In this NORRAG Highlights, Ali Ait Si Mhamed and Rita Kaša argue that the introduction of per-capita school funding in Kazakhstan creates a possibility for achieving better educational outcomes. It describes per-capita school funding reform rationales and its initial effects on the schools. The blog also discusses how the per-capita funding formula adjustments for large schools, with over-capacity enrollment, are designed to disincentivize excessive student enrollment for the purpose of augmenting the school budget. Finally, it addresses the promotion of public-private partnerships (PPP) as a solution to the growing student population in public schools.
Per-capita funding to equalize school budgets
In Kazakhstan, the improvement of educational equity and the development of school accountability are important policy goals. Authorities have introduced per-capita school funding and enabled school decision-making autonomy to allocate the budget in a way that meets the needs of the school.[i] Most importantly this policy change is designed to address inequalities in spending per student across the country. The prior budget allocation system to schools resulted in unexplained variations of per-student spending not only between the regions of the country but even between similar schools in the same district.[ii]
The initial results of the per-capita funding model have shown some promising outcomes. Budgets of urban schools, on average, have increased by 20%.[iii] The new model allows transparent allocation of funds to all urban schools as there are clear criteria for funding allocation depending on the characteristics of the student body. The adequacy of the school funding in terms of allowing schools to meet their needs has also improved, on average, even though some schools did experience net loss during the formula piloting stage.[iv]
With the launch of per-capita funding to all urban schools, public schools that have demonstrated the capacity to manage their budgets effectively can change their legal status from a “state institution” which is strictly regulated in multiple aspects of management (e.g., hiring and firing of staff) to a “public enterprise with the right of economic management”, which is an autonomous form of public organization.[v] This important policy change further enhances school decision-making autonomy to allocate the budget in a way that meets the needs of the school. Schools that have the status of public enterprise can set their own system of compensation (while retaining all social guarantees provided by the state for the employees), make staffing decisions, accrue, and transfer funding from one fiscal year to the next, and continue enjoying the same tax privileges as the state institutions.
The reduced funding formula for large schools
The per-capita school funding formula includes two correctional coefficients designed to balance the funding amount for small and overcrowded schools.[vi] It is because parents in Kazakhstan can choose the public school to send their child to. These correctional coefficients do not apply to students with special needs enrolled at the school. In fact, the funding schools receive per child with special educational needs is doubled. For all other students, only schools the size of up to 400 students with enrolments that do not exceed the designated capacity of the school buildings receive the full amount of funding calculated according to the formula. As the number of students at school increases, the funding coefficient applied decreases the funding amount calculated per student. The same approach is applied where the number of students exceeds the physical capacity of the school. The total size of this correctional coefficient is calculated by combining the two abovementioned coefficients. For instance, for a school with more than 4,000 students, a number that exceeds the school’s physical capacity by 150%, two funding reduction coefficients are applied. This school receives 38% of funding per student due to its size and 30% of funding per student due to overcrowding. The resulting correctional coefficient for such a large and overcrowded school decreases funding to 68% per student.
Demographic pressures and PPP
While the schools during the formula piloting stage did not welcome the decreased funding coefficient for overcrowding [vii], the government has retained this measure to discourage school behavior to enroll more students than it would be optimal for providing quality education. However, public schools in growing urban areas do not have a choice but to admit more students than the physical capacity of the building. The shortage of student places in public schools totals 225 000 places in all regions of the country.[viii] The government predicts that by 2025 a lack of student places at public schools across Kazakhstan will soar from 225 000 up to 1 million student seats.[ix] To encourage the development of school infrastructure and allow enough student seats, per-capita funding is available to build private schools in the framework of public-private partnerships (PPP).[x] Per-capita funding includes a mechanism for reimbursing school construction and operational costs for private education providers. In this context, the government can justify the PPP provision of compulsory education to meet the increased demand for educational spaces due to high birth rates and outdated school infrastructure.
To conclude, in Kazakhstan as in most countries around the world, the equitable delivery of quality education is a challenge. Responses to this challenge are froth with issues that range from jurisdictional taxing powers and educational funding responsibilities to school-level management autonomy under various funding formulas. Addressing school inequity and introducing per-capita school funding in Kazakhstan have proven equally challenging. In this blog, we have shown examples of positive outcomes of per-capita school funding and a move towards decentralized school-based decision-making powers, but we have also identified the areas of tension that remain.
Ali Ait Si Mhamed and Rita Kaša are Associate Professors at Nazarbayev University Graduate School of Education, Astana, Kazakhstan.
This article was developed as part of the Nazarbayev University Graduate School of Education research project Per-capita funding model in Kazakhstani public and private schools and issues of adequacy, equity and accountability, funded by the Ministry of Education and Science, Republic of Kazakhstan, grant no. АР09261436.
[i] Ait Si Mhamed, A., Winter, L., Kasa, R., Qanay, G., Zhontayeva, Z., & Abdimanova, L. (2023, forthcoming). New ways of financing schools – per capita funding. In C. McLaughlin (Ed.), Mapping educational change in Kazakhstan. Cambridge University Press.
[ii] OECD. (2015). OECD reviews of school resources: Kazakhstan 2015. OECD. https://www.oecd.org/publications/oecd-reviews-of-school-resources-kazakhstan-2015-9789264245891-en.htm ; UNICEF. (2013). Developing and piloting the methodology for a per capita financing scheme in general secondary education in Kazakhstan and piloting the proposed model [In Russian]. UNICEF. https://www.unicef.org/kazakhstan
[iv] Clarke, G. (2018). A review of formula funding: Identifying the main bottlenecks for formula funding for general secondary schools. UNICEF Kazakhstan. https://www.unicef.org/kazakhstan/en/reports/review-formula-funding
[v] Financial Center. (2021). Universal manual on per-capita funding for schools [In Russian]. https://pnf.kz/pnf/%D0%9F%D0%BE%D1%81%D0%BE%D0%B1%D0%B8%D0%B5%20%D0%BF%D0%BE%20%D0%9F%D0%A41.pdf
[viii] Tokayev, K. (2021, September 1). State of the Nation Address. https://www.akorda.kz/en/state-of-the-nation-addressby-president-of-the-republic-of-kazakhstan-kassym-jomart-tokayev-38126