APRIL 2010

Non-State Education and Public-Private Partnerships

Background Report Prepared by UNICEF and ADB for the ADB-UNICEF Workshop on “The Role of Non-State Providers in Delivering Basic Services for Children”

DRAFTNOT FOR CITATION

Disclaimer

This draft paper was developed by Norman LaRocque, Education Specialist, Southeast Asia Regional Department, Asian Development Bank and Sena Lee, Consultant, East Asia and Pacific Regional Office, The United Nations Children's Fund for the joint UNICEF-ADB workshop on “The Role of Non-State Providers in Delivering Basic Services for Children.” Commentaries represent the personal views of the authors and do not necessarily reflect positions of the United Nations Children‘s Fund or the Asian Development Bank.

TABLE OF CONTENTS

I. Introduction..............................................................................................................................................1

Background..............................................................................................................................................1

Objectives of the Paper...........................................................................................................................1

II. The Context....................................................................................................................................2

Education and the Obligations of the State.............................................................................................2

Education Trends and the Private Sector in EAP......................................................................................6

III. The Role of Public-Private Partnerships in Education...................................................................19

Public-Private Partnerships Defined......................................................................................................19

Potential Benefits and Risks of Public-Private Partnerships..................................................................20

Models of Public-Private Partnerships With a Focus on Those Targeting the poor...............................24

IV. Making Public-Private Partnerships Work: Regulation and Implementation................................35

Fostering a Vibrant Private Education Sector........................................................................................35

Designing and Implementing Public-Private Partnerships.....................................................................37

V. UNICEF/ADB and Public-Private Partnerships in Education..........................................................38

VI. Moving Forward...........................................................................................................................40

I. INTRODUCTION

BACKGROUND

Today, access to education is widely recognized as a basic human right, both an important end in itself as well as means to achieving the Millennium Development Goals (MDGs). The role of the State in delivering that right is legally codified in their commitments to the international rights treaties. However, governments face persistent constraints in ensuring the financing and provision of services of sufficient quality in an equitable manner. As a result, there has been increasing call for a wide range of private providers, whether it is for-profit entities, non-governmental, community-based, or faith-based organizations, to play an active role in education. The growth of the private sector has been fuelled, on the one hand, by conscious policy design and, on the other, by voluntary, demand-driven factors related to increased access and better quality education. The private sector has come to play a significant role in providing education to the poor.

Private education has a long history – in some cases, pre-dating state provision. While the growth of private sector provision brings new opportunities for governments, it also brings new challenges. In particular, governments face questions about the implications of increased private sector provision for the universality, affordability and quality of education. Available evidence suggests the great potential of private sectors to contribute to overall progress in education, resulting in broader coverage and enhanced efficiency in education, particularly in reaching those underserved by public systems. At the same time, governments need to ensure that private sector engagement promotes pro-poor, equitable provision.

This paper explores the issues, challenges and opportunities related to non-state provision and the scope for partnerships between the public and private education sectors, particularly for the poor. An underlying theme is the changing role of the State – from funder/provider to funder/enabler of education. The report discusses the potential for Public-Private Partnerships (PPPs) to successfully engage and support the private sector in enhancing educational opportunities for the poor. While the focus is on East Asia and the Pacific (EAP), the report also highlights examples of PPPs drawn from other parts of the world. 1

OBJECTIVES OF THE PAPER

The purpose of this paper is to identify key issues, opportunities and challenges related to private sector providers and their partnerships with the State in fulfilling the rights to education for all in East Asia and the Pacific (EAP). While recognizing the State as being ultimately accountable for the equitable provision of education services, the paper discusses the challenges to traditional means of schooling, funded and provided solely by the State, and discusses the potential shifts in the role of the State vis-a-vis that of private sector that could be considered. The paper then highlights a range of PPP models in education, benefits and risks commonly associated with them, and essential factors to establishing successful partnerships. Particular emphasis is made on key considerations for the design and implementation of

1 In UNICEF's demarcation, East Asia and the Pacific is represented by one region. Under ADB's demarcation, East Asia and the Pacific includes three regions: (i) East Asia, (ii) Southeast Asia, and (iii) Pacific.

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effective PPPs that contribute to equitable, quality delivery of education, especially for the poor. Lessons and potential areas for support by UNICEF, ADB and development partners in advancing the partnership agenda for equitable educational opportunities will also be discussed.

II. THE CONTEXT

EDUCATION AND THE OBLIGATIONS OF THE STATE

In recent decades, basic education has been a key area of policy focus for governments given the widely accepted view that basic education generates positive externalities, that is benefits that not only accrue to individuals concerned but also to society at large. Although not a pure public good, basic education does exhibit certain neighborhood effects in the likes of social cohesion, economic growth and law and order, which may justify government finance of education.2 Furthermore, education is considered to have instrumental value as the principal means of achieving other development goals, such as enhancing maternal and child health.

At the same time, the rights-based view of education has flourished, in recognition that education directly relates to the enjoyment of a quality life, external to its effect on economic productivity. Amartya Sen aptly described that:

“It would be a mistake to see the development of education, health care, and other basic achievements only or primarily as expansions of ‘human resources’- the accumulations of ‘human capital’- as if people were just the means of production and not its ultimate end. The bettering of human life does not have to be justified by showing that a person with a better life is also a better producer.” 3

Today, the right to basic education is expressed in the Universal Declaration of Human Rights (1948) that has served as a foundation upon which the substance of the right has been translated into numerous international legal and political commitments that followed.

The normative framework for the right to basic education is essentially contained in Article 4 of the Convention against Discrimination in Education (1960). With regards to basic education, the Convention

holds the State Parties, as signatories to the law, responsible for the obligation:4

a) To make primary education free and compulsory; make secondary education in its different forms generally available and accessible to all;…assure compliance by all with the obligation to attend school prescribed by law;

2 Friedman, Milton. 1955. "The Role of Government in Education", in Economics and the Public Interest, ed. Robert A. Solo, Rutgers University Press.

3 Sen, A. 1997. “Radical needs and moderate reforms,” in Indian Development: Selected Regional Perspectives, edited by J. Dreze and A Sen, Oxford University Press, New Delhi, India.

4 Daudet, Y. and K. 2001. “The Right to Education: An Analysis of UNESCO’s Standards-Setting Instruments”, UNESCO, Paris.

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b) To ensure that the standards of education are equivalent in all public education institutions of the same level, and that the conditions relating to the quality of the education provided are also equivalent;

Provisions for education rights are also upheld in the International Covenant on Economic, Social and Cultural Rights (1966) and the Convention on the Rights of the Child (CRC) (1989). Similar to the 1960 Convention, Article 28 of the CRC requires the State Parties to recognize the right of the child to education and to realize the right on the basis of equal opportunity, including through free and compulsory primary education and “available and accessible” secondary education for every child.

Since the adoption of these legal treaties, political commitment in reaffirming education as a basic human right was also made through the World Education Forum, setting out six goals of Education for All (1990, 2000) pledged by 155 countries worldwide.5 The Millennium Declaration (2000) marked similar political commitment for the right to development, including six commitments for the promotion of human rights.6 Despite certain limitations of these commitments to address issues of disparities and quality of outcomes, they represent the political commitment imparted to the normative framework for the right to education as established by the international conventions.7 Quantifiable and time-bound, the goals and objectives provide useful guiding points to measure progress of realization key rights.

Pragmatic approaches to fulfilling the right to education

Together, the international conventions and commitments provide the legitimate legal basis to assert the State as the ultimate guarantor for ensuring the fulfillment of the right to education. However, in practice, the State faces persistent budgetary and institutional constraints that plague both the coverage and quality of its education services. This, coupled with the increase and diversification of demand for education, has resulted in a wide range of private actors to complement and/or supplement the State’s provision of education services.8 In effect, education systems funded and provided solely by the State have become rare, and in the East Asia and Pacific region, a range of private providers are actively engaged in service delivery, catering to diverse groups of communities and to varying degrees of formality with the State.

Thus, it is useful to consider the role of the State as not only a provider but also as an enabler of services in the fulfilment of rights. In this respect, the following elaboration- from a recent UNICEF position paper regarding providers of basic services- regarding the obligations of the State to respect, protect and fulfill the enumerated rights is noteworthy:9

5 Education for All Jomtien (1990) and Dakar (2000).6 Millennium Declaration (2000)7 Some critics argue that MDGs emphasizes numerical targets and goals at the expense of quality of

outcomes and limited attention to women and marginalized groups. See Concept Note: MDGs and Human Rights. Office of the High Commissioner for Human Rights.

8 With the advancement of the EFA agenda, the demand for education has outpaced supply in many developing countries. Quality of education services also varied, and insufficient quality of public systems stimulated the growth of private schools where “differentiated demand” for quality exists, whether it is for the elite or those with special demands (religious, ethnic, linguistic, etc). For more details, see summary of E. James’ writings in Sosale, Shobana. Trends in Private Sector Development in World Bank Education Projects. The World Bank.

9 UNICEF. Submission to the UN Committee on the Rights of the Child Day of Discussion on the Private sector as service provider and its role in implementing child rights. September 2002.

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The obligation to ‘respect’ requires States to refrain from interfering directly or indirectly with the enjoyment of the right. For example, the State cannot pass a law that does not provide for all children to go to school.

