Performance Budgeting In Public Sector Management Education Essay

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The shift towards outcome approaches and performance budgeting for public sector educational institutions in recent years has given rise to a need to officially link inputs consumed and outputs achieved.

Since education plays an integral part in socio-economic development of a nation, it aims at improving human capabilities because not all human capabilities are by birth. Economic growth is accelerated by education via development of knowledge and skills. Since education is considered as an economic commodity, it is both consumers as well as capital good that offers utility to consumers and is seen as an input in production of goods. The utilitarian factor of education, particularly primary education, offers incentives to both individual as well as government in order to invest in education. The individual provides for education by means of expenditure shared by the parents through fee structure, etc. whereas government invests in education via expenditure on education and facilitation of the procedure of education (Curtis 2008).

Every parent wants to provide their children with the top-most possible educational surroundings. Their ultimate decision to make an investment in children education is influenced by several factors such as social, economic and cultural factors. In a nation like Pakistan, education is provided both by public as well as private sector. Public schools offer education free of cost, whereas the parents have to pay the fees in private schools. Recent years have seen improvisations in private schools in terms of quality, thereby attracting good input via fee concession which typically ranges from a percentage to full fee discount. Such schools, on one hand educate the youth; while on the other hand, they emerge as an essential sector for the investors investing in this sector. Several aspects in regards to the education system have been addressed in various studies as of yet. However, the factors influencing the parents to make a decision about primary schools are yet to be explored (Elliott 1998).

In essence, the parents generally decide to educate their children in private schools only at the time when they are thoroughly unhappy with public schools. Teacher student ratio, educational surrounding, occupation and education of parents, and smaller size of classes are private schools are some of the few reasons which aid parents in selection of schools. Parents are more inclined towards private schools as compared to public school because private schools are relatively more effective than public schools even with the same pupils and parents composition due to the school environment. Furthermore, school choice is greatly associated with parent's occupational position. Parents having higher occupational status opt for private schools; likewise parents with lower occupational position will prefer public schools over private schools for their children. Selection of school by parents shows their satisfaction level with the institute they choose (Rehman et al 2010).

Choice is an essential factor that has been the major policy idea in educational sector for quite some time. In essence, choice can be a good thing in itself since people value their freedom; however, most experts argue that it results educational providers into competing for pupils by advancing their technology and heightening their educational standards. This concern has been widely researched in the US coupled with an extensive literature in education as well as economics of education. Nonetheless, it would be only fair to claim that the current evidence is mixed and provides at best unstable foundation for policy (Elliott 1998) (Gibbons et al. 2005).

Irrespective of this, a quasi-market in education is linked to political currency. Theoretical studies on the benefits of school choice and competition, and on its least expected consequences, are broadly ranged and often greatly politicised. Even though wide philosophical concerns are often involved, it will be feasible to address the narrower claims regarding potential productivity and performance gains, and outcomes in terms of between-school segregation. As such, these issues have been the centre point to applied work in the education field (Curtis 2008).

Typically, two "ideal" modes of school provision are:

Community-school model: this model involves schools that serve local communities only, and just those who stay nearby or within the corresponding jurisdiction are permitted in.

Parental-choice model: In this model, pupils are admitted in schools regardless of their residential location, and parental preference is taken as the deciding factor.

In general, the first model has traditionally been the most prevailing type of provision is almost every part of the world. However, by comparing the relatively weak performance of state-sector educational institutions running under (1), with respect to educational institutions in the private sector that operate broadly on mode (2), researchers have been urged to advocate expansion of choice in the direction towards better schooling (Singh 2006).

Researchers of mode (2) have stated their claims on the basis of standard efficiency arguments form economic theory. These are divided into two categories, namely, those based on market field incentives, and secondly, those based on better matching of pupil requirements and school provisions. Further, the primary claims are proclaimed by assuming that Tiebout choice, which involves families voting by their feet and make schooling as well as residential choices simultaneously, has not resulted into effective allocation of resources under the community-based framework (1) (Gibbons et al. 2005).

Clearly, community-based schools that serve single neighbourhoods operate in a comparatively monopolistic market, where the incentives may be poor for enhancement of adoption of state-of-the-art technologies. Moreover,, incentives must be obtained from good governance, coupled with strong institutional arrangements such as training, monitoring, measures and mechanisms for self-evaluation as well as performance-related pay. Still, these institutional arrangements might not be as effective. Rather, letting parents free choice and linking school finance to school's fame is likely to create a direct market incentive mechanism. These mechanisms entail that: unpopular schools loose students as well as money; while popular schools gain students and additional funding from parents; teachers and other staff are rewarded accordingly; schools are required to adjust to fulfil parental demand- that may include supply of high educational standards- or rather fail (Singh 2006) (Dee 2005).

