active part in the production of benefits as well
as participating in the enjoyment of those benefits. Education contributes immensely to the
development process as follows.

POSITIVE CONTRIBUTION OF EDUCATION.

➢ Creates human capital that is vital for development.

➢ Fights illiteracy
➢ Educated people gets better and well-paying jobs.
➢ Education changes individuals positively which promotes productivity.
➢ Education yields social benefits.
➢ Education has implication on health status.
➢ Educated people play a role in politics.
➢ Education enhances unity
➢ Education promotes industrial developments and technological advancement.

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 ➢ Education has emancipated women and other marginalized groups.
➢ Education enlightens the masses about their rights.
➢ Education is a source of employment.
➢ In an ideal situation, education determines one’s income
➢ Helps to achieve even distribution of income in the long run.
➢ Education is one of the agents of modernization of society.

NEGATIVE EFFECTS OF EDUCATION.

➢ It in many cases serves to maintain the status-quo.

➢ In Uganda, it has been accused of producing job seekers because of the curriculum.
➢ It may raise the aspirations of graduates for post school careers.
➢ English as the MOI has killed the culture in many LDCs
➢ The current education system has perpetuated neo-colonialism.
➢ It is too expensive to society and to individuals
➢ There is unequal distribution of education facilities.
➢ It leads to brain drain.

EDUCATION AND INCOME DISTRIBUTION.

improvement in the distribution of educational opportunities will enable the poor capture a
larger share in the benefits of economic growth and development, and it will also enable them
to contribute to the overall increase in the rate of growth. The relationship between education
and income distribution derives from economic returns associated with education and where
education of income and this is important in poverty reduction.

EDUCATION AND DEMOCRACY.

Much as the case for investment in education is often made on economic grounds, there are
equally important benefits of education for democracy and government as follows;

a) Mass education is a fundamental requirement for democracy and a threat against

dictatorship.
b) Within communities’ education can build self-confidence needed to engage in political
discussion.

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c) The skills imparted through education play a significant role in creating conditions for
accountable governance e.g. record keeping.
d) Literacy skills are vital for the defense of basic-rights. Without education democracy
itself is a little more them an empty shell.

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EFFICIENCY IN EDUCATION
Introduction
One of the main pressures on education managers in LDCs is to improve the efficiency of the
education system in which they work. their efforts, however, encounter two problems:
a) Many frontline education administrators do not really understand efficiency or how it
can be improved. The notion is rather confusing.
b) Many education administrators do not have authority to make changes that would be
needed to seriously improve efficiency.
Definition
In its simplest forms, efficiency means the ability to produce the desired effects with a minimum
of efforts, expensive or worse. It means achieving the desired goals of education at lower cost
or achieving more of those goals without increasing cost. Efficiency in education is viewed is
achieving educational goals in a cost-effective manner and measuring educational outputs by
comparing graduation rates with enrollments. Efficiency is desirable in its own right as a means
of maximizing educational output given limited resources.

The concept of efficiency is closely connected to that of productivity, for it is through

maximized productivity that maximum efficiency is achieved. Productivity is the ratio of output
produced to physical input used. Efficiency relates to productivity in that efficiency can be seen
as an index of productivity. If we are to calculate productivity estimates for a set of institutions,
and seek to identity the most/least productive unit, efficiency can be defined as the index used
to rank the different productivity values. There are two aspects to the maximization of
productivity.
✓ any given set of inputs can be utilized so as to produce the largest valve of output.
✓ For a specified output and quality level, inputs should be chosen and utilized so a the
minimize production costs.
The attempt to apply efficiency concepts to education is confronted by the problems of defining
educational input. This is because a good number of the educational outputs cannot be easily of
education. This, however, does not mean that qualitative aspects are not as important. One
widely used approach is to think about the education process as consisting of four major parts

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i.e. inputs, process, outputs, and outcomes. Many aspects of efficiency can then be understood
in terms of the relationships among these components (windam and chapman 1990).

Inputs which Education process Education outputs Education

include comprised of: ▪ Knowledge outcomes
▪ Teaching/learn ▪ School ▪ Success in
• Students ing process. graduates employment
• Teachers ▪ Administration ▪ Positive ▪ Levels of
• Infrastructure ▪ Monitoring attitudes. earnings.
• Time process ▪ Good citizenship
Instructional ▪ lessons ▪ Civil
materials consciousness

input refers to the resources used in the production of education service for example teachers,
textbooks and other instructional materials, school facilities as well as students’ time.

The process refers to the means by which education inputs are transformed into education
outputs, for example through lectures, lessons, self-instructional materials, administrative and
managerial provisions, monitoring and evaluation processes.

Outputs are the direct and immediate effects of the education process for example students’
achievement, skills, attitudes, numbers of graduates. It refers to the valve added to the students
by the time of graduation.

Outcomes refers to the long-terms impacts of the education process. They are the less direct and
less immediate results of schooling. They emerge from the interaction of the inputs and the
process determines the education costs. Presumably, costs can be lowered either by reducing
the level of inputs (fewer teachers, classrooms, or textbooks) or by selecting s delivery
technology that has a lower cost for example through the use of programmed instructional
materials instead of teachers, teleconferencing, skype or google video chat.

The relationship between education output and be analyzed from several perspectives. These
include:

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 ▪ Technical efficiency of education.
▪ Economic efficiency of education
▪ Internal efficiency of education.
▪ External efficiency of education.
▪ Scale efficiency.
a) Technical efficiency is concerned with the maximization of output from a given set of input
(resources). Intuitively it is the measure of the extent to which an institution efficiency allocates
physical inputs at its disposal for a given level of output. This dimension of efficiency is more
concerned with getting maximum results, sometimes without due regards to the cost
implications. A head teacher can employ a professor to ensure all pupils pass with distinction
one
b) Economic efficiency is concerned with achieving a desired level of output at the lowest cost
possible. It is thus concerned with both output maximization and cost minimization. Our head
teacher above can employ a Grade 111 teacher who will be paid less than the professor but will
ensure that students pass.
c) Internal efficiency refers to the relations between inputs and outputs whereby the output is
measured in relation to the internal objectives of the education systems or institution. It is
concerned with the extent to which the internal objectives of an education system, institution,
which the stated objectives have been achieved.

Indicators of internals efficiency

Once a student enrolls, there are three main possibilities
i. The students may successfully complete the course.
ii. The students may have to repeat a grade or more.
iii. The students may drop out of the programme.

The internal efficiency indicators reflect these possibilities by showing the flow of students
through an education system or institution. The four key internal efficiency indicators are:
i. Promotion rate which is the degree of progression from one grade to another. This is
similar to transition rate, i.e. progression from one level of education to another. 100%
progression/transition rate is an indicator of a high internal efficiency.