The obligation to ‘protect’ requires States to take measures that prevent third parties i.e., non-State actors from interfering with the right. For example, the State is obliged to respond by law to violations of children’s rights, such as the case of a child being excluded from school by a third party.

The obligation to ‘fulfill’ requires States to progressively realize the enjoyment of all rights. This is particularly related to socio-economic rights where realization is very dependent on the provision of basic social services. For example, the State has to provide adequate and effective education to all.

Non-state provision

While the State bears the responsibility to guarantee the rights, the legal commitments does not necessarily presuppose government provision of education services. Instead, the primary role is to “respect” the right and “protect” it from violation. For example, in many countries globally, the State may allocate aspects of the education system, such as inspection, teacher training or school feeding, to non-state providers, either as a cost efficiency measure ort o improve quality. Thus, in cases where alternative private providers are engaged in providing education services and meeting established criteria and standards, the State should not prevent these actors from service provision as it would constitute as interference with the enjoyment of the right. Instead, the State’s obligations to “protect” and “fulfil” requires the State to regulate and monitor so that the services contribute to genuine fulfilment of the right to quality education, regulating and monitoring to ensure appropriate standards and equality of opportunities.10

Non-state financing

On the other hand, the issues surrounding the financial obligations of the State are less straightforward, particularly at the primary education level. Both the CRC and the 1960 Convention explicitly hold the State accountable for “free and compulsory” primary education, and numerous initiatives such as the World Bank/UNICEF School Fee Abolition Initiatives catapulted the advocacy efforts to help State Parties put this into practice. The failure to provide universal free primary education would constitute as violation of immediate and core obligations for providing primary education free of charge.11

Nevertheless, user fees in primary education are not only common but also represent as much as 20 percent of all education spending in many developing countries. 12 Most States, regardless of how well-intentioned they are, resort to some level of cost recovery to fill the revenue gaps resulting from abolition of tuition fees, particularly as they try to expand coverage. In Lao PDR, for example, tuition fees are officially banned, but most schools still levy a contribution, and in Indonesia, the fee-free policy is optional with some incentives provided for those who eliminate fees.13 States also face the difficult choice of budget allocation among other basic social services, such as health and infrastructure, as well as different levels of education from early childhood up to university. In effect, whether in the form of

10 Ibid. 11 General Comment No. 13 on the Right to Education??12 World Bank. 2004. “School Fees: A Roadblock to Education for All,” Education Notes, World Bank,

Washington, D.C. August.13 Ibid

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direct tuition fees to schools or indirect fees like supplies and uniforms, household contributions have become essential components of overall education financing in most countries.

High levels of user fees raise equity concerns as they inevitably impose a barrier to access for the poor who cannot afford to pay for services, unless strong systems for subsidies and state payments are in place. However, moderate levels of fees targeting the non-poor can be crucial resources for the expansion of services and its prevalence points to the existence of some level of private demand and willingness to pay for education, which may not be surprising as education has private benefits that accrue to individuals. In fact, in a 1996 report prepared in collaboration with the World Bank, UNICEF highlighted the importance of community contributions towards education.14 Community management is essential, and family engagement and support of schools is often a sign of their health. What is clear, however, is that no child should be excluded from education due to an inability of their families to pay fees or make mandatory contributions.

In this respect, whether abolition of user fees is the panacea to right to education is increasingly being questioned. Concerns regarding quality of education contribute to this debate, as experiences of fee abolition from many countries show that expansion of coverage without complementary investments in supporting mechanisms has deleterious effects on overall quality of education due to overcrowding, limited supply of trained teachers, etc. 15 In particular, overall quality can be critically compromised if revenue loss is not countered by increased government investments to maintain sufficient levels of discretionary funding used for school supplies and effective operations.

Another related argument is that equity concerns are not unique to user-financed education. The way public education is financed has great implications on equity, and in cases where services do not reach the poor, public spending can be highly regressive in effect. 16 This is particularly true in higher grades of primary education and in secondary education, where lower participation rates among the poor result in higher proportional state spending on the wealthy. Thus, some argue that a user fee policy that exempt the poor can, in fact, enhance equity, by increasing public expenditure to expand coverage without taking away investments towards overall quality improvements. Also, in cases where the only form of education available to the poor is a fee-based one, a policy that categorically bans operation of schools solely on the basis of fees- however modest- could result in denial of access to services and a violation of right to education for the child.

It is useful, therefore, for the State to consider a pragmatic approach to the progressive realization of the right to quality education for all than to emphasize the unrealistic ideals of free universal education in the immediate term. As concluded in a recent UNICEF paper on the role of the Non-state Actors, “it is unrealistic to expect governments to achieve universal coverage quickly,” and the progressive realization clause aims to “give flexibility and recognize their varying levels of economic status and capabilities.” 17

This recognition includes working with all available resources to help fill the gap in access and quality left by State provision, including those of private sector providers, but not as permanent substitutes; the

14 See Bray, M. 1996. " Counting the Full Cost: Parental and Community Financing of Education in East Asia." Washington DC: The World Bank in collaboration with UNICEF.

15 Kattan, R. B. and N. Burnett. 2004. User Fees in Primary Education, World Bank, Washington, D.C.16 See Colclough 1996. Education and the Market: Which Parts of the Neoliberal Solution are Correct? World

Development 24 (4); Rose 2003. “Communities, gender and education: Evidence from sub-Saharan Africa. Background paper for 2003 UNESCO Global Monitoring Report

17 UNICEF. 2009. Fulfilling Child Rights: What Role for Non-State Actors?, Draft paper.

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ICESCR calls for “immediate deliberate, concrete and targeted steps towards the effort to meet the various obligations set forth.”18

With public resources consistently failing to meet the demands of access to quality basic education, the failure of States to leverage the existing resources of private sectors can be costly. To be sure, participation of private sector in education can raise different types of issues and challenges for the State, as they require shifts in the roles and responsibilities of the State vis-à-vis the private sector. However, effective partnerships can maximize potential rewards and minimize risks in the advancement of the right to education.

EDUCATION TRENDS AND THE PRIVATE SECTOR IN EAP

Education for All Progress and Challenges:

The developing countries in the EAP region are characterized by diverse economic, political, cultural and ethnic makeup, between and within countries. It encompasses some of the most populous nations in the world, such as the People's Republic of China (PRC), as well as some of the smallest, like the Pacific Island states. Economic status also varies, with countries like the PRC undergoing robust rates of growth, while others like Cambodia, the Philippines and Myanmar has experienced relatively modest growth with disruptions from political conflict and natural disasters. The Human Development Index (HDI), an aggregate measure of literacy, life expectancy and real GDP per capita, spans a wide range across the region, with Thailand (87), PRC (92) and Fiji (108) ranking much higher than Myanmar (138) and Timor-Leste (162).19

Disparities in access

The diversity of the region (Table 1) presents limitations on the extent to which the progress of and issues related to education can be generalized. Indeed, while the region is often recognized to have achieved remarkable progress towards EFA goals, large variations exist across different countries. Under-5 mortality rates are stands well below the world average, at around 28 per 1,000 births, but the figures for Cambodia, Myanmar and Timor-Leste are over 85. 20 Children in those countries also have higher rates of underweight and stunting. Overall progress towards universal primary education (UPE) has been steady, and since 1999, and Cambodia, Myanmar and the Lao PDR have made substantial gains in reducing the number of out-of-school children. However, access remains elusive to over 9 million primary school age children, 3.5 million more than in 1999, and the un-enrolled population is concentrated mainly in the Philippines, Indonesia, Cambodia and Thailand. 21 The gross enrolment rate (GER) in pre-primary schools remains virtually unchanged since 1999, with consistently low participation of less than 10 percent observed in countries like Myanmar, Timor-Leste and Cambodia. In some countries, however, pre-primary enrolment rates have more than doubled since 1999, as in the case of Indonesia. Transition to lower secondary education, including both general and vocational/technical education, has seen only modest gains and is now at the center of the EFA agenda in many countries in the region (GMR 2009).

18 Ibid.19 Human Development Report 2010. Available at http://hdr.undp.org20 For basic statistics, see www.childinfo.org21 UNESCO Global Monitoring Report for EFA, 2009.

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Table 1: Selected Education Indicators, East Asia and the Pacific, 2008Under-5 mortality

rate, 2008

Total population

(thousands), 2008

GNI per capita (US$),

2008

Primary NER 2003–2008*, male

Primary NER 2003–2008*,

female

Secondary GER 2003–2008*, gross, male

Secondary GER 2003–

2008*, female

Brunei Darussalam 7 392 26740 93 93 96 99

Cambodia 90 14562 600 91 87 46 38

PRC 21 1337411 2770 100 100 75 76

Democratic People's Republic of Korea

55 23819 a - - - -

Indonesia 41 227345 2010 97 94 66 66

Kiribati 48 97 2000 96 98 82 94

Lao PDR 61 6205 750 86 81 49 38

Malaysia 6 27014 6970 99 99 66 72

Myanmar 98 49563 220 - - 49 49

Papua New Guinea 69 6577 1010 - - - -

Philippines 32 90348 1890 91 93 79 88

Solomon Islands 36 511 1180 62 62 33 27

Thailand 14 67386 2840 94 94 79 88

Timor-Leste 93 1098 2460 64 62 53 54

Vanuatu 33 234 2330 88 87 43 37

Viet Nam 14 87096 890 96 91 69 64

East Asia and Pacific

28 1996426 3136 98 97 73 74

Source: UNESCO UIS

Furthermore, disparities in education progress are pervasive within countries. The Asia-Pacific EFA Mid-Decade Assessment process, with the theme of Identifying Disparities: Reaching the Unreached, resulted in 47 National Reports being prepared with disaggregated data prepared on specific indicators. In general, measuring marginalization in education is fraught with challenges, with a wide range of factors such as poverty, gender, language, ethnicity, and geographical isolation all acting as disadvantages affecting a child’s access to schools. In many cases, children experience multiple levels of disadvantage that interact together to limit their genuine opportunities to access quality education.

