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Decentralization and Education

Definition, Measurement, Rationale, Implementation, School Finance, Effects of Decentralization

The ways in which public primary and secondary education is financed and delivered varies greatly throughout the world. In France, education is highly centralized at the level of the national government, whereas in Canada the national government does not even have an education ministry, and in the United States education is mainly the responsibility of local school districts. Many developing countries and countries in transition to market economies have highly centralized government administration of education and other public services. During the 1990s and early twenty-first century, many of these countries began to decentralize education. This phenomenon proceeded fastest in Latin America and eastern Europe, but several countries in Asia and Africa also began initiating decentralization policies.


Decentralization is defined as the transfer of decision-making authority closer to the consumer or beneficiary. This can take the form of transferring powers to lower levels of an organization, which is called deconcentration or administrative decentralization. A popular form of deconcentration in education is to give additional responsibilities to schools. This is often called school autonomy or school-based management and may take the form of creating elected or appointed school councils and giving them budgets and the authority to make important educational decisions. Deconcentration may also take the form of empowering school directors or directors and teaching faculty to make decisions within the school.

Another form of decentralization, called devolution, entails transferring powers to lower levels of government. Most often, education responsibilities are transferred to general-purpose governments at the regional or local levels. Examples are the decentralization of basic education to local (district) level governments in India and Pakistan. In rare cases additional responsibilities are given to single-purpose governments, such as the local school district in the United States. When education responsibilities are transferred to general-purpose governments, the elected governing bodies of those governments must make decisions about how much to spend on education versus other local services.


The measurement of education decentralization is especially difficult. Economists often measure decentralization to lower levels of government by looking at the percent of educational revenues that come from local (or regional) sources, or, alternatively, by looking at the share of educational resources–whatever their origin–that local governments control. Using these measures, education is highly centralized in countries such as Greece, Italy, and Turkey and highly decentralized in countries such as Canada, Norway, the United Kingdom, and the United States.

However, these measures may be misleading when central governments mandate educational policies or programs that require the local government to allocate its revenues in a certain way. Mandating reductions in class size or the creation of special education programs, for example, reduces the degree of power the local government has to allocate its own revenues or resources. In the United States, the federal and state governments influence local education resource allocation both through unfunded policy and program mandates and through the use of conditional grants-in-aid, which require local governments or school districts to match federal or state funding for certain purposes. The combination of these mandates and conditional grants results in local school districts having discretionary expenditure control over only a small portion of their revenues and budgets.

An alternative means of measuring education decentralization is more subjective and entails (1) identifying the major decisions made regarding the finance and provision of education and (2) answering the question, who makes each decision? The Organisation for Economic Co-operation and Development (OECD) has developed a methodology for measuring the degree of education decentralization. This methodology divides educational functions into four groups: the organization of instruction, personnel management, planning and structures, and resources. The content of each group is given in Table 1.


Some educational functions are decentralized even within centralized systems, and others are centralized even within decentralized systems. An OECD survey of its members, for example, shows that, even in centralized systems, schools make most of the decisions about the organization of instruction. On the other hand, in many countries most personnel-management decisions are made at a central level.

Measuring decentralization by answering questions concerning who makes decisions in what areas does not provide an easy answer as to how decentralized one country's education system is relative to another's. Not all decisions are equally important. Indeed, one decision-making area is far more important than the others. Teachers and other school staff represent about 80 percent of total recurrent education spending in developed countries and more than 90 percent of total recurrent education spending in many developing countries. Research on learning also demonstrates that teachers and their ability to teach are the single most important factor in the school that affects learning. Thus, a shortcut for determining whether one country is more decentralized than another is to compare the countries' policies in personnel management. Countries that allow school councils to select school directors and allow schools to recruit, hire, and evaluate teachers have already achieved a significant degree of decentralization even though school finance may still be highly centralized and teachers may be paid according to a national pay scale.