21
 ii. Graduation rate is the proportion of the enrolled students that successfully completes the
final grade of a given education cycle. It indicates the degree of students in the final
examinations. A high graduation rate is an indicators of internal efficiency.
iii. Repetition rate is the degree to which students repeat grades. A high repetition rate is an
indicator of low internal efficiency which constitutes wastage of resources. However, in
cases where there is no way of monitoring the quality of education and much students
actually know or have learnt a low repetition rate not necessary imply high efficiency,
as in the case of the UPE programme in Uganda.
iv. Dropout rate is the degree to which students drop out or abandon school. Without
completing a given grade in a given education year or without completing given
education cycle. A high dropout rate means low internal efficiency.
d) external efficiency is concerned with the extent to which the education system
satisfies the wider society i.e. the society external to the education system, programme
or institution. It is concerned with how well schools prepare their learners for their roles
in society. (relevance’s of education)

Indicators of external efficiency include;

▪ Ability to get a job which one was trained.
▪ Performance at work place.
▪ The level of earnings.
▪ The ease with graduates fit in their local communities.
It is important to note the last two dimensions of education efficiency (i.e. internal and external)
should be closely linked. A first class graduate should be an excellent performance at the work
place or else the two dimensions of efficient will conflict. In Uganda today there is growing
evidence where by institutions develop and impart skills, knowledge, attitudes and valves that
are not valued or needed by the society as a whole. In such cases, the institution may be taken
to be internally efficient, but externally inefficient.

e) Scale efficiency this meant the extent to which institutions operate at increasing, decreasing
or constant returns to scale. Returns to scale points to the change in output following a change
in inputs. Deviations from the optimal size are clearly sub-optimal, thus they are regards as

22
inefficiencies. A school or system or programme is scale efficient if it operates at constant
returns to scale. This occurs when doubling all inputs results into a doubling of outputs.
Decreasing returns to scale on the other hand occurs when doubling of all. Inputs results into a
less than double increase in output. On the other hand, if a doubling of inputs leads to a greater
than double increase in output then the institution is said to be operating at increasing returns to
scale.

Region A-B is the region of increasing returns to scale, an institution operating within this
region benefits from increasing output. Region B-C is the region of decreasing returns to scale
whereby it is not beneficial to increase output. Economists often equate DRS to level of
institution bureaucracy, such that as paper work increases and lines of authority grow longer
(by doubling the number of employees) such factors are likely to reduce production rather than
increase it. IRS is often associated with startup institutions. One teacher who is able to handle
50 students in a class may teach 30 students enrolled by the establishment of the school. The
cost per students is relatively high. But as enrollment expands, the average cost (per students
cost) declines i.e. as class grows bigger up to 50th students. This is because the school does not
employ another teacher (increase inputs) as a results of the increased enrollment (output) to 50
50 students in the class.
Point B is the optimal/best size of the system, institution, programme where an increase in inputs
leads to the same increase in output. It is therefore important to know whether or not an
institution is scale efficiency just in the same way it is to know whether it is too large or small.

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Ways of improving education efficiency in Uganda.
The following measures have been suggested to improve efficiency of the education system.
They target the inputs and the process and affect various dimensions of efficiency.

▪ Increase student-teacher ratio and recruits staff in school according to a formula that
reflects the appropriate ratios.
▪ Increase time on the task of teaching e.g. from 15 lessons out of 50 to about 30 lessons
out of 50 per week. Better still, awards should be linked to gains in productivity. This
will encourage teachers to put in a lot more effort to the benefit of students’
achievement.
▪ Operate effective automatic promotion to eliminate repetition so as to reduce the ranges
of ages within each grade. Reduce dropout rates by selective use of bursaries and fees
waivers where poverty is the cause of inefficiency.
▪ Increase the proportion of day school place in all types of schools and reduce boarding
subsidies to minimal levels or eliminate them completely.
▪ Monitors public recurrent expenditure per pupils between schools. This will lead to
relocation of teachers from over staffed institution to the benefits of those with high
pupil-teacher ratio.
▪ Provide training for institution managers to increase awareness of effective institution
planning and cost-sensitive decision making. Performance related contracts for
institutional managers should be introduced.
▪ Consolidate effective structures for school government by building on experience of
successful and effective modalities at other levels. If contracts are successful at higher
levels, they could be adapted at primary level.
▪ Introduce school level strategic planning to target desired outcomes year after year e.g.
improvement in examination results, more equitable enrolment, more efficient
deployment of staff and other resources. This will provide a benchmark for performance
evaluation.
▪ Put in place an effective procurement system to support school construction drawing
on the lessons from the primary schools’ facilitation Grant (SFG). There is need to

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 ensure adequate cost control, discourage cost over runs and increase annual building
capacity which is currently below what is needed.
▪ Funding could be extended to institution in kind instead of cash. This may reduce case
of misuse and diverting of funds to none core activities.
▪ Increase average secondary school size to reduce the number of schools enrolling less
than 250. This would enable such school to reap economies of scale and improve
quality.
▪ Refocus the lower secondary curriculum on basic learning skills and competencies
primary school leaver who may not have secured levels of literacy in English and
numeracy and only a very rudimentary group of scientific thinking could benefit from
this with improved performance in senior four.
▪ Re-define the S3-S4 curriculum to meet the needs of both those who continuous study
and those who enter the labor market. Introduce vocational subjects at an earlier level.
▪ Permit and encourage the introduction of some practical and subject and prevocational
studies in the curriculum where there is local demand and school community level
support and where this can be realized at lower cost levels.
▪ Encourage and develop outreach programmes using school facilities designed to meet
learning needs of those out of school and in the formal sector.
▪ Consider developing attaining targets for each subject at different levels using these to
reshape examination, curricula and teaching methods.
▪ Link a revised core curriculum to a limited list of approved textbooks that satisfy the
criteria of price, quality, relevance and availability.
▪ Reform the teacher education programmes to include longer period of mentored school-
based practice (e.g. one year) sandwiched between shorter full time periods in teachers
training colleges. This could increase effectiveness and should be more cost effective.
▪ Undertake a medium term project for teacher demands and output to demand.
▪ Reduce salary differential between graduates and non-graduates doing the same jobs
and link bonus to work so as to improve productivity and performance.
▪ Integration the work of ESA and district level advisor into evaluation, monitoring,
institution development and resource support for secondary establish and schools.

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▪ Establish and ensure that minimum standards are enforced in the private sector for the
key indicators of equity e.g. building, sanitation and health, learning facilities, teachers.