A lack of common benchmarks also makes cross-country comparisons difficult. However, where available, sub-national data do provide insight into the relative scale of disparities within countries. Survival rates within countries vary considerably by geographic location and income levels. As seen in Figure 1, in Cambodia, the average rates of survival to grade 5 for Ratnak Kiri and Mondul Kiri are nearly

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half those of Kampong Chhnang. In Vietnam and the Philippines, survival rates of the poorest population group are lower by more than 15 percent than those of the richest.22

FIGURE 1: SURVIVAL RATE TO GRADE 5, BY PROVINCE IN CAMBODIA, 2006/07

Source: EMIS Ministry of Education Youth and Sports

Amongst the most pervasive of disparities are those linked to poverty, which is consistently rates as one of the major factors in non-attendance at all levels of education. Among populations aged 17-22, those born into the poorest households have disproportionately high representation among those in “education poverty,” defined as having fewer than four years of education.23 In Cambodia and Myanmar, for instance, the poorest quintile account for more than double their population share in education poverty.24 Similarly, as seen in Table 2, the poorest income quintile is also disproportionately represented in the bottom 20 percent of education distribution (by years in school). In the Philippines, for example, over 55 percent of those in the bottom 20 percent of the education distribution is from the poorest wealth quintile.

TABLE 2: EDUCATION POVERTY IN SELECT EAP COUNTRIES

22 Viet Nam 2002 Demographic and Health Survey; Philippines 2003 Demographic and Health Survey.23 2010 EFA GMR.24 In the absence of established cross-country benchmarks, the 2010 EFA Global Monitoring Report introduces

three core areas (education poverty, extreme education poverty, and the bottom 20%) to identify groups facing restricted access to educational opportunities. See the Report for more information.

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Country Most Deprived RegionShare of the poorest wealth quintile in

the bottom 20% of the education distribution, by years in school

Cambodia Easter Shan 36.3Lao PDR South 34.6Viet Nam Mekong River Delta 51.0

PhilippinesAutonomous Region of Muslim Mindanao

55.4

Indonesia West Kalimanta 41.1Source: EFA Global Monitoring Report 2010

Poverty-based barriers are particularly pronounced at the pre-primary level, with children in Vietnam’s poorest 20 percent of households being nine times less likely to participate in pre-primary programs than children in the wealthiest 20 percent; the corresponding rate in the Philippines is twelve.25

Disparities in the Quality of Education

With regards to overall quality of education, high rates of grade repetition and low rates of grade-5 survival point to the need for increased investment towards improving inputs and teaching and learning processes. And similarly to access, inequity in quality of education at all levels remains a major challenge across the region. According to the results from the 2007 Trends in International Mathematics and Science Study (TIMSS), the average test scores for students in the region’s top-performing country, the Republic of Korea, were 1.5 times higher than those in Indonesia, the poorest performer in the region.26 Quality of learning environment widely varies within education systems, with marked variations in class size, teacher quality, availability of teaching and learning materials and facility standards. Gap between urban and rural areas are prominent in many countries, with shortage of trained teachers and inadequate quality of facilities being persistent in rural areas. Data on learning achievement assessments suggest inequalities based on socio-economic status, ethnicity and geographical location influencing overall learning achievement. In Vietnam, for instance, a large scale survey found strong disparities in learning achievement among different groups, with ethnic minority students from predominantly poor, remote communities showing limited reading competencies than those from middle-class backgrounds in urban areas.27

As previously mentioned, the poor often face multiple levels of bias, making the last remaining out-of-school children also the hardest-to-reach. Inequalities they face tend to be persistent and resistant to change, and strategic and targeted investments are needed to improve their overall education opportunities. Based on the experience of the East Asia 1997 financial crisis, the situation for the poor in the aftermath of the current crisis is expected to worsen, making it more imperative to identify and implement effective social protection measures, grounded on continued political commitment to ensuring every child’s basic right to education.

25 Regional Overview: East Asia and the Pacific 2010 EFA Global Monitoring report. 26 Seven countries in the East Asia and Pacific region were surveyed in 2007 TIMSS, including Australia,

Indonesia, Japan, Malaysia, the Republic of Korea, Singapore and Thailand. See EFA GMR 2010 for more details.

27 Vietnam Reading and Mathematics Achievement Study. 2001. Vietnam Ministry of Education and Training.

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Scale and nature of private (non-state) providers

Who are private providers?

Before discussing the scale and nature of private providers in education, it is important to define what is meant by “private” providers. In this paper, the term “private” providers encompasses the whole range of non-State providers of education services, including for-profit entrepreneurs operating individual schools, for-profit school chains, faith-based and community based organizations, NGOs, and philanthropic associations engaged in the provision and/or financing of education services (Table 3). As summarized in the table below, the type of intervention covers a wide range, whether it is in the form of support to government service delivery or direct service delivery. While it is commonly assumed that for-profit institutions comprise the biggest share of private education provision, the opposite is true in many developing countries, with non-profit, civil society organizations accounting for the biggest share.28 These include private schools that are operating on non-commercial interests, designed to reach under-served communities as well as those with differentiated target groups (e.g., linguistic communities, ethnic groups).29

Table 3: Summary of types and forms of private (non-state) provision in education

Types of Providers Forms of non-state provision

Commercially-driven private entrepreneurs operating individual schools

Commercially-driven private school chains NGOs Faith-based organizations Philanthropic associations Spontaneous community-based organizations

NSP support for government service delivery

Supply inputs to government schools (e.g. learning materials, school feeding)

Support to infrastructure development of government schools (e.g. school buildings)

Support to management of government- run schools Regulation and quality control of associated services (e.g.

inspection, teacher training and certification)NSP service delivery

Manage and run government schools Establishment and operation of non-state schools Private tuition to supplement government provision Receiving state funds to provide schooling to specific groups

of childrenSource: Rose 2007.30

At an institutional level, UNESCO classifies an institution “private” if it is controlled and managed by a non-government organization. 31 While this definition relies on governance criteria, others also use financing criteria that differentiate private education based on source of funding; those receiving more than half of their budget from the state are classified as “government-dependent” and others as “independent” (Figure 2).

FIGURE 2: SOURCES, FLOWS AND DESTINATION OF EDUCATION FUNDING

28 UNESCO. Global Education Digest 2007. UNESCO Institute of Statistics.29 Ibid.30 Rose, P. 2007. Supporting Non-State Providers in Basic Education Service Delivery. Research Monograph

No.4. DFID31 UNESCO 2005. World Education Indicators. Montreal: UNESCO Institute of Statistics.

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Source: UNESCO-UIS/OECD/WEI, 2003. Financing Education: Investments and Returns, Montreal: UNESCO Institute for Statistics

The variations in the use of the term highlight the complexity of determining the public and private spheres in education, and the limited consistency in usage of the terms across countries require caution in the interpretation of information over time as well as in cross-country comparisons. For the purposes of this paper, the governance criteria used by UNESCO will be used to define “private” institution.

Enrolment

The significance of the private sector in overall education delivery can be determined by the size and nature of their participation as well as the scope and provisions of the regulatory framework within which they operate. For the most part, reliable data and information related to private providers are limited in the EAP region, rendering it difficult to capture the true picture of the nature of private sector participation. Nevertheless, available data indicate notable significance of private providers, partly stimulated by government policies that recognize and encourage their contribution through enabling legislations and financial incentives.32 Even without supply-side interventions, private providers also spawned in response to unmet demands, both for the elite class as well as for underserved rural and ethnic communities.

As seen in Figure 3, the average share of private enrolment in the EAP region is comparable to that in other regions for primary education. As with all regions but South Asia, the private enrolment share is higher in secondary education than in primary education in EAP.

32 World Bank and UNICEF. 1996. Counting the Full Cost: Parental and community Financing of Education in East Asia. World Bank, Washington, D.C.

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FIGURE 3: PRIVATE ENROLMENT SHARE BY REGION, 2006

The relative significance of private sector participation varies across the region, with private sectors highly active in countries like Indonesia, Philippines and the Pacific Islands, as compared to the relatively modest levels in Myanmar and Lao PDR. As shown in Figure 4, enrolment in private schools is significant for all levels of education in Indonesia, Thailand and some Pacific Island countries. Also evident is the significance of private sector engaged at the pre-primary level, and to a lesser degree, at secondary level in most countries. For six countries, the level of private school enrolment is the lowest in the primary level, but even in those countries, the proportion of private enrolment is very high at pre-primary and secondary level. This is the case for Cambodia, Lao PDR and Vietnam. The private sector is also active in secondary education, with over 25 percent of total enrolment in private schools in Indonesia, Tonga and Marshall Islands.