The rationale for education decentralization tends to be associated with four distinct objectives: democratization, regional and/or ethnic pressures, improved efficiency, and enhanced quality of schooling. Several countries with a history of authoritarian government have decentralized government in the name of democratization. More specifically, decentralization in these countries is designed to increase the voice of the local citizen and to empower the citizen to more fully participate in decision-making at the local level. Democratization has been the rationale for transferring education responsibilities to local governments in countries as diverse as Poland and Brazil.

In other countries, there have been pressures from regionally based ethnic and language groups to develop their own curriculum, teach in their own languages, and manage their own schools. A good example of this is Spain, where initially the Basque and Catalan regions gained the right to manage their own educational systems, followed later by other regions.

One of the potential benefits of decentralization is increased accountability to the citizen/beneficiary, resulting in improved efficiency in the use of school resources. The improved efficiency results from two effects. One effect is the better match between services provided and the preferences of citizens. The other effect is increased output relative to resources or expenditures. Chile is an example of a country where education was decentralized to local governments primarily in the pursuit of greater efficiency.

When education is decentralized in pursuit of democratization, or in response to regional/ethnic pressures, it is usually just one of several services being transferred to local or regional governments. In addition, educators often resist decentralization for these purposes, fearing greater inequality in spending and educational outcomes. On the other hand, when education is decentralized in pursuit of greater quality, it is usually done as part of a larger reform promoted by educators themselves. An example of this can be found in several large U.S. cities where school councils and school directors have been given greater decision-making autonomy. At the same time, however, the performance of schools is carefully monitored, and schools are held accountable for improved performance to both parents and system administrators.

These four objectives account for most, but not all, of the reasons for education decentralization. Some countries have transferred the finance and delivery of education to lower levels of government to help solve the central government's own fiscal problems. Argentina, for example, transferred education from the national to the regional governments in order to reduce central government fiscal deficits. Since the education sector employs more personnel than other sectors and also requires large recurrent salary expenditures, it is a tempting target to decentralize for fiscal reasons. Other countries have given local governments the authority to run their own schools as a means of circumventing central government bureaucracies in order to rapidly increase enrollments in remote areas. El Salvador provides an example of decentralization to remote rural communities for this purpose.


Like other education reforms, decentralization can result in political winners and losers. The potential winners are those gaining new decision-making powers, while the potential losers are those losing those powers. Two of the potential losers–civil servants and teacher unions–are sufficiently powerful that that they can effectively stop decentralization processes. The civil servants working in education ministries have perhaps the most to lose, because some of their jobs become redundant and their power to influence the allocation of resources may be diminished. In countries where corruption in government is a serious problem, reduced power will be also reflected in a reduced ability of civil servants to extract financial or in-kind rents. The leaders of national teacher unions also lose power to the extent that salary negotiations, teacher recruitment, and teacher promotion are moved from national to lower levels of government. Union members may also fear lower salaries if the funding of education is moved to local governments with fewer sources of government revenues. In countries where being elected head of a teacher union is an important stepping-stone to a political career, decentralization of labor negotiations is likely to reduce the political importance of leading the national union.

The implementation of education decentralization reforms can either be rapid or slow. Legislative or constitutional changes that immediately transfer responsibilities from the national to lower levels of government run the risk that lower levels of government will lack the required administrative capacity required to manage the system well. The result may be disruption in the delivery of schooling to children that adversely affects their learning, at least for a time. A more gradual decentralization can allow powers to be transferred to lower levels of government as those governments gain administrative capacity. The difficulty with gradual decentralization is that it may never occur at all, as the potential losers marshal their forces to fight the policy change.

In some countries with serious problems of internal conflict, weak public bureaucracies, or very weak government finances, one finds de facto decentralization of education. In these cases, the central government abdicates its responsibility for financing and providing public education, especially in remote areas, so local communities organize and finance their own schools and recruit and hire their own teachers. In Africa, the countries of Benin and Togo provide examples of community control and finance of schools resulting from the lack of central government supply. In other cases, the central government finances an inadequate number of teachers and other school resources to ensure schooling of adequate quality. In these cases, parents may form school councils to raise revenues to hire additional teachers, construct and equip school buildings, and provide other school resources. By virtue of their important role in funding education, parents and school councils may exercise significant decisionmaking power.