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INTRODUCTION TO COST ANALYSIS IN EDUCATION
The production of education like any other community involves the utilization of input like
students, teachers, instructional materials school facilities and equipment that is transformed by
the education process, that is the curricular, pedagogical methods, school organization,
management and monitoring procedures into educational output like cognitive and non-
cognitive skills well as education out comes like higher productivity and earnings.

Education or the alternative use for the total investment in the educational facilities. All those
involve real costs to somebody or the economy at large even if they are not reflected ibn the
educational budget. In most cases, the total of opportunity cost is much larger than the total
monetary cost of education inputs

1. RESOURCE COST VERSUS MONEY COST

Education inputs may be expressed in terms of real cost when measured in physical units e.g.
number of teachers, teachers’ hour’s number of text books, square feet of floor space etc. inputs
can also be measured in terms of their monetary valve. That is the price paid for them by the
education system (institution) and expressed by financial or money cost.

2. FACTOR COST

These are simply the price paid by education for its various factors of production (inputs) such
as teachers, supplies, equipment, building etc. since the price of different inputs behave
differently and are determined by different forces, they must be examined and treated separated.

Note factor cost may be expressed in real or money terms or in currents or constant prices but
to be meaningful, they must be tried to physical and quantitative standards such as a graduate
teacher, writing table of particular size or square feet of space.

3. RECURRENT COST VERSE CAPITAL COST

Cost analysts must know whether the expenditure figures at hand include capital cost or only
current operating cost. The distinction is normally based on the length of service of various
resource inputs.

Recurrent costs relate to the expenditures on consumable supplies and personnel that are used
up within one financial year and must therefore be regularly reviewed. On the other hand, capital

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costs relate to expenditure on the more durable items land, buildings, equipment that render
useful service over a number of years if properly maintained.

4. CURRENT VERSUS CONSTANT PRICES

In periods of inflation, expenditure expressed in current price and wages or salaries in each year,
give an exaggerated picture of the actual increase in real resources going into education, for
example, the 2005 budget may be twice as large as in 2004 in financial terms but if prices and
wages paid have risen by 50% in the interim, then the real resources have not actually the cost
of education there is the economic valve of the inputs used in education. it refers to the valve of
all resource inputs, that is physical, human, financial resources that go into the construction and
operation of the education program.

The economic valve of an education input is defined as its opportunity cost and it is measured
by the valve of the input at its alternative use. This definition therefore, implies that the cost of
education consists of the following:

a) Government expenditure on teachers, administrators and support staff, school facilities,

suppliers, and equipment’s.
b) Parents and students’ expenditure on education which include tuition and non-tuition
fees, expenditure on textbooks, uniforms, boarding, feeding.
c) Foregone opportunities (for example earning and productive activities) sacrificed so as
to attend school.
d) Private contribution to education in cash and in kind by individuals and private
organizations.

Efficiency in education production is concerned with the comparison of the cost of education
to the benefit of education, and an education program is said to be efficient when maximum
benefits are produced from a given education cost. This therefore implies that the major
determinants of the cost of an education program are the inputs and the process.

Different ways of expressing education costs.

Education costs alone have little meaning, it is only when they are seen as link between an
education system’s inputs, its objectives and outputs, and benefits that they reveal how

28
efficiently and effectively the system in functioning. Cost analysis therefore becomes a
powerful tool to improve the performance and plan the future of any education system.
Education costs can be expressed in the following ways:

1. OPPORTUNITY COST (SACRIFICE COST)

The most fundamental concept of the education cost and rather than measuring the cost of
educational inputs by the princes paid for them, the logic of the approach is that since resources
are limited in supply a decision to use some of them for a specific purpose such as education
means sacrificing the opportunity to spend the same resources on something else.

The concept of opportunity cost though sometimes difficult to apply is valuable in education
cost analysis in that it makes the educational administrator aware of the importance of the
economic cost of education that show up in the budget or expenditure account such as earnings
foregone by students, the value of students’ time allocated to education.

increased by 50%. Analysis therefore, must convert the expenditure each year into constant
prices based on the price level prevailing in an inflation-free period (base year)

2. PUBLIC VERSUS PRIVATE COSTS

Public costs are those financed by governments generally on the basis of tax revenue, loans and
other public revenue. Private costs are those borne by individual students and their families
through school fees, purchase of uniform, textbook etc.

3. UNIT COST (AVERAGE COST)

This is a very useful measuring for many education purposes, for instance it is useful for
comparing costs between different education levels, institutions, geographical areas or times.
Units cost simply means cost per unit and the most commonly used measurement is cost per
students calculated by dividing the total expenditure over the number of students enrolled in a
particular education program. However, unit cost may also be used for a variety of other cost
measures that may include;

a) cost per graduate

b) cost per student place
c) cost per occupied student place

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 d) cost per teacher
e) cost per classroom
f) cost per school
g) cost per course

The most appropriate unit to use depends on the particular of interests, for example if you are
costing the number of pencils, pens, textbooks, the food bills, then the individual students is the
most appropriate unit because in these cases, cost varies in direct proportion to the number of
students. If, however, you are estimating requirements for teachers, e.g. desks, maps, globes,
tables then the classroom is the best unit since staffing and equipment requirements vary with
the number of classrooms other than number of students.

Issues to consider when analyzing education costs

When analyzing education costs, there are certain issues that the analysts should consider. Such
issues can be methodological or technical.

The following can be the methodological issues concerning cost analysis

1. The cost of an education input (teacher, building and instructional materials) should be
defined in terms of its opportunity cost. SO it is not necessarily equal to the expenditure
on the input. For that matter, private and public (social) direct and indirect contributions
should not be ignored.
2. Care should be taken in estimating the capital cost (this is cost on inputs that last for
more than 1 year). The annualized cost of such inputs should depend on the expected
life of the item, the discount rate and the undepreciated part of the item.
3. If future expenditures required are ignored, the total cost of an education activity would
have been under estimated.
4. It is useful to distinguish between education cost in current prices and the costs in
constant prices. Constant prices reflect the real resources to education while current
prices reflect the going price of the resources in the market today.
Constant prices are obtained by adjusting the current prices with price indices. Price
indices show change in price levels. So to assess the real amount of educational
resources, costs should be estimated in constant prices.

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 5. Since prices of education inputs can vary significantly from region to region, there is
need to reflect such price changes when determining the cost an education program for
different regions.

Failure to take into account the above issues can lead to errors in costing that can affect the
choice of priorities based on such costing information.

Technical issues

Apart from the methodological considerations, there are technical issues. Such technical issues
may influence the usefulness of cost analysis in education and they include:

1. Availability of relevant and accurate data

There are always considerable gaps between the data required and what is available especially
in developing countries. For instance, data for public education expenditure is often missing.
Even where public education expenditure is available, it is planned expenditure and not actual
expenditure that is reported. Public education expenditure by the central government may be
available but not necessarily at lower levels of government for example at district level or sub-
county level. In several cases expenditure on a number of items is lumped together and yet such
aggregate data is not useful for cost analysis.