In some countries, private sector engagement is based on systemic alliances formed with the government, whereby a large share of education is provided by the private sector but remain under public financing and/or ownership. An example of such alliance is the madrasahs (Islamic institutions) in Indonesia, which account for approximately 6 million school-age children, or about 20 percent of primary enrolment.33 Madrasahs are managed by private, non-governmental providers but are under public oversight by the Ministry of Religious Affairs34. Similarly, in Papua New Guinea, the proportion of schools managed by churches is estimated to be around 50 percent in primary level and 30 percent in secondary level, although the level of State engagement, in terms of funding and legal provisions, is not as strong as in Indonesia.35 In the Philippines, nearly half of all private secondary schools are operated by the Catholic Church or the Association of Christian Schools and Colleges.36

FIGURE 4: PRIVATE SCHOOL ENROLMENT AS % OF TOTAL ENROLMENT IN EAST ASIA AND PACIFIC (2007)

33 Indonesia Education Strategy 2007-2012. Ministry of Religious Affairs. 34 Ibid. 35 Gibbs, P. 2002. “Religion and religious institutions as defining factors in Papua New Guinea politics.”

Development Bulletin 59.36 UNESCO-UIS/OECD/WEI, 2003.

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Source: UNESCO, WORLD BANK EDSTATS, GLOBAL MONITORING REPORT 2010

0

25

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Overall, while information on the exact scale and nature of private schools- the types of providers, funding mechanisms, and distribution of service by income/region- is not readily available, the above estimates provide a useful starting point to recognizing the relative significance of the private sector in the region.

Private schools and the poor

While private schools are often seen as bastions of the elite, the reality is that a large and growing proportion of the private sector in education serves the poor. Several studies have documented the emergence of low-cost schools serving the poor. Kingdon (1996) reports on a household survey in rural India that found that about 10 per cent of children were enrolled in private unaided schools. 37

Alderman, Orazem and Paterno (2001) find significant enrolment in private schools among poor families in Lahore (Pakistan), with 37 percent of surveyed children from the lowest income quintile enrolled in private schools. Only among the poorest families was the proportion of students enrolled in public schools higher than in private schools.38 Salmi (1998) highlights the vast majority of private schools in Haiti operates at the bottom of the market, with only a small proportion of (mostly religious) schools operating at the elite end of the education market.39 The Oxfam Education Report (2000) has noted that private schools serve a much broader group of people than just the elite and that low-cost private schools have emerged to meet the demand of poor households.40 According to the World Bank, one-

37 G. Kingdon: 1996. Private Schooling in India: Size, Nature and Equity Effects, London School of Economics STICERD Working Paper 74, London, August.

38 Alderman, H. et al. 2001. School Quality, School Cost, and the Public/Private School Choices of Low-Income Households in Pakistan, The Journal of Human Resources, pp. 311-312.

39 Salmi, J. 1998. Equity and Quality in Private Education: The Haitian Paradox, Technical Paper 6, World Bank, p. 29.

40 Watkins, K. 2000. The Oxfam Education Report, Oxfam Publishing,

13

quarter of the private schools in Lahore (Pakistan) were charging less than $20 per annum and more than half the families in the lowest income group were choosing private education for their children.41 Postiglione and Tan (2007) note that private schools in Indonesia have provided educational alternatives for the poor and those living in more remote areas and are sometimes the only options for these students. He also notes that the overwhelming majority of private institutions provide educational services for those who would otherwise be denied access.42 In their 2005 study, Tooley and Dixon found that private schools made up anywhere from 65.1 percent to 74.7 percent of schools serving the poor in the slums of Hyderabad (India), Ga District (Ghana) and Lagos State (Nigeria). 43

Finally, the size and growth of PPP programs such as the Punjab Education Foundation's (PEF) Foundation Assisted Schools (FAS) program, which are targeted at children from low income families attending private schools, is further evidence of the degree to which the private sector serves the poor.

Expenditure

As a whole, the East Asia and the Pacific region has the second highest share of global public expenditure on education (18 percent). While this appears significant, it is considerably less than its share of global wealth (28 percent of GDP) and the school-age population (29 percent) and is approximately about 1 percent of GDP, on average, compared to 1.5 percent in North America and Europe and 1.3 percent worldwide.44,45 Private expenditure on primary and secondary education is estimated to be notably high in the region, due to prevalence of private schools and various types of user fees in the public school sector, whether in the form of direct tuition fees or indirect fees such as cost of uniforms and textbooks. While it is generally true that most spending goes towards private education institutions, private financing of public education is also common in the region.46

Systematic data on private expenditure for East Asia and Pacific countries is limited, and, where available, not disaggregated by types of spending. However, available data on its share of total expenditure on education suggest the relative significance of the private sector. As seen in Figure 5, private expenditure contributes a large percentage of total expenditure on primary to post-secondary, non-tertiary education level in Indonesia and Lao PDR, higher than the relatively affluent countries like Japan. This contradicts the popular notion that private education is not prevalent in low-income countries.

41 World Bank: Pakistan: Improving Basic Education, South Asia Region, 1996. 42 Postiglione, G and J. Tan. 2007. Going to School in East Asia, Greenwood Press, Westport CN, p. 129. 43 Tooley, J. and P. Dixon. 2005. Private Schools are Good for the Poor, Cato Institute, Washington DC, p. 8. 44 Global Education Digest. UNESCO UIS. October 2007.45 Ibid. 46 For more information on examples of countries where private financing in a publicly provided system is

common see Bray, Mark. 1996. Decentralization of Education: Community Financing. Directions in Development Series. World Bank, Washington, D.C.

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FIGURE 5: PRIVATE EXPENDITURE AS A PERCENTAGE OF TOTAL EXPENDITURE ON PRIMARY TO POST-SECONDARY, NON-TERTIARY EDUCATION

INSTITUTIONS FOR SELECT EAP COUNTRIES, 2004

The notion that private schools are servicing the needs of a small minority of wealthy parents is misplaced.

- Oxfam Education Report, 2000

According to one estimate, private financing as a share of total education expenditure is fairly high throughout most of the region where data is available.47 In Indonesia, over 90 percent of pre-primary education expenditure is from private sources, and over 56 percent for lower secondary level. 48 At primary education level, private expenditure in Vietnam and Cambodia is as high as 44 percent and 80 percent, respectively.49 According to the 2009 Global Monitoring Report, private expenditure for primary and secondary level combined constitute nearly 35 percent of total expenditure in the Philippines.50

The invisible

Data on private enrolment and private expenditure shares provide a rough estimate of the relative scale of the private sector, but this is likely to be an underestimate of the true scale of the private sector. As noted previously, many countries do not collect data related to private sector, and even for countries that do collect data, they do not see it as their responsibilities to collect data on unregistered or unlicensed private schools.51 Also, some private schools choose to remain unregistered and thus not in purview of government, due to certain legal and regulatory hurdles that tend to restrict their operations.52 In general, there is high likelihood that private sector providers serving low-income communities are the ones not captured in national data, as incidence of non-registration among private providers, especially small-scale, NGO-type providers, are relatively high compared to urban, large-scale private providers.53

47 World Bank. 2004. Working paper series on Private Sector Involvement in Education: A review of World Bank Activities in East Asia and Pacific 1996-2002.

48 Ibid.49 World Bank. 2004. User Fees in Primary Education. World Bank, Washington. D.C.50 Global Monitoring Report, 2009. World Bank.51 Kingdon, G. G. 2005. Private and Public Schooling: The Indian Experience. Paper presented at the

Conference, Mobilizing the Private Sector for Public Education, Co-sponsored by the World Bank, Kennedy School of Government, Harvard University, October 5-6, 2005.

52 Ibid53 Literature around the effect of State restrictions on NGO’s on their registration practices is vast. See

documents from the Workshop on the Legal Framework for Civil Society in East and Southeast Asia. . Available at http://www.icnl.org.

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Source: UNESCO UIS

Legislation and regulation

Another dimension related to the relative significance of the private sector in education relates to the spread and enforcement of the legal and regulatory provisions pertaining to private sector participation. Whether it is related to barriers to entry, standards of operation, regulations for safety and quality, or tax codes, the depth of regulatory provisions and its actual enforcement suggests the relative “power” of the private sector in education compared to public sector as recognized by the State. In essence, the State’s policy ranges from those that prohibit, permit or encourage private sector participation, though in practice, it varies considerably by types of private provision and providers as will be discussed later in the paper.

In general, at the pre-primary level, many countries in the region have specific policies encouraging various private providers to play an active role in the provision of early childhood education (ECE). In some cases, government encourages cost-sharing, support funding, as in the case of Indonesia where the Ministry of National Education (MONE) encourages private sector, including for-profit, nonprofit and community-based organizations, to expand the provision of ECE through block-grant subsidy system. 54 In the Philippines, the Early Childhood Care and Development Law, enacted in 2000, also encourages private sector initiatives in ECE, with specific guidance and supervision provided through the Department of Social Welfare and Development acting as the designated body for setting standards and monitoring all provisions.