As a contrast, gains and incentives can also be generated by reallocation of students according to personal preferences and choices. Pupils tend to opt for schools that best suits their tastes and educational needs. For instance, consider a transition from a community-based system to choice-based system. If every student was to find a school that they prefer at least as much as what was initially accessible under the previous system, the new system should be welfare improving (Dee 2005) (Dopuch & Gupta 1997). Additionally, if every student would fund a school that provides a teaching technology which educates them at least as efficiently as under the community-based system, then there would be an improvement in their academics.

Lastly, greater choice is most likely to offer advantages especially to people residing in poor communities, at which children are admitted in schools that do not provide educational standards or social environment that they feel are acceptable by them (Curtis 2008).

However, on the other hand, critics of mode (2) argue that traditionally, it results into segregation in schools and unjust outcomes. So far, under mode (1), variations in community composition may lead to inequalities in terms of attitudes and abilities of their students, as well as resources they can access. Under such circumstances, the results of community-based systems may be highly unjust, because students in poor areas are most likely to attend schools with poor educational outcomes and unfriendly social environments, in comparison to students dwelling in wealthier areas. Moreover, parents who are unable to exit unpopular schools through the admission process can exit the community by changing their residential location, thereby leading to even deeper community stratification (Gibbons et al. 2005).

Enormous amount of literature has been conducted on school choice and competition in the past few years. Several countries have gradually adapted their institutional arrangements in order to accommodate more freedom of choice for parents, and, implicitly, greater competition between schools. Furthermore, the literature is rich in explanation of these educational arrangements done by schools, along with changes in aggregate achievements that are coupled with them. This concern has also encouraged considerable highlights in philosophical discussions and political debate. As a matter of fact, following various forms of approaches, a significant volume of quantitative evidence on the impact of primary school selection on student results have been generated (David & Esquieu 2002: 2-20).

Most commonly used approach involves exploring the effects of implicit differences in the level of choice existing in different school markets. These studies first categorize schools with respect to a specific indicator of market competitiveness in the education sector. Next, a measurement of the extent to which this indicator is related to student outcomes in the cross-section, is done. In most studies, the market which is home to a school is defined by the admissions district wherein it is situated, whereas the level of competition is based on the count of schools that are potentially available to any student in that district (Singh 2006) (Elliott 1998).

Parents' decision is also based on the fact that students perform much better in metropolitan areas where there are more number of schooling choices, although the number of school districts in predicted only once from data on the number of natural boundaries.

Another approach estimates the overall effects of private schooling. This approach has two strands associated with this. One type looks at the outcome of private sector students in comparison to public schooling, or more particularly at whether or not students offered vouchers to be able to access the private sector perform better. Practically, this strand does not directly assess whether increased choice or competition itself will be effective or not at raising institutional standards; the issue is whether primary schooling within the private sector is more beneficial over schooling in the state sector. If is it, then giving parents more freedom to choose private schools, by means of vouchers or similar approaches, may result into aggregate enhancements in educational standards (Sanatmaria & Watts 2003) (Dopuch & Gupta 1997).

The second strand examines the competition impacts directly by evaluating the effects of private schools admission on state school performance, mainly based on the fact that private schools offer competition for state schools.

Voucher Scheme:

In the most liberal sense, an education voucher can be defined as a payment made by the government to parents instead of to the school selected by the parents of the child being educated. In other words, the voucher is nothing but a tax-funding payment that covers most or all of the student's tuition fees. In addition, there are private suppliers of vouchers such as foundations, trusts, and so on, who sponsor vouchers. Vouchers are mainly used to increase the freedom of parents to select the school they prefer to educate their children in. In particular, households with low income as well as minority groups are more focussed upon to allow them to have access to private schools, without worrying about the funds required to enrol their children. As discussed previously, the initiation of competition between public schools and between public and private schools has been one of the desirable consequences. Furthermore, such as free market to promote education services reduces costs to a great extent and in turn improves accountability. Nonetheless, there is yet much debate surrounding the benefits and drawbacks of voucher schemes (Spicer & Hill 1990) (Rehman et al 2010).

With the voucher scheme, parents are given chits that are only payable to appropriately assigned schools who in turn receive the cash value from the government which they use for funding their expenses.

By considering the case of England and assuming its current state-school system, a hybrid of the two systems discussed previously have been observed in its educational system. Conventionally neighbourhood-based, the precept of choice has reached greater or lesser extent in various areas, since the Education Reform Act of 1988 (Dee 2005).

In addition, the trend continues together with further expansion of choice being promoted in several quarters. However, presently, choice is quite restricted and geographically differed. Incentive effects could be found restricted when schools in built-in urban environments having stringent teacher labour markets, are not equipped with capacities for rapid expansions, thereby affecting the overall choice to be made by parents. Furthermore, places at popular schools are still distributed in terms of the residential location of children. Even though choice in "secondary" education is more likely to be prevalent the political, rhetoric as well as policy discussion, typically more emphasis is given on the effects if choice at the primary education level (Singh 2006) (Rehman et al 2010). The reasons for this being three-fold:

It is commonly believed that choices and decisions made at the primary age are vital for later educational success. Parents are relatively active in making choices at the primary level. Therefore, for this reason, practitioners have explained that the empirical analysis of the effects of choice as well as competition on the performance of toddlers and under-11s is a valuable target.