2. Lack of awareness of the relevance and importance of cost analysis on the part of decision
makers.

3. Availability of competent cost analysts which negatively impacts on the quality of cost
analysis and could even lead to uninformed decisions. Where there is lack of competent cost
analysists, they should be trained.

The socio-political factors include:

a) Lack of genuine interest by policy makers in cost analysis. Education plans in most
developing countries are drawn by policy makers for symbolic purposes like making a
regime popular or complying with requirements to obtain donor funds.
b) Sometimes if serious cost analysis is done, it may reveal findings that are inconsistent
with a hidden agenda of policy makers. It may also expose the inequalities in the

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 distribution of education resources by social class, gender, ethnic group or region that a
regime would like to cover up.

SUGGESTED COST MINIMISING MEASURES

It is in the interest of educators and educational administrators to minimize costs where possible
(efficiency) because of the problem of resource constraint. The following cost minimizing
measures have been suggested for low developed countries.

1. Reduction in school construction costs through the application of modern planning,

engineering and the use of local materials to provide low cost housing.
2. Redeployment and more intensive utilization of the available space. For example you
may run an all-year-education-calendar.
3. Double shift: instead of building another structure, one can use the same facility to serve
more clients.
4. Lengthening the school day and school year to provide more time for teaching and
learning.
5. Sharing expensive school facilities and specialized personnel like laboratories,
transport, accommodation, doctors, plumbers, etc.
6. Emphasis on well planned self-instruction by developing appropriate learning materials
like well written books for students’ use under the distance education programme.
7. Application of modern management practices to school services aimed at lowering
school costs for example the use of computer literate managers and administrators.
8. Consolidation of under-utilized education institutions into larger and more efficient ones
which will enjoy economies of scale.
9. Improving the relationship between local communities and school authorities.
10. Pre-school programmes including better feeding. This can prevent having children with
post-malnutrition effects like deviance, delinquency, etc at school.

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COST BENEFIT ANALYSIS
The Meaning of Cost - Benefit Analysis
This is an evaluation technique that is used to assess the profitability (desirability) of investment
projects through the identification, measurement and comparison of all the costs and benefits
involved in those projects. This is done with a view to determining whether or not the
investment project is economically worthwhile. The investment project which offers the highest
rate of returns (i.e. the highest net benefits) is preferred, and vice versa.
This evaluation technique has been applied to several educational issues but mainly:
• To determine the social rate of return to educational investment in order to assess its
contribution to economic growth as compared to the other alternative fields of
investment (agriculture, industry, transport, public service etc).
• To determine the relative rates of return to different types and levels of educational
investment (primary Vs tertiary education, academic Vs vocational education, Formal
Vs Non-Formal education, etc.
• To compare the relative efficiency of the different methods of teaching, different modes
of service delivery (e.g. in service Vs pre - service educational programmes), etc.

Analysis of Educational Costs

What is an educational cost to private individuals or households is likely to differ from an
educational cost to society as a whole. Hence the distinction between private and social
educational costs.

Private Educational Costs

These are the total costs of all the resources an individual or household (family) devotes to
education and they include:
a) The direct money costs (payments) of school fees, feeding, boarding, uniforms, books,
teachers salaries etc together with the direct ‘payments m kind’ as in the offers of land, buildings
or labour by private individuals. Since, in the calculation of private educational costs we are
only interested in ascertaining the burden carried by the individual or family, it follows that,
where the individual or family is receiving financial support from government in the form of

33
scholarships, bursaries or other type of public financial grant the amount of government subsidy
(financial assistance) must be deducted ' from the total private costs computed. For instance, if:
• Musoke, a private undergraduate student, is supposed to be paying fees amounting to
sh.500,000/= per semester; and
• Musoke wins himself a scholarship award from his local government of sh300,000/=
per semester;
Then Musoke incurs a private educational cost of sh.200,000/= only per semester (i.e.
sh.500,000/= - sh.300,000/=).

b) Indirect costs or opportunity (real) costs: when a student chooses to enroll for school
education, other resources get used up but arc usually not considered m the calculation of private
educational costs or they are not paid for directly e.g. the value of students' time. Time is an
important resource and students value the time they spend at school, because they could have
used it to do other things (e.g. get a paying job). Therefore, by choosing to enroll in school,
students forego some earnings. In order to get a total measure of the sacrifices (costs) a student
incurs, these foregone earnings should be added to what she/he directly pays out as school fees.

To be able to measure the earnings foregone by students, details about the average earnings of
people of similar age with similar educational attainments (but who are in paid employment),
are required. Such data is often lacking in the developing countries, and even where it exists,
there are several difficulties involved in estimation of private opportunity costs of education,
namely:

a) The fact that youth who are still at school could be people of greater or lesser abilities than
their counterparts who are in paid employment. In other words, using the earnings of the
employed youth as a basis for our calculations could lead to either underestimation or
overestimation of the earnings foregone by the youth at school.

b) Where there is widespread unemployment or underemployment, the earnings foregone may

actually be zero or very low, since the probability that the schooling youth would be
unemployed or underemployed is nigh. Therefore, basing on the calculation of the earnings
foregone by the youth at school on what they could be earning "if employed" can be very
misleading.

34
Note: However that, the probability of finding job is likely to be higher and positive (though
less than unity or less than one) for the educated groups than for the educated. Such probabilities
can be used as "weights" in the estimation of students’ opportunity costs. For example, assume
that the employed youth are:

- A’ level certificate holders

People who fall within the 18-20 years age-group
On average earning a salary of sh.200,000/= per month
It follows that A' level youth who are currently in school are foregoing the opportunity to earn
sh.200,000/= per month. But that can only be so if they actually got jobs. However, if there is
0.5 probability of these youth remaining unemployed then the more realistic estimate of the
earnings they forego is sh.200,000/= x 0.5 = sh.100,000/= per month.

c) For some programmes of study, the time sacrificed by students could be leisure time.
Opportunity in such cases in zero. The time, for example spent by “evening” students at the
university is, in most cases, supposed to be their leisure time.
For other programmes of study, the time sacrificed by the students could be partly work time
and partly leisure time. There is difficulty in estimating the amount of leisure time for each
category of students since each individual student is free to work for long or short hours.