At the primary level, policies generally permit but do not explicitly encourage private sector participation, with many countries regarding primary education as free and compulsory and the responsibility of the State. In some cases, as in Vietnam and Myanmar, fully private schools are officially prohibited to act as alternatives to State institutions, though private providers are active in practice. 55

Policies for private providers engaged in lower secondary and technical/vocational education levels are also generally favorable across the region.

Conclusion

While the exact scale and nature of the private sector is not easy to assess, the relative significance of private sector participation in education in EAP is undeniable. This is especially true in the case of pre-primary and secondary level across the region, and in certain countries, also in primary level. Both demand-driven needs as well as supply-side interventions are responsible for the growth of private sector participation, as well as the remarkable household willingness to pay for education. 56 Private enrolment rates are high for both high and low income countries in EAP, which reflects the global rates by national income as seen in Figure 6.

54 Ministry of National Education allocates a share of ECED budget for these block grants, which are disbursed to private providers in the form of subsidies; the grant covers a part of the operational and start-up costs, and parents contribute the rest as user fees. See Overcoming Inequality: Why governance matters. Background paper prepared for the Education for All GMR 2009.

55 Ibid. 56 Numerous empirical studies have shown people of all economic backgrounds are willing to pay for desired

service and cost recovery through fees. See Bray, M. 1996. Counting the Full Cost: Parental and Community Financing of Education in East Asia. Directions in Development Series. A Collaborative report by the World Bank and UNICEF. and Psacharopoulos et al. 1997. “Private Education in a Poor Country: The Case of Urban Bolivia.” Economics of Education Review. 16 (4): 395-406 .

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FIGURE 6: PRIVATE ENROLMENT SHARE BY NATIONAL INCOME, 2006

Source: UNESCO, WB EDSTATS, WB GMR 2009

There is no uniform trend in the scale of private sector provision across the region, by level, as can be seen in the Table 4. Private enrolment shares have increased for primary education in some EAP counties, like Thailand, while those of secondary education have seen modest decreases.

Table 4: Private enrollment shares in education, selected countries, 1990 and 2006 (%) Primary Secondary

Country 1990 2006 1990 2006Indonesia 17.6 15.9 49.2 43.5Philippines 6.7 7.8 36.4 20.4Thailand 9.6 16.7 16.2 15.0

Source: UNESCO; EdStats (www.worldbank.org/education/edstats). Note: The table shows most recent data available within two years of the year indicated.

It should also be noted that there is difficulty in understanding the scale of private sector due to the fact that education institutions are often characterized by a hybrid system, where the government and the private sector cooperate in mixed arrangements in provision and financing. In practice, the extreme case of unitary financing and provision by either the government or private sector, as seen in the first and fourth quadrant, are highly rare as compared to quadrants highlighted in yellow. 57 For instance, in Cambodia, 60 percent of resources for “public” primary education are direct household contributions rather than indirect contributions through the State, and in Indonesia, over 65% of “private” primary school funding comes from the State.58 In considering the notion of public and private education, it is important to distinguish between two different policy instruments that governments have available to them – that of financier of education and that of provider of education (Figure 6). Governments may use either to achieve their policy objectives. While schools may be privately owned, governments can ensure access to the poor by providing public funding to students to offset fees. This is the basis for many of the PPPs discussed in the next section.

57 World Bank. 2009. Global Monitoring Report. Chapter 3. 58 Bray, M. 2002. The Cost and Financing of Education: Trends and Policy Implications. Asian Development

Bank. Comparative Education Research Centre, the University of Hong Kong.

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FIGURE 6: FINANCING AND PROVISION OF SERVICES

Provision*

Private Public

Finance

Private Private schools**

Home schools

Tutoring

User fees

Student loans

Public Vouchers

Charter schools

Contracting out

Public schools

Note: *provision includes ownership and management**private schools include for-profit, non-profit, formal or informal

Source: Adapted from World Bank 2006

Thus, even as debates around the relative efficiency of public versus private schools continue to evolve, it is more useful to shift away from the false dichotomy of public and private school to a more meaningful assessment of the range of policy options on financing and provision of education. In essence, it is rarely a choice between one sector or the other, but choice of different forms of partnership arrangements between the two sectors. Global evidence on the relative effectiveness and impact of partnerships is scarce and cannot be generalized across all political, economic, cultural and geographic contexts. Nonetheless, it is critical to ensure that all forms of partnerships contribute to enhance equity of opportunities to education, with continued State commitment to “respect”, “protect”, and “fulfill” the rights to education for all children, particularly the disadvantaged.

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III. THE ROLE OF PUBLIC-PRIVATE PARTNERSHIPS IN EDUCATION

PUBLIC-PRIVATE PARTNERSHIPS DEFINED

Traditionally, private sector participation in education has largely been in the form of privately-funded and privately-owned schools and the provision of ancillary services such as the provision of food and transport services. Recent years, however, have seen the expansion and broadening of the role of the private sector in education and the introduction of more sophisticated forms of private involvement in education. Types of engagement of private providers are as diverse and sophisticated as the types of inputs, processes and outcomes involved in education delivery. Despite the emerging role for the private sector in education, it receives comparatively little attention of policy makers in developing countries and of development partners. In many cases, governments do not even measure the size of the private sector. This cannot and should not continue.

Given the significant educational challenges faced by developing countries and the potential for increased access, quality, efficiency and accountability offered by increased private participation in education, it is incumbent upon policymakers to explore innovative ways of financing and delivering quality education efficiently. PPPs - under which the public and private sectors work together to achieve desirable economic, social and educational goals – are one such innovation. There are various definitions of PPPs. (see Box 1 below). While variations exist, most of PPPs share a number of features – a formal relationship between partners, most often in the form of contracts with defined outcomes for a specific period of time. It does not matter whether the private sector partner is profit-oriented, philanthropic, faith-based, or community-based in nature, but in all PPPs, an element of risk-sharing exists in the

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Box 1: Public-private Partnership Defined

"a risk-sharing relationship based upon an agreed aspiration between the public and private (including voluntary) sectors to bring about a desired public policy outcome. More often than not this takes the form of a long-term and flexible relationship, usually underpinned by contract, for the delivery of a publicly funded service."

- Commission on UK PPPs

"a cooperative venture between the public and private sector s, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards."

- Canadian Council for PPPs

"Arrangements whereby the private sector provides infrastructure assets and services that traditionally have been provided by government, such as hospitals, schools, prisons, roads, bridges, …"

- OECD

arrangement. The public sector defines the scope of business, targets and outputs, and the private sector delivers on them based on built-in incentives.59

PPPs are to be distinguished from privatization, with the latter involving a permanent transfer of control from the public sector to the private sector, while PPPs’ main aim is to promote improvements in the financing and provision of services without altering the balance of control of one over the other.60

The definition of PPPs employed in this paper involves, for the most part, contracting-type PPPs that bring together governments and the private sector broadly defined to include both companies and the not-for-profit sector. However, this definition of PPP is by no means exclusive. To some, these contracting-type PPPs are more a form of contract than a PPP and do not constitute partnerships in the true sense of the word.61 Similarly, PPPs are often defined as involving only the government and private (companies) sectors – thus excluding the non-profit sector. 62 Some definitions of PPP are extremely narrow. For example, PPP is often used to refer only to Private Finance Initiative-type infrastructure PPPs. Other definitions recognize that the public sector and a wide range of stakeholders (including civil society, donor organizations, political representatives, etc) are engaged in many different forms of interventions and partnership arrangements. While such partnerships may not necessarily be formal, they are also critical means of achieving educational development. Some broader partnerships are more formal in nature. Partnerships may involve only a small number of partners. Other partnerships – such as Multi-Stakeholder Partnerships for Education (MSPEs) – may involve many actors. MSPEs bring together governments, the private sector, civil society, academic institutions and other organizations to pool and jointly manage resources and competencies that contribute to the expansion and enhanced quality of education.63 These can vary considerably in terms of purpose, scope, complexity, level of engagement, size and diversity of partners.

POTENTIAL BENEFITS AND RISKS OF PUBLIC-PRIVATE PARTNERSHIPS

Economic and rights-based perspectives continue to prevail in the discussions about the role of public versus private sector’s role in education, and for many, the participation of the private sector in education is viewed only a short-term solution to inadequate government provision or an experimental ground where innovations can be developed and tried for broader application. 64 As discussed, however, exceptions to the view are increasingly recognized, with proponents arguing the benefits of engaging in partnerships with private sector in not only filling an immediate gap but also providing perceived advantages over pure government provision.65 The key arguments are addressed below.

Potential Benefits of PPPs

59 LaRocque, N. 2008. Public-Private Partnerships in Basic Education: An International Review. CfBT Education Trust, Reading, p. 8.

60 Wang, Yidan. 1999. Public-Private Partnerships in Health and Education: Conceptual Issues and Options, paper prepared for Manila Social Policy Forum: The New Social Agenda for East, Southeast and Central Asia, Joint ADB-WB Conference, November 9-12.

61 Draxler, A. 2008. New Partnerships for EFA: Building on Experience, UNESCO-IIEP and World Economic Forum, Paris and Geneva, p. 32.