Travel distances play a significant role in primary school choice since children of this age cannot travel independently. This entails that geographic criteria hold much more relevancy and importance in deciding which school to enrol in, so that the availability of schools will be more confidently derived from geographical standards of accessibility.

Lastly, primary schools are ubiquitously non-selective, are mixed gender, and are not equipped with curriculum specializations. Hence, primary schools hold lesser dimensions over which parents can easily exercise choice and on which to effectively compete (Rehman et al 2010).

But, similar to secondary schools, primary schools are financed according to number of students and encounter similar incentives to secondary schools according to their incentives to pull in students by improving educational standards. Interestingly, if expansion of competition and choice is possible in secondary sector, then it will be possible to work in the primary sector as well (Sanatmaria & Watts 2003).

However, there exist some crucial differences among primary schools that make the process of school selection quite complicated. In fact, all schools that are "maintained" or not included in the private sector, are financed by the Local Education Authority or LEA, greatly from central government agency. Still, from the viewpoint of choice and competition, critical differences among schools arise typically depending on how they are governed and how student enrolments are monitored (Spicer & Hill 1990). Toward that end, studies of the economic foundation for non-profit institutions are conducted based on the difficulty of estimating organizational performance in the context in which they exist. "Public good" institutions are developed in contexts wherein multi-dimensional criteria are required for evaluating performance due to the presence of multiple stakeholders (David & Esquieu 2002: 2-20) (Gibbons et al. 2005).

In this context, an example of such "public good" institution the multiple stakeholders in the public education system can be considered as:

The external stakeholders including the state legislature, local and state government officials, as well as taxpayers

Secondly, the internal or beneficiary-side stakeholders such as parents, teachers, and school district officials or administrators.

The external stakeholders are responsible for obtaining high reported levels of educational results with respect to financial constraints. They also deal with budgetary constraints since these limitations are even more pressing as they deal with local taxpayers and the given funding of schools via funding mechanisms such as local property taxes.

In contrast to the aforesaid external stakeholders, the internal stakeholders such as parents are much more concerned about the overall quality and effectiveness of the educational outcomes, and least interested on the budgetary aspects. On the other hand, teachers are required to equally focus on their personal remuneration, the quality of pupils, the instructional resources supplied, and eventually, the final educational outcomes as estimated by objective measures like state wide test scores. Therefore, school district administrators are at the apex of these convergent forces wherein a balance should be maintained among the internal and external stakeholders (Sanatmaria & Watts 2003) David, A, & Esquieu 2002.

In order to control the impact of socio-economic aspects on achievement scores, Myraid variables can be used. Further, Sander (1993) explained that family income and three other indicator variables can be used to explain score on college entrance exams. In addition, four variables can be included to attain pupils' family background, namely, percent single mothers, percent of rental units in the community, rate of community crime, and lastly, percent of professional and managers residing in the community. Moreover, Dee (2005) employs five variables for controlling socio-economic factors, such as percent of children at risk, percent of children who know English "well" and "not at all", percent of families with high school qualified degrees, percent of families associated with college degrees, and lastly, average income in families with children. Elliot (1998) suggests use of indicator variables for pupil gender, urban school, and minority status, as well as continuous variables for socio-economic status, which is derived from parent's qualification occupation, and overage income, percent of pupils getting free lunch, percentage of pupils enrolled in special education programs, and lastly, percentage of pupils with less proficiency in English (Elliott 1998) (Dee 2005).

One must note that most of the variables stated above deal with similar dimensions of socio-economic background. The selection of socio-economic aspects found in empirical studies on the school input-output relationship is typically driven by data availability. An improvement in political and socio-economic conditions may urge parents to send more children to school, strengthened by an increase in central government's contribution to teachers' salaries. In this context, the behaviour of public service providers or facilities may differ substantially between sectors even within one country, mainly according to the institutional context and incentives they confront (Rehman et al 2010). For instance, primary schools tend to keep relatively good records on admissions as well as financial flows, whereas in other public institutions like health clinics, an almost incomplete void of information was found on both outcomes, including in- and out-patients, or even financial information, like user fees and cash and similar transactions of public resources. Clearly, the reason behind such a notable variation is the fact that parents in primary schools have long been the prime source of finance not just in the private schools but also in the public schools. Furthermore, parent-teacher collaboration tends to concentrate on accountability and maintain pressure on the schools to deliver services in return for their contributions. However, in most cases, parents do not have much control over public expenditure since that is usually dominated by local and central governments (Spicer & Hill 1990) (Dopuch & Gupta 1997).

Hence, parents are able to influence educators in order to improve performance since they are able make appropriate choices of schools for their children.