Social Educational Costs

These are the total costs of all the resources which a given society devotes to education and they
include:
• Private educational costs: these are a subset of social educational costs.
• The amount by which costs of education are subsidised by government out of tax
revenues.
• The real costs or opportunity costs to society i.e. what society foregoes in deciding to
spend on education, rather than on anything else. These include;
a) The output students could have produced if they had not enrolled for school education.
b) The opportunity cost of the money used to construct school buildings, buy durable equipment
and purchase land. These costs are shared among the many users of these facilities. The durable
nature of these facilities also means that they will be used over a long period of time, say, 50

35
years. The costs of purchasing or constructing the facility are, as a result, spread over a long
period of time. To simplify the analysis and our understanding of such costs, we need to
amortise or annualise (break down costs to annual outlays).
For example, if a building with a lifetime of 50 years cost sh. 10,000,000/= to put up, then the
annual depreciation cost (measured as the amount of money you would need to be putting aside
yearly, so as to enable you save a total of sh. 10,000,000/= by the end of the 50m year) would
be
= 10,000,000 = 200,000/= p.a.
50
If within a given year the building is housing 1000 students, then the depreciation cost per
student would be = 200.000 = 200/= p.a.
1,000
However, in addition to this direct money cost, there is the opportunity cost of the money used
to construct the building. For example, if the 10,000,000= had been invested, say, in a deposit
account or in treasury bills, some interest would have been earned. If the rate of interest offered
by (he bank is 10% p.a., then the opportunity cost of the building (i.e. the foregone interest)
would be 10% of sh. 10,000,000/= which is sh. 1,000,000/= p.a. or sh. 1000/= per student p.a.
(i.e., 1.000.000)
1,000
i.e. the total capital cost per student would be 200 + 1000 = 1200/= p.a.
Alternatively, if instead of constructing the building, the school had chosen to rent a private
building, its annual expenditure on rent would have appeared as a direct money cost in the
school budget i.e. the opportunity cost of the building can also be seen as the equivalent of the
buildings' "imputed" rent.
Note: It is important to remember, when calculating social educational costs, to make an
allowance for wastage (dropout) or repetition rates. These have the effect of. increasing the
social costs of education. For example, society incurs higher social costs of education if, instead
of providing the normal seven years of primary schooling to a child, it has to provide 10 years
schooling to produce a candidate who has completed primary school.

Analysis of Educational Benefits

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Again, what is an educational benefit to private individuals or households is going to differ from
an educational benefit to society at large. As a result, educational benefits too, are sub-divided
into private and social educational benefits.

Private Educational Benefits

These are the expected monetary or non-monetary advantages enjoyed by educated workers.
Better educated and trained employees usually earn higher salaries or wages and get more
pleasant and secure jobs. These direct private educational benefits are measured as the
increment in one's lifetime earnings attributed to the extra education and training received. For
instance, if a graduate teacher earns 50% more than Grade V teacher (i.e. if the Graduate teacher
gets a salary of sh.200,000/= p.m., then the Grade V teacher is earning sh.300,000/-p.m.), then
this 50% increment (i.e. (300,000 - 200.000) x 100) is the private benefit from the extra
spending 200,000

on the Graduate teacher as a result of his or her decision to proceed up to University. This is
measured as shillings per year over the number of years of person's working life.

Form our example, the graduate teacher receives a monthly increment of sh.100,000/= (i.e.
sh.300,000/= - sh.200,000/=) over and above what the Grade V teacher earns; i.e. the Graduate
teacher receives a total annual increment of sh. 100,000/= x 12 = sh.1,200,000/=. If the graduate
teacher is remaining with 20 years of active service (i.e. before the mandatory retirement age),
then the total increment to his or her lifetime earnings will be sh.1,200,000/= x 20 =
sh.24,000,000/=.

The commonest way of obtaining data on the lifetime pattern of earnings is by constructing
"Age Earning Profiles" which classify workers' earnings according to age (experience) and
educational attainment. However, such data is unreliable, because individual earnings are
influenced by a variety of factors other than education, such as on the job training, the natural
ability of the worker, the workers personal characteristics (attitudes, motivation, social status,
family background, sex, race, location of workplace, etc).

Finally, there are some direct or indirect consumption benefits from education which should be
included in the calculation of private educational benefits. They include the satisfaction received

37
from improved social status, improved health, improved tastes (preferences) and values, etc. In
addition, educated people 'enjoy non pecuniary (non-monetary) benefits in their places of work,
like subsidised meals, use of office cars, medical insurance, free housing, the physical comfort
of the working environment, etc.

To obtain the "net" private educational benefits, therefore, private educational costs have to be
deducted. These net private educational benefits, in turn, need to be discounted to correct for:
• The private households rate of time preference (i.e. preference to hold money now rather
than later)
• Price (salary/wage) changes
• Risk and uncertainty since, after paying school fees for years the student may fail exams
or pass them and graduate but remain unemployed.

The Social Educational Benefits

These include:
a) Higher productivity resulting from the use of better-educated and trained manpower.
b) The intergenerational effects that arise when both parents and their children lire
educated. For instance, school children could help their parents to become more
responsive (receptive) to extension advice. On the other hand, educated parents are
better placed to help their children to choose realistic and suitable careers; they also
readily appreciate their children's need for time and place to study at home; and they can
help their children with their homework.
c) Education helps to bring about improvements and innovations through the promotion of
research and intellectual debate.
d) There is also a relationship between educational improvements and reduction in crime
rate, reduction in the demand for children, effective utilisation of contraceptive (birth
control) technology, adoption of acceptable social values, existence and practice of
democracy, etc.
However, these social educational benefits have to be corrected for some negative effects of
education. They also have to be ‘discounted’ to correct for inflation effects and rate of time
preference.

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INTRODUCTION TO EDUCATION FINANCING

Educational financing is concerned with the science and practice of raising and spending funds
for education as well as the management of financial affairs of educational institutions.

Education in all countries consumes a significant amount of resources and it is provided by both
the private and public sectors; hence education is not purely a public good. It is a quasi-public
good meaning that it is partly public and partly private. This is because those who fail to pay
fees can be excluded. The way in which education is financed can have far reaching implications
on the following:

a) The scale and type of educational provision.

b) The composition of the students’ body.
c) The style of governance of educational institutions.
d) The range, level and type of curricula offered.
e) The quality of teaching and research at higher levels.

Various education funding mechanisms available include:

• Government financing
• Private financing
• Student loans
• The voucher system

Government financing of education

In most countries, education is largely financed by the public sector. This is because the concept
of human capital has been widely accepted as a vital factor in the development process.
However, even more important is the recognition that education is a basic human right. The
economic arguments for government financing of education usually rest on the efficiency and
equity arguments.

The efficiency arguments for government financing of education

Economists point out that the most efficient allocation of resources will be achieved under
perfect competition conditions. Perfect competition refers to a market condition or situation

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where resources are allocated in a perfectly efficient way. Otherwise, there will be a market
failure. But in the real sense, however, a perfectly competitive market does not exist, that is,
there is always market failure that justified government intervention.