62 Ibid., p. 23. 63 http://www.pfore.org/about.64 Rose 2007. 65 Ibid.

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PPPs may help to widen access to education. The public sector faces considerable resource constraints in financing and providing education services to all on its own. PPPs can play a complementary role to the State by providing additional finance to the education sector through, for example, adopt-a-school type programs and other forms of philanthropy, thus filling the gaps left by the State. PPPs can also facilitate increased access by making use of private schools to absorb the excess demand for schooling in particular geographical areas. This can increase access for those attending private schools and reduce class sizes for students in overburdened public schools. The Education Service Contracting scheme in the Philippines does exactly that by targeting areas where public high schools are overcrowded.

PPPs may also help to lift the quality of education delivered, by incorporating the knowledge, skills and innovations available in the private sector, whether pedagogic, technical or managerial functions. Rigorous evidence on the impact of PPPs on the quality of education is relatively limited, partly due to the inherent difficulties in defining what is meant by “quality” education and partly due to the lack of studies that have been carried out using rigorous evaluation techniques.66 Nonetheless, there is some evidence to suggest that PPPs can positively influence the quality of education through improved teacher training, increased teacher attendance, and through the application of better management and pedagogical techniques.67 An independent evaluation of the PEF's FAS program found that it led to a marked improvement in school administration and management, lower teacher attrition, regular attendance, better learning outcomes and increased teacher salaries and working conditions.68

PPPs, by increasing choice in education and linking educational subsidies to demand, may also lead to increased accountability for educational results. This is because, under PPPs, parents are able to hold educational providers directly accountable for the quality of service provision (ie. short route accountability), rather than having to hold providers accountable through the political process (ie. long route accountability), as described in Figure 7. 69

Proponents of PPPs argue that not only is short route of accountability good for increasing quality, it is also advantageous in its own right, as strengthening local accountability can be a way of influencing the demand for education as well as ensuring its relevance to those being served. Indeed, emphasis on local level accountability is an approach embraced by many international NGOs and development agencies alike, including UNICEF, in basic social services.70 Overall benefits of short route accountability are particularly evident in areas underserved by governments who are too fragile or unable or unwilling to respond to all existing demand.71

66 Quality of education is defined in different ways in the context of education, and efforts to measure quality are equally varied, from teacher quality to learning outcomes to perceived quality of beneficiaries. See Rose (2007) and Patrinos (2005).

67 See World Bank. 2009. The Role and Impact of Public-private Partnerships in Education , Washington DC, pp. 31-41.

68 Innovative Development Strategies. 2009. Third Party Evaluation of Punjab Education Foundation Foundation Assisted Schools (PEF – FAS) Program, Islamabad, p. 61.

69 World Bank. 2004. World Development Report 2004: Making Services Work for the Poor, World Bank and Oxford University Press, Washington. D.C.

70 Rose, P. 2007. NGO Provision of Basic Education: Alternative or complementary service delivery to support access to the excluded? CREATE Research Monograph No.3. Brighton: University of Sussex.

71 Ibid.

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FIGURE 7: SHORT AND LONG ROUTES OF ACCOUNTABILITY

Source: World Bank. (2004) World Development Report 2004: Making Services Work for the Poor, World Bank and Oxford University Press: Washington. D.C.

Another commonly perceived benefit of PPPs is the increased efficiency in the delivery of education services. Through PPPs, the State can apply competitive pressures of markets in the education sector to spur innovations that generate increased efficiency. Partnerships also allow governments to transfer responsibilities of certain functions to the public sector, while the government focuses on areas where they have comparative advantages over the private sector, such as in policy, planning and quality assurance. If designed to allow optimum levels of operational and management flexibilities of private providers, PPPs can also overcome unnecessarily restrictive government rules and procedures that limit the State's ability to deliver services efficiently, including antiquated pay practices and employment arrangements.

Potential Risks of PPPs

The arguments in favor of PPPs are by no means accepted by all and PPPs have been subject to a number of criticisms. A key concern with PPPs is that the contracting that underlies PPPs may be complex and requires considerable government capacity to be able to design, implement and monitor PPPs in order for benefits to materialize. This is particularly of concern in countries where the State has relatively limited experience in working with the private sector and with contracting, which may leave the State exposed to risks – both financial and in relation to quality.

A second criticism is that the private sector is not sufficiently developed or sufficiently large to allow for PPPs in the education – particularly in poorer areas. Clearly, sufficient capacity in the private sector is required if the government is to contract for the delivery of education services. Inadequate regulatory and policy frameworks and administrative systems in developing countries may also hinder effective implementation of PPPs and the delivery of quality education.

Critics argue that limited government capacity and a weak policy framework also mean that PPPs can result in a loss of accountability to the public in its role as the duty-bearer of education. Ministries of

22

Education are traditionally amongst the most conservative, in terms of control over curriculum, language policies and politicization of content – and therefore may be reluctant to relinquish control to NSP partners.

What Role for PPPs in the Education Sector

At this stage, debates over the appropriateness of PPPs in the education sector are largely theoretical in nature. As the World Bank (2009) notes, PPPs may affect school outcomes in either of two ways: by changing the way schools function internally, and by changing the behavior of students and families. Private provision of educational services may affect educational outcomes in a number of ways: (i) private schools have more management flexibility than their public sector counterparts, (ii) providers are usually chosen on the basis of quality and cost criteria, (iii) PPP contracts can result in optimal risk-sharing between the public and private sectors, and (iv) PPPs promote competition in the market for education.72

Despite a growing number of PPPs in education around the world, rigorous evidence on the impact of these programs is limited except for vouchers, where there is an extensive literature. In respect of interventions such as private management, subsidies and private finance initiatives, empirical information is less abundant. Evidence on the Colombian voucher program is that it had positive effects on several outcomes over both the short and long term, including school attendance, years of schooling, lower repetition rates, higher repetition rates and higher standardized test scores. On the other hand, evidence on the national Chilean voucher scheme is mixed and controversial. Voucher programs in Denmark, Sweden and the Netherlands appear to have increased competition and, in the case of the latter two, have had a positive effect on student achievement.73 More and better evidence is required to assess the potential for PPPs in the education sector. The above arguments provide a useful starting point for considering the potential benefits and risks related to education PPPs in any given context. Rigorous empirical evidence of the impact of PPPs in a developing country context remains inconclusive, but available studies do show promising trends of PPPs, and more importantly, some of the essential elements to implementing successful PPPs, particularly for the benefit of the poor. While there are legitimate concerns about the use of PPPs, some are unlikely to be relevant in practice. Clearly, PPPs – like any other education reform – should not be oversold nor seen as a panacea for improving education performance in developing countries. A variety of factors, both internal and external to the education system will influence the extent to which PPPs (or any other school reform) can deliver successful outcomes for children. Despite this, it seems that PPPs do have some advantages as policy tools and can play a role in broadening access and lifting the quality of education in developing countries.

As discussed below, a range of PPP models can be explored, and the degree of benefits and risks associated with PPPs with respect to equity cannot be generalized for all populations and across different levels of education. The wide range of PPPs in place across a number of developed and developing countries suggests they offer a flexible model that can be adapted to differing local circumstances. To be sure, moving towards the establishment of effective partnerships is a gradual process that can only be achieved in incremental and deliberate steps, beginning with no less than the

72 Patrinos, H. et al . 2009. The Role and Impact of Public-private Partnerships in Education, World Bank, Washington DC, pp. 33-34.

73 Ibid., pp. 35-41.

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State’s recognition of the private sector as a potential partner in the goal to achieve education for all. A key to progress in the implementation of PPPs in the education sector is to overcome concerns amongst both policymakers and the wider public about the potential for private sector involvement in education and the potential for PPPs to assist DMCs in meeting their economic, social and educational objectives.

MODELS OF PUBLIC-PRIVATE PARTNERSHIPS WITH A FOCUS ON THOSE TARGETING THE POOR

Despite the fact that many EAP countries have quite large private education sectors – one of the pre-requisites to development of PPPs – there are comparatively few PPPs in operation in EAP countries. As has been documented in a number of publications, there is a wide range of education PPP models in operation around the world, including a small number in EAP countries such as Hong Kong, Indonesia and the Philippines. This section outlines some of the PPP models that exist in the education sector in EAP and elsewhere. The section begins with a classification of education PPPs according to different types. For the purposes of this report, PPPs are categorized into five categories: (i) education service delivery initiatives, (ii) infrastructure initiatives, (iii) voucher and voucher-like initiatives, (iv) professional and support services and (v) philanthropic initiatives (Table 5).74

Educational service delivery initiatives generally involve programs under which a government agency such as the Ministry of Education purchases places for students in private schools. These arrangements are often used in cases where there is insufficient space in, or a complete lack of, spaces for students in local public schools – particularly in poor areas. Thus governments may see the use of contracting with the private sector as a cheaper option than either expanding an existing school or building a new one. These PPP programs generally share a number of design features. Key features of these include:

A formal contractual arrangement between the government and the school. Contracts may be either short and simple or lengthy and complex.

Payments are demand-driven with the school paid for each student they enroll. The per-student payment may be a fixed amount per student or the amount may differ depending on the student's grade level or other factors such as gender (ie. schools may be paid more for each girl they enroll). Schools cannot charge fees above the level of subsidy provided, so the education is free to the student.

Schools must meet certain criteria in order to enter the program – for example, they must be registered or meet other minimum standards relating to teachers and infrastructure.