School Finance

The financing of decentralized education can be very complicated in systems where two or three levels of government share financing responsibilities. The choices for financing education in such systems can be framed as follows: (1) central versus local funding, (2) conditional versus unconditional grants, and (3) negotiated versus formula-driven grants. The choices made concerning education finance are extremely important as they determine both the degree of effective control local governments have as well as the implications for efficiency and equity.

The single most important choice is whether the level of government providing education (in most cases, the local government) is expected to generate its own revenues for education from its own tax and other revenues sources or if it will receive the bulk of the required educational revenues from a higher level government. Local government capacity to generate revenues (i.e., its tax base, or its fiscal capacity) tends to vary widely across local governments within regions or countries. Thus, requiring local governments to raise all their own revenues for education ensures an unacceptably high degree of inequality in spending per child. Countries where local governments finance education from their own source revenues (e.g., Brazil, the United States) have adopted intergovernmental grants to help even out spending inequalities. In the case of Brazil, the central government provides additional financing to ensure each jurisdiction spends a minimum amount per student. In the case of the United States, school finance policies vary by state, but in general they, too, ensure a minimum level of spending and, in some cases, put a cap on the maximum amount a local school district can spend.

Most countries have made the choice to fund a large portion of primary and secondary education spending from either the regional or national government budgets. This funding can be provided in one of two ways. Monies can be transferred from the central government to either the general fund of the local (or regional) government or to a special education fund of the local (or regional) government. In the former case, the local or regional government receives funding sufficient to cover a large portion of expected education expenditures, but the local or regional government makes the decision of how much to spend on education. In the latter case, the local or regional government is required to spend the grant monies on education only. Requiring grant monies to be spent on education ensures adequate education spending but reduces the expenditure autonomy of the local (or regional) government.

Once a decision is made to transfer monies to lower levels of government, a further decision needs to be made as to how to determine what amount of money should be transferred to each receiving government. The basic choice is whether to negotiate that amount between governments or to determine the amount using a capitation formula. Negotiation has political advantages in that it allows central governments to reward their political allies, and thus it is often popular. Capitation formulas, however, are more equitable and may also provide incentives for educational performance. Chile, for example, determines how much it provides to each local government based on a formula that includes indicators of educational cost, educational need, and student average daily attendance. Since local governments receive more revenues if more students are enrolled and attending regularly, the formula has encouraged those governments to undertake campaigns to keep children in school.

Effects of Decentralization

It is extremely difficult to disentangle the effects of education decentralization policies from other variables simultaneously affecting educational outcomes, and there have been few rigorous attempts to do so. Two studies that did attempt to isolate the effects of devolution in Central America concluded that it increased parental participation, reduced teacher and student absenteeism, and increased student learning by a significant, but small, amount.


FISZBEIN, ARIEL, ed. 2001. Decentralizing Education in Transition Societies: Case Studies from Central and Eastern Europe. Washington, DC: World Bank.

HALASZ, GABOR. 1996. "Changes in the Management and Financing of Educational Systems." European Journal of Education 31 (1):57–71.

HANNAWAY, JANE, and CARNOY, MARTIN, eds. 1993. Decentralization and School Improvement: Can We Fulfill the Promise? San Francisco: Jossey-Bass.

ODDEN, ALLAN, and CLUNE, WILLIAM H. 1998. "School Finance Systems: Aging Structures in Need of Renovation." Educational Evaluationand Policy Analysis 20 (3):157–177.

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT. 1998. Education at a Glance: OECD Indicators. Paris: Organisation for Economic Co-operation and Development.

WINKLER, DONALD, and GERSHBERG, ALEC IAN. 2000. "Education Decentralization in Latin America: The Effects on the Quality of Schooling." In Decentralization and Accountability of the Public Sector, ed. Shahid Javed Burki et al. Washington, DC: World Bank.

WOHLSTETTER, PRISCILLA, and ODDEN, ALLAN. 1992. "Rethinking School-Based Management, Policy, and Research." Educational Administration Quarterly 28:529–542.


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