The following conditions lead to market failure (imperfection)

1. Consumer ignorance
2. Economies of scale
3. Externalities
4. Public goods

1. Consumer ignorance

Would apply in education where the students and their parents are incompetent to judge a good
school from bad one; some parents cannot even judge the advantages and disadvantages of
schooling. In such a situation, the government.

2. Economies of scale

This means benefits of large scale production. For economies of scale the argument is that if
students are not enrolling in sufficient numbers, to secure the benefits of large scale production,
government should subsidize education to encourage enrolment (UPE). This will raise
enrolment levels to a critical minimum desired to enjoy the benefits of education by society at
large.

3. Externalities

Externalities are the spillover benefits or costs that accrue to those around the educated,
externalities can be positive or negative. This means that the benefits of education or costs of
education are not only confined to the educated. Even those who are not educated can benefit
or incur the cost. This therefore provides a genuine reason for government financing of
education.

4. Public good

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As a public good, education provides invisible benefits to society as a whole. This then implies
that individuals would have no incentives to pay for education directly. This then requires
government to tax individuals in order to finance education.

The equity argument has it that if government does not finance education, the disadvantaged
like the poor, minority groups, people with disabilities, the women, etc would not be able to
access education. This means that the education opportunities would only be limited to the
privileged few. This would result into gross inequalities, injustice and unfairness.

Sources of government financing for education

In developing countries most financial support for education comes from a wide variety of
public sources which include;

a) Revenue from general taxation, income tax, graduated tax, VAT import/export tax and
taxes earmarked for education.
b) External aid in form of loans, grants, technical assistance, etc. External aid is an
important source of funds for investment in education. It includes World Bank loans and
credit, aid from national and multinational agencies.

External aid is important because:

i. It helps to fill the gap between available resources mobilized locally and what is required
to provide the educational service.
ii. It has facilitated the training of local people abroad by means of scholarships and
fellowships which have helped to increase on the stock of human capital in the country.
iii. External education aid also helps to strengthen international relations between the donor
and recipient countries. Cultural can be strengthened as well.

Disadvantages of external aid

However, over reliance on external assistance can be dangerous because:

1. Most of this aid is in form of loans and therefore it leads to an increase in demand for
public funds in future and when repayment is due.
2. Capital investments financed by means of external aid lead to increased recurrent costs
in terms of operating costs, maintenance costs, salaries and allowances.

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 3. Developing countries may lack the complementary educational inputs required to enable
them make maximum use of aid, for example they may lack the qualified personnel to
use aid optimally (to the maximum).
4. There is administrative inefficiency (corruption) in implementing projects that are aid-
financed. Problems associated with corruption, and supply substandard inputs, over
invoicing, purchase of sub-standard equipment, expired food and expired drugs are
wide-spread in developing countries.
5. Where aid takes the form of scholarships, it may benefit only a few privileged ones at
the expense of the majority. This worsens the inequality problem.
6. The conditionalities attached to aid are not usually in the best educational interests of
the recipient countries.

Generally, foreign education aid can be a very important stimulus to educational development
as long as the interests of the donor and the recipient countries coincide.

Of recent, however, public financing of education is increasingly becoming a less feasible

strategy especially at higher levels. This is mainly due to the following reasons:

• Declining government funds for education

• Demand for higher education is growing at a high rate than government can cope
financially
• Demand for higher education is increasingly becoming customized

On top of that, public financing of education is often associated with disadvantages such as:

• Less student commitment to study

• University programs that are not responsive to the labour market changes and students
demands
• Inefficient utilization of educational resources
• Unfair distribution of educational opportunities

The consensus for reform therefore is centered around 4 broad areas:

1. Encouraging the establishment of the private institutions

2. Encouraging public education institutions to diversify their source

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 3. Encourages income generation by education institutions.
4. Improving efficient utilization of available resources.

Private financing of education

The growing financial constraints on education investment combined with the ever increasing
private demand for education have forced low developing countries governments to consider
the possibility of increasing the share of private financing of education. this has been done
through various cost recovery measures that include tuition fees, growth of the private sector
schools, colleges, universities; charges for accommodation, feeding and other services. They
have also considered contributions in kind from local communities; and students’ loan schemes.

Because of the little information available about private expenditure on education, it is hard to
measure the form of tuition fees, registration fees, and examination fees. It is even more
complicated if private contributions take the form of direct labour contribution where the local
communities may undertake to build a local school or to provide goods and services in kind like
food, housing and land.

Efforts have also been taken to make schools generate their own income or to have students
contribute through direct labour and producing goods and services for sale.

It may also take the form of donations like fundraising programs, contributions from the old
students and various interest groups, NGOs, etc.

Cost sharing where students especially in higher institutions of learning are asked to contribute
towards their education, the idea is to have government and individual students to share the cost
of education.

The following arguments support the students’ contribution towards their education:

1. Students in higher institutions of learning benefit more from higher education and for
that matter, they should pay for those benefit. This is supported by the principle that
those who benefit more should pay more and those who benefit less should pay less.
2. Students in tertiary institutions often come from well-to-do families that have the ability
to meet the cost of higher education.

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 3. When students pay for their education the institutions will be more responsive to
students needs and therefore to the labour market demands. This will eventually improve
the efficiency of education system.
4. When students pay for their education, they learn to value their education more. They
will be motivated to complete their studies quickly so as to reduce the costs. This will
enhance the internal efficiency of education.
5. In a competitive environment, educational institutions will be forced to become more
efficient in their operations or else they risk losing students to their rivals.
6. Pressure will be applied to higher institutions of learning to privatize some of their
support services like catering, security, health, etc.

There are also arguments against private financing of education which include:

1. It limits cases to higher education for the academically gifted students who are poor.
2. It undermines national unity since those who are from the rich background may not meet
and interact with students from low socio-economic status families.
3. Education generates social benefits to society as a whole and therefore society should
pay for the education of its citizens.

THE STUDENT LOAN SCHEME

This is an education financing mechanism that allows eligible students to secure financial
support during their years of schooling; and after qualifying and getting jobs such students can
pay back the loans secured. The financial support may be provided by government, educational
institutions or private firms like commercial banks and insurance companies. Please note that
the student loan scheme is only appropriate at higher levels of education.

The repayment regulations vary from one scheme to another, for instance in some cases the
repayment may or may not be subsidized; the interest payments can be waived or met. The
government can also use the scheme to raise the efficiency of education. The loan scheme may
allow repayment to be delayed or even cancelled if the debtor suffers a period of low income.

In other cases the burden of repayment can be inversely related to the student’s academic
performance i.e. if you perform well, you pay less and vice-versa. This is aimed at improving
the internal efficiency of education.