Schools are generally held accountable for student performance. Those that do not meet the required standard of instruction (as determined by test scores or some measure of quality) may be removed from the program.

The program is open to for-profit or not-for-profit schools.

74 This classification is similar to that outlined in LaRocque, N. 2008. Public-private Partnerships in Basic Education: An International Review, CfBT Education Services, and LaRocque. N. 2005. Contracting for the delivery of education services: a typology and international examples. Program on Education Policy and Governance. Working Paper 05-07. Cambridge, MA: Harvard University Press.

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Table 5: Classification of PPPs in Education

PPP Type Examples

Education Service Delivery Initiatives

Contracting with private schools for delivery of education services

Contracting with private providers for delivery of specialist curricula

Provision of tutoring services Private management of public schools

Voucher and Voucher-like Initiatives

Publicly and privately financed voucher programs Targeted scholarship programs Payment of subsidies to students at private schools Education tax credits/tax assistance

Professional and Support Services

Teacher training Curriculum design School review/evaluation services Ancillary services such as food and transportation services Educational testing and school rating services

Infrastructure Initiatives

Private Finance Initiatives - finance, construction and maintenance of core and non-core educational assets

Private leasing of public school facilities Equipping and maintenance of IT laboratories

Philanthropic Initiatives Scholarships, private voucher programs School sponsorships Adopt-a- School programs School construction

Source: Adapted from LaRocque (2008) and World Bank (2009).

There are a number of examples of such programs in EAP and elsewhere. The Philippines Education Service Contracting (ESC) Scheme, which was introduced in the 1980s, is one of the largest educational service delivery programs in the world and is one of the largest in the world (Box 2). There are a number of other examples of educational service delivery initiatives, including the Universal Secondary Education program in Uganda, which pays a subsidy for each student enrolled in eligible private secondary schools (ie. those in sub-counties that are not served by government-aided or public schools). Assistance under the program is targeted at low-fee schools and is well below the average per-student subsidy paid to public schools. In 2008, there were some 430 private secondary schools – serving approximately 56,000 students – participating in the USE program, up from 363 schools and 42,000 students in 2007.

A second example is the Foundation Assisted Schools (FAS) Program operated by the PEF in Pakistan. That program pays participating schools Rs350 per month per student for each student enrolled. Schools are located ion poor urban and rural areas in Punjab province of Pakistan. School cannot charge tuition fees. Continued participation in the program requires that students at participating schools meet performance standards. The program was introduced in late 2005 and has expanded rapidly – from 54 schools and 20,000 students in late 2005 to 1,157 schools and 500,000 students in early 2008. The Sindh

25

Education Foundation (SEF) is introducing the Promoting Private Schooling in Rural Sindh (PPRS) program, which will use a PPP model to increase access to basic education in rural areas of Sindh Province in Pakistan. The PPRS will operate like the PEF FAS model and is being supported by a World Bank loan. In 2010, the SEF expects to establish 100 schools under the program. The Baluchistan Education Foundation (BEF) has also introduced a PPP program under which it selected private school operators to set up 300 low-fee schools over the project period in rural and semi-urban areas of the province.

In February 2007, the Government of Uganda introduced a policy of Universal Secondary Education (USE). Under the policy, the government pays a subsidy for each student enrolled in eligible private secondary schools. Participation in the USE program is limited to private secondary schools in sub-counties that are not served by government-aided or public schools. Only schools charging no more than Ush75,000 per student per term can participate in the program. Participating schools are chosen by the Ministry of Education and Sports and receive a subsidy of Ush47,000 per student per term – well below what participating government-aided schools receive. A Memorandum of Understanding is signed with individual private schools to ensure compliance with the policy’s implementation guidelines. In 2008, there were some 430 private secondary schools – serving approximately 56,000 students – participating in the USE program.

The Venezuelan Association of Catholic Education (AVEC) runs over 700 Catholic schools, most of which deliver education to poor children. In 1990, the Ministry of Education, Culture, and Sport (MECD) struck an agreement with AVEC to provide subsidies to private schools located in low-income urban and rural areas, indigenous communities, vocational schools, and those schools that were only able to cover up to 85 percent of operational costs. Fe y Alegria schools form a large body of AVEC schools. In 2005, government subsidies to AVEC schools amounted to almost $49 million, covering 483,000 students.

The agreement between MECD and AVEC holds AVEC schools to higher degree of accountability for performance than public schools.75 Whereas there are no conditions imposed on public schools, AVEC

75 Mora, J.G. (2005) Public-Private Partnerships in Latin America: A Review Based on Four Case Studies, Paper presented at the Conference on Mobilizing the Private Sector for Public Education, October 5-6, Harvard University, Cambridge, MA.

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Box 2:Education Service Contracting, Philippines

Under the ESC program, the government contracts with private schools to enroll students in areas where there is a shortage of places in public high schools. The per-student payment to private schools can be up to PhP4,000 and cannot exceed the unit cost of delivery in public high schools.

ESWC is one of a number of programs that comes under the Government Assistance to Students and Teachers in Private Education (GASTPE) program. Subsidies under ESC are generally restricted to students at schools that charge low fees, and preference is generally given to students from low-income families. The GASTPE scheme is administered by the Fund for Assistance to Private Education, a private not-for-profit organization. The Department of Education has introduced a certification program for schools participating in ESC, which aims to address concerns about the quality of education at some schools.

In 2005/06, over 380,000 students in 1,833 participating private schools were subsidized under the ESC program. Grantee numbers and participating schools are up from just 4,300 and 158 respectively in 1986/87. The number of grantees and participating schools are up considerably since 2003/04.

Source: LaRocque (2008)

schools must provide financial statements to MECD regarding the use of funds and present an annual management report. Supervision is also a large part of the AVEC model: supervisors visit the schools twice a year to assess the academic and operational situation. This information is then compiled for future analysis.

Private management of public schools involves the government contracting directly with private providers to manage/operate public schools. Although these schools are privately managed, they remain publicly owned and the government remains ultimately responsible for their performance. Contract schools can be run by a variety of for-profit, not-for-profit and community organizations.

Schools are paid a fixed amount per student or are paid a management fee. Privately managed schools are subject to performance benchmarks. Unlike the previous category of PPPs, the infrastructure used to teach students is publicly, rather than privately, owned. Privately managed schools are generally used in poor and disadvantaged areas. Teachers may be subject to centralized government contracts or may work under more flexible contracts under local control.

One example of a privately managed public school program is the Concession Schools model in Bogota, Colombia. Under the Concession Schools program, newly constructed public schools are managed by private operators. To be eligible, private operators must be organizations with a good track record. Private providers are chosen by a competitive selection process. Contracts are 15 years in length and schools have considerable management autonomy, including being exempted from inflexible pay and employment legislation. Schools are paid $500 per student per year – about what public schools are paid, although they operate for a full day, rather than a half day as do their public counterparts. Schools are located in disadvantaged areas. Concession schools are subject to formal contracts that specify delivery standards, including educational outcome targets. There are some 25 schools serving over 26,000 students and plans for further schools.

Under the Lahore program, a local NGO – Cooperation for Advancement, Rehabilitation and Education (CARE) – manages more than 170 public schools on behalf of the City District Government of Lahore (CDGL). However, unlike most private management models, CARE does not receive any compensation from the CDGL. Instead, it raises philanthropic funds to increase schools' budgets to pay for extra teachers, books, pedagogical aids, etc. CARE schools operate with a mix of publicly funded regular teaching staff, publicly funded contract teachers and teachers hired by CARE using its philanthropic funds. Some CARE schools also participate in the FAS program operated by the PEF (see above). Developments in Learning (DIL) is another NGO in Pakistan that operates a mixed school adoption/private management model. Under that model, DIL provides additional funding for its 'adopted' public schools and contracts with private providers to manage those schools.

Other examples of this model exist, including one operating in Lahore (Pakistan), Transformed Schools in PRC, Fe y Alegria in South America (Box 3) and the 'contract schools' model in the United States of America.76

76 LaRocque, N. and V. Jacobsen. 2000. Minban: A Market and Regulatory Survey of Private Education in China (A Tale of Two Kitties), Arthur Andersen, Wellington and LaRocque, N. 2008. Public-private Partnerships in Basic Education: An International Review, CfBT Education Trust, Reading.

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Voucher and Voucher-like Programs. School vouchers are a certificate or entitlement that parents can use to pay for the education of their children at a public or private school of their choice, rather than the public school that is closest to them or to which they have been assigned. Vouchers are paid directly from a public entity to parents or to schools directly on parents’ behalf. Voucher programs are in many ways similar to the educational contracting models described above – fixed payment per student – although they differ in that, with vouchers, the government does not 'bulk buy' places at a particular school as they do under school contracting schemes. In both cases, however, the decision to attend a particular school is made by the parents, rather than the government. It could be argued that the voucher model reduces the single buyer risk (ie. the significant revenue loss if the contracting agency decides not to renew a school's contract). However, schools that participate in voucher schemes are likely to face similar risks in that they generally need to meet certain pre-conditions in order to remain in the voucher program.

