Can we Finance Educational Improvement? Education Finance under the SDG 4.5

• In Event: Economics and Finance of Education in Developing and Emerging Market Economies: Current Developments and Challenges

Proposal

Ensuring equity in education relies on the resources allocated to education and on the resource allocation methods within and between countries. The SDG's 2030, Target 4.5 comprises three thematic indicators which assess equity in education finance, both at the national and international level: the extent to which explicit formula-based policies reallocate education resources to disadvantaged populations (SDG 4.5.3), education expenditure per student by level of education and source of funding (SDG 4.5.4) and the percentage of total aid to education allocated to least developed countries (SDG 4.5.5) (OECD, 2018).
There are several prominent discussions in the field of study of education finance. One of them is whether money matters and, in what ways, if at all. Recently, some persistent myths—that money doesn’t really make a difference when it comes to raising student achievement—were refuted (Baker, 2018). Furthermore, a positive causal relationship or an impact of equitable funding on outcomes was found (e.g., Jackson, Johnson, & Persico, 2015; Johnson, 2015; Lafortune, Rothstein, and Schanzenbach, 2018; Jackson, 2018; and Kreisman, &Steinberg, 2019). Increased per pupil spending increased the educational attainment as well as improved the adult labor market outcomes of low-income children (Jackson, Johnson, & Persico, 2016). Equitable school finance reforms cause gradual increases in the relative achievement of students in low-income school districts, consistent with the goal of improving educational opportunity for these students. The implied effect of school resources on educational achievement is large (Lafortune, Rothstein, & Schanzenbach, 2018).
Most of the work on education finance policy is done within the Western world. However, some work on equity within resource allocation has been done at the international level. For example, the UNICEF (2015) report entitled, "The Investment Case for Education and Equity" (p. 57), used some equity measurements in resource allocation (i.e., Lorenz Curve) in an international development context. Furthermore, Houck and Eom (2012), in their innovative paper, have taken school finance equity and adequacy analysis one step further into the international level, analyzing Korean data using education finance concepts of equity and adequacy. However innovative in its framework, their paper still lies in the US framework of education finance, advocating that "government and schools are currently expected to both play a substantial role in guaranteeing students a minimum level of performance, and provide sufficient resources to ensure this outcome" (p. 19).
This study provides an alternative framework based on the contemporary creation of a learning society (Stiglitz & Greenwald, 2014). While the current frame lies on the equity-efficiency trade-off, advocating a trade-off between state competitiveness and cohesiveness, the new notion supports the idea that competitive ability and efficiency will be more established when equity and cohesion is solid (BenDavid-Hadar, 2018).

Author

• Iris BenDavid-Hadar, Bar-Ilan University