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NB: A comprehensive and effective loan scheme should focus on the quality, equity and
efficiency implications with respect to the following:

• Lending mechanism
• Repayment mechanism
• Interest rates
• Mechanism for minimizing defaulting

Argument in favour of the loan scheme

1. It encourages students to take up courses for which there is high demand in the labour
market. This helps to meet the human resource needs for the country and therefore
affects the external efficiency of the education system.
2. Education institutions will be encouraged to improve their curriculum so as to respond
to changes in the labour market and to students’ needs. This has implications on
efficiency.
3. It is just fair that students who benefit from higher education should pay the cost even
if the repayment is deferred. This reduces the burden on the tax payers and therefore is
more equitable.
4. Shifting the burden of payment of education to students makes them more committed to
their studies, improves on completion and graduation rates and therefore improves on
internal efficiency.
5. The scheme will indirectly reduce the excess demand for higher education and this will
reduce the problem of educated unemployment.
6. The lending and repayment mechanism can be manipulated to promote access to the
most deserving i.e. the disadvantaged e.g. people with disabilities, the poor, the women,
the rural dwellers.

Arguments against the loan scheme

1. Students on the loan scheme can be constantly worried about the repayment of the loan
which may affect their concentration on the studies. This reduces completion, may
increase repetition and lead to internal inefficiency.

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 2. Students from poor socio-economic backgrounds may fear to acquire loans because of
the risk involved. The poor may therefore remain less educated and therefore poor.
3. Since the society as a whole stands to benefit from the education of its citizens, society
should bear the burden of student’s education. this will ensure equity.
4. If the beneficiary migrates to another country before the loan is fully repaid, loan
recovery could be difficult to enforce. High rates of defaulting will render the scheme
less feasible and less profitable to the funding institutions.
5. The administrative costs for administering the loan scheme are likely to be higher
especially in the developing countries for example due to corruption, difficulty in
tracking defaulters, etc. The scheme may therefore be economically inefficient.
6. The scheme may negatively affect women’s chances of getting suitors for marriage. This
is because it renders ladies expensive since their husbands may be called upon to assist
them in loan repayment as and when it is due. This affects equity.

THE VOUCHER SYSTEM

It has been suggested that instead of government financing and providing education in
government owned institutions, students or pupils should be given vouchers representing a
monetary sum that they would spend only on education. The government issues a voucher
(coupon) to parents who would then take it to a school of their choice. The school would return
the voucher to government and in return receive a cheque equal to the value of the voucher.
Government would therefore continue to finance education but the provision of education
would go the private sector.

A voucher system is expected to introduce freedom of choice into the education system. This
would increase the efficiency of the system.

Arguments in favour of the voucher system

1. Parents will have freedom to choose a school that suits the needs of their children.
2. The competition for customers (students) will lead to greater efficiency because schools
will compete for students by offering programs that meet the demands of parents and
students.

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 3. The voucher system could be used to discriminate in favour of the poor by giving them
an amount to spend that would compensate for earnings foregone.
4. If parents wish to supplement on the voucher from their own income they can do so.
5. Religious and separate community schools could be established to meet the needs of the
minority groups.

Arguments against the voucher system

1. Not all parents are competent enough to choose schools and courses for their children
of choice therefore becomes meaningless.
2. Choice in rural areas is very limited because of the few schools available. In this way, a
choice is rendered meaningless.
3. Systems that allow schools to vary fees could result into inequalities where the poor can
only afford to send their children to the worst schools while children of the rich would
enjoy the best education since their parents can supplement on the vouchers.
4. Teachers’ unions have opposed the idea of the voucher system because it is a threat on
their employment i.e. if a school does not receive students, it will be forced to close
down and the concerned teachers will lose employment.
5. If the poor are given vouchers to cover all their costs including earnings foregone, they
may be encouraged to relax in their poverty.
6. Concern has been raised about the administrative feasibility of the voucher system in
developing countries.

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EQUITY ISSUES IN EDUCATION

Introduction

Although almost all third world countries have achieved some reasonable measure of
educational development, such improvements in the education sector - often expressed in
national statistics such as enrolment ratio, repetition rates, wastage rates etc conceal
considerable inequalities within and between countries and downplay the continuing
educational deprivation of many people in those countries. The problem of inequality of
educational opportunities in LDCs is most noticeable along geographical, gender and socio-
economic lines.

THE MEANING OF EQUITY AS IT RELATES TO EDUCATION

The concept of equity in education describes the way in which the costs and benefits of
education are shared out among different groups, individuals or regions in a given society. It is
common knowledge that the costs and benefits of education are unevenly distributed.
Unevenness is reflected in regional, ethnic, gender and socio-economic disparities in access to
and participation in education. For example, inequity is manifested as:

• Approximately ¾ of the students admitted to Makerere University are from the central
and western regions.
• There is a lower participation of female students admitted to tertiary institutions
throughout Uganda (approximately 30% of total enrolments).
• There is an imbalance in the distribution of admissions to arts and science-based
programmes in higher education. For example, in 1990/91 intake to Makerere
University, female students accounted for 40% of the total admissions into Arts
programmes and only 18% of the total admissions into science courses.
• Tertiary enrolment ratio in Uganda is approximately 1/3 of the total number of students
eligible for post-secondary and higher education.
• Wastage rates and higher among female students than among male students.

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DISPARITIES BETWEEN URBAN AND RURAL AREAS

Although 2/3 of the people in LDCs live in rural areas, they receive less than ¼ of the social
services for education, health, water and sanitation. Consequently,

• Rural illiteracy rates more than double those of the urban areas.
• Infant and maternal mortality rates are higher in rural areas than in urban areas.
• There is higher incidence of malnutrition in the rural areas, etc

All these have a combined effect of undermining the access and participation of the rural
population in the education process. An illiterate parent suffers from inferior valuation of
education and is more reluctant to get his/her offspring enrolled in educational institutions. Even
when rural children get enrolled in school, they are not likely to benefit maximally from
education since they are often sickly, malnourished and poorly facilitated. They are therefore
likely to fall out of the educational pipeline prematurely (i.e. before completing a given
educational level).

FEMALE Vs MALE DISPARITIES

In most third world societies, women fare less well than men in various areas of human
endeavor. Discrimination against females starts early in childhood and takes many forms, for
example:

a) Young girls may not get the same health care and nutrition as young boys. The human
development report of 1990 revealed that 14% of the young girls in Bangladesh were
malnourished as compared with 5% of the boys. Families in India’s rural Punjab spend
more than twice as much on the medical care of male infants as that of the female infants.
Similarly, most rural communities in Uganda attach greater importance to a male child
as compared to a female offspring.
b) Women typically work about 25% longer hours than men in the rural areas. However,
their total earnings are less because of their dominance in the poorly remunerated
agricultural activities; in the unpaid household work; and in the urban informal sector
where pay tends to be lower than in the rest of the economy. Women also tend to earn
less than men partly because they have fewer or no property rights. This anomaly is now
being addressed in Uganda, using constitutional means.

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 c) Gender inequality is being reinforced in education. For instance, for the developing
world as a whole, the female literacy rate is now ¾ that of the male group. Yet from
research findings, the social dividend (i.e. the social gains or benefits to society) from
female literacy tends to be very high. For example, higher female literacy is associated
with lower infant mortality, better family nutrition, reduced fertility and lower
population growth rates. In 1990, child mortality in Bangladesh was five times higher
for children of mothers with no education than for those with seven or more years of
schooling.

DISPARITIES BETWEEN THE RICH AND THE POOR

Differences between earnings and levels of human development are closely related in LDCs
since income is an important determinant of people’s access to social services. Several studies
show how the poor generally have limited access to the essential social services. This in turn
has led to low life expectancy, malnutrition and low literacy rates among the poor.

Even where governments have deliberately targeted their social expenditure and subsidies to
the poor (e.g. through provision of essential goods and services free of charge), many of the
poor do not benefit from such offers partly because:

• Information about the availability of such social goods and services is usually more
accessible to the rich and better educated sections of the society.
• Even free goods and services have a cost. For example, to gain access to a government
funded hospital or school people have to pay transport costs to cover the home to
hospital or home to school distance. And the time taken to consume the service (say,
attending school) has an opportunity cost.
• Much social expenditure in the third world often goes for projects and programmes that
subsidize the rich more than the poor. For example, in the developing countries as a
whole although only about 8% of the total population was enrolled tertiary education
has absorbed 73% of the education budget in 1973 a large majority of government
sponsored students enrolled in tertiary institutions come from their richer social-
economic backgrounds. In such cases, the poor are ironically made to pay the cost of
educating the children of the rich. This unfairness becomes clearer when we recognize

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 that for the third world as a whole, the cost per student (unit cost) in tertiary education
was 24 times that of a student in primary education in 1973.

SUGGESTED MEASURES TO REDUCE INEQUALITIES IN EDUCATION

How educational resources and opportunity are distributed among individuals or groups in a
society has strong implications on;

• Future income distribution patterns, especially when we assume a positive correlation

between education and the level of individual earnings (i.e. the better educated earn
higher incomes than the less educated)
• The rate of economic growth and development
• The quality of education provided
• The future distribution of educational costs and benefits.

Educational investment can therefore be deliberately manipulated to bring about the desired
patterns in the distribution of wealth, income and opportunities between various regions, males
and females, people in different age groups, people in various socio-economic groups,
occupations, religions, races, etc.

As a first step there is need to improve the statistical data base through efficient reporting and
analysis so as to be able to establish the exact nature and magnitude of the disparities. External
aid agencies could be of some practical help here: the World Bank, UNICEF, UNDP, etc.

Solutions to rural-urban disparities

These may among others include:

• Expansion of education capacity (increase the number of educational institutions) and

quality in the disadvantaged rural areas by giving priority to such regions when
allocating newly mobilized resources or by diverting some of the resources currently
going to urban areas without undermining the efficiency and effectiveness of education
in rural areas.
• Application of the quota system for student enrollment into the tertiary institutions as a
measure aimed at correcting regional imbalances in educational provision.

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 • Allowing for a greater of decentralization of educational planning, curriculum
development, teacher training and financial management in order to enhance the
flexibility required to cater for regional diversities (differences). For example, some
upcountry children fail to attend school regularly because the centrally determined
school term does not rhyme with the peak periods of planting or harvesting in the rural
areas.

Solutions to gender disparities

These may include;

• Expansion of educational capacity and quality, specifically for girls.

• Where parents fear to send their female children to school with male teachers, serious
efforts ought to be made to train and hire women teachers. As a short term measure,
rigid insistence on teacher qualifications could be relaxed. This would not only increase
employment opportunities for women, but those recruited to teach would also act as role
models for the young girls.
• Altering employment practices which restrict employment of women to what are
traditionally deemed to be feminine jobs. Government, together with the other
stakeholders, should be encouraged to recruit well-qualified women, to occupy positions
which were previously reserved for men only.
• Affirmative action: one way of achieving immediate improvements in female
enrollment at tertiary institutions is through use of “positive discrimination” or
affirmative action in favour of women e.g. through the use of different academic
performance ‘cut off’ points for male and female applicants for example the 1.5 points
arrangement for female applicants for entry to public universities in Uganda.
• Encouraging women organizations to carry the struggle for women’s liberation beyond
mere sloganeering and tokenism.
• Governments must also attack the causes for the under-representation of female students
in primary and secondary schools.
• The educational institutions themselves need to address the sociological factors on their
compounds (e.g. discrimination, sexual harassment, defilement, etc) which impair the
participation of female students in educational activities.

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Solutions to socio-economic disparities

The following measure could be considered:

• Reform the current system of financing education in most third world countries which
force poor families to subsidise the education of children from rich families. For
example, the children from richer families should be made to pay full fees for their
tertiary education, while loans and scholarships are availed to the able but needy
students aspiring for post-secondary education.
• Introduce remedial courses (as transitional programmes from school to college/
university) for students with inadequate previous preparation (e.g. those from relatively
poor schools or disadvantaged home backgrounds) and who, as a result, compete poorly
with better prepared students when they pursue college/ university education.
• Introduce work-study programmes in colleges/ schools/ universities that enable
especially the needy student to attend school/ college and also earn money for meeting
college expenses.
• To overcome the economic barrier to schooling, special work programmes could be
sandwiched with school attendance programmes; i.e. the education institution becomes
both a school and production unit such that students in such a school/college produces
say, agricultural, wood or other products either for the needs of the school itself, for sale
on the market or for their own home use. The purely academic subjects are then
integrated into and reinforce the productive learning.
• There is need to enlarge and strengthen pre-school education. Locally-based day care
centers for pre-school children need to be constructed in urban slums and rural areas
whereas poor live education activities in such centers need to be combined with
nutritional, health and recreational provisions as intervention measures to correct for the
earlier retardation for children from such areas.
• Finally, there is need to initiate measure aimed at reducing the twin problems as
absenteeism and dropouts, especially in the rural based schools. These will include all
wrong courses of study to local community needs, improving pedagogical processes,
tailoring the school schedules to the needs and conditions of the locality, providing

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opportunities for school dropouts to drop back into the system and providing flexible
non-formal educational opportunities for the out-of-school youth.

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