Voucher programs may have quite different design features and associated rules and regulations relating to eligibility, fee charges, school registration and student admissions. For example, some programs may allow schools to charge fees on top of the value of the voucher, while others may not. In essence, governments use vouchers to “contract out” enrolment of students or buy outputs, which allows expansion of access more quickly through existing schools rather than building and equipping new schools. Another important reason for use of vouchers is that they can promote competition and choice, which in turn can lead to improvements in innovation and efficiency in both public and private schools. Vouchers can also be much better targeted to the poor and disadvantaged students and gives

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Box 3:Fe y Alegria, South America

Fe y Alegria (FyA) is a Jesuit controlled NGO that operates formal pre-school, primary, secondary and technical education programs in the poorest communities in Latin America and Spain. The program began in 1955 and has since spread to 14 other countries. FyA’s primary mission is to provide quality education to poor people, to ensure that students complete at least the basic cycle of schooling, and to establish schools that operate on behalf of community development. Under the FyA model: ministries of education pay the salaries of teachers and the principal; foundations, international agencies and voluntary fees from the local community pay for the

land, construction and maintenance of schools; the community invites FyA to open a school and builds it; and FyA trains and supervises teachers, manages the school and assists it in its operation as a

community development centre.

A national office coordinates the network of FyA schools in each country, while overall coordination is provided by headquarters in Venezuela. Most FyA schools are located in rural areas, but some are found in or near urban slums. FyA schools can be either public or private, although a majority are public. Schools generally enjoy considerable autonomy – they can appoint school directors and teachers without state or teacher union interference. The central curriculum is supplemented with locally developed materials. FyA schools do not charge compulsory fees. The main indicator of school performance is student retention. In 2005, there were more than 1.2 million students in the FyA network – up from just 220,000 in 1980. Over 500,000 of these FyA program participants were in formal education programs.

Source: World Bank (2009)

them a wider range of educational choices, since they can attend public or private schools. Governments can use vouchers to target low-income students, and hence, publicly funded vouchers could provide higher quality of education at a lower cost than would be possible through only public provision. In addition, many nonprofit, private schools subsidize publicly funded students, in which case vouchers allows them to benefit from the higher fees paid by privately funded students. 77

Voucher schemes are much more common than either school contracting or school management programs and exist in a number of developed and developing countries, including Pakistan, Chile, the Netherlands, Colombia (Box 4), Hong Kong, New Zealand and the Unites States of America. These include programs with national coverage those with sub-national coverage. There are also a number of examples of voucher-like programs. Although such programs are not vouchers in name, they are similar to vouchers in that they provide subsidies (full or partial) to private schools or to students attending private schools. In some cases, assistance may involve a per-capita subsidy, while in other cases, assistance may be in-kind (eg. teachers). The difference between vouchers and some voucher-like programs is marginal at best – often the only difference is whether the voucher is full or partial. While voucher-like programs may involve payments direct to schools (as opposed to certificates to be redeemed by families), many are, for all intents and purposes, vouchers in that they involve demand-based financing triggered by student enrolments.

There are many examples of voucher programs. The Netherlands and Chile operate national voucher programs. The voucher program in the Netherlands applies to both public and independent schools. Not-for-profit organizations and parents can set up schools if they meet certain minimum requirements.

77 World Bank. 2006 “Columbia Contracting Education Services.” Report 31841-CO. Washington, D.C.

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Box 4:Plan de Ampliación de Cobertura de la Educación Secundaria (PACES), Colombia

In the 1990s, Colombia experimented with a targeted voucher program whose objective was to increase access to secondary schooling for children from poor families. PACES provided 125,000 vouchers during its six years in operation from 1992 to 1997. The program offered vouchers to students entering sixth grade, the start of Colombian secondary school. Key elements of the program included: vouchers were available to children from low-income families who had attended a public

primary school and who had been accepted at a private school; vouchers renewal was linked to satisfactory academic performance; the value of the voucher was $US190 – about half the cost of attending a private

secondary school; the voucher was deposited by the student and the school received funds directly from the

bank, rather than an intermediary; schools were allowed to charge top-up fees; and there was minimal regulation of private

schools

As noted by Patrinos (2005), the program led to considerable enrolment increases, especially for the disadvantaged, at a low cost to government. The quality of education provided under the program was at least comparable to that provided in public schools, yet the per beneficiary cost of the program was about 77 percent of the unit cost of public secondary education.

Source: LaRocque (2008)

Box 5:Primary School “Lunch” Program, Mongolia

In Mongolia, approximately one-third of primary school children are reportedly under-nourished, especially during spring time following the long winter months. A daily intake of 200 ml of milk is widely recognized to provide children with sufficient amount of protein, energy, key micro-nutrients and vitamins, improving their overall nutritional status.

In 2006, the Government of Mongolia launched a school lunch scheme for primary school children, under a public-private partnership arrangement. As a result of intense lobbying by the Mongolian Food Industry Association, only domestic produce is used, with eighty percent of meals provided by local dairy enterprises. Also known as the “milk scheme,” the program aimed to provide children with nutritious snacks to improve their health and learning capacity as well as overall school attendance, particularly among poor families. Policy was developed to allow local governments and school administrators to select private providers through bidding of contracts. In the 2007-2008 school year, an estimated 9.7 billion MNT was spent for about 187,600 children in grades 1-4.

A few years since the launch of the program, reports of its impact have been mixed. Some noted modest reductions in truancy and improvements in study habits. However, many raised concerns of poor quality products as well as high levels of corruption and nepotism among school officials engaged contracting processes. In 2007, an audit of the program conducted by the National Audit Office (NAO) found evidence of widespread misuse of funds and limited transparency in schools with respect to program budgeting, planning and selection of suppliers. The experience reveals the critical importance of effective monitoring and oversight to ensure adherence to appropriate standards and practices to realize the full benefits of public-private partnerships.

Source: “Lunch Program Implementation is Insufficient.” By B. Bolortuya. July 2008. Mongolian National News Agency. http://www.montsame.mn/; Joint UN Food Security Assessment Mission to Mongolia. FAO/UNICEF/UNDP, April 2007; and Mongolia: Project Completion Report. Government of Mongolia-Japan-FAO Dairy Food Security Project. FAO. 2007

Funding follows the student and schools receive the equivalent of the per capita cost of public schooling for each student enrolled. The number of teachers to which each school is entitled is determined by student numbers. Schools are free to supplement their government funding, but this is severely limited. The Ministry of Culture, Education and Science places a number of requirements on schools in relation to the quality of education delivered. Schools serving disadvantaged students receive higher per-student subsidies.78 The Chilean voucher program was introduced in 1980 and covers public and private (secular and religious) schools. Schools receive monthly payments based on the number of students enrolled. Initially, subsidized schools could not charge fees, but this has been changed. Nonetheless, vouchers do cover most or all of the tuition cost at eligible schools. Voucher schools must follow certain operating guidelines relating to basic facilities, employment of certified teachers, class sizes and so forth.

There are several other examples of voucher programs, including the Swedish school choice program, the voucher program operated by the PEF in Pakistan and several city and state-level programs such as

the Milwaukee Parental Choice Program. New Zealand operated a voucher scheme – the Targeted Individual Entitlement – in the 1990s that provided private school vouchers to students from lower income families. Several countries, including Bangladesh, New Zealand, Canada, Senegal and Australia operate voucher-like subsidy programs that are, to various degrees, similar to voucher programs.

78 Patrinos, H. 2010. Private Education Provision and Public Finance, Policy Working Paper 5185, World Bank, Washington DC, pp. 5-8.

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Several countries also operate voucher-like programs at the pre-school level, including the Philippines (a small program similar to the ESC discussed above), Hong Kong, New Zealand and Australia.

Professional and Support Services. Governments also make considerable use of PPPs for the delivery of education professional and support services such as school evaluation/school review, teacher training and textbook publication. Examples include CfBT Education Trust, which undertakes school evaluations for public schools in Dubai on a regular basis. Non-instructional services, such as transportation and school meals can also be contracted out through PPPs. One example is the Mongolia Primary School Lunch Program (Box 5). Generally, PPPs for professional and support services allow governments to utilize private expertise and efficiency on particular services as well as economies of scale to increase cost-effectiveness and release schools and education officials to focus on teaching. The relative ease with which the quality of inputs can be specified and monitored through contracts makes this type of PPP one of the least risky partnerships, and some form of professional and support service contracts exist virtually in every public education system around the world.79 Innovative use of targeted support and pro-poor criteria also enables governments to use these types of PPP to address disparities and reduce inequality in enrolments and completion, especially amongst the poor.

Educational Infrastructure Partnerships. PPPs are an increasingly common form of procurement for large infrastructure projects in the education sector. Infrastructure PPPs can be structured in a variety of ways (Table 6). Under the most common type of PPP arrangement – Build-Operate-Transfer (BOT) – a private operator is granted a franchise (concession) to finance, build and operate an educational facility such as a public school, university building or hostel. The government, in effect, leases the facility from the private sector for a specified period, after which the facility is transferred to the government.

performance standard.

Table 6: The range of options for PPP in infrastructure

Type of Partnerships FeaturesTraditional designand build

Operations andmaintenance

Turnkey operation

Lease-purchase

Lease or own-develop-operate

Build-operate-transfer

Build-own-operate

The government contracts with a private partner to design and build a facility to specific requirements.

The government contracts with a private partner to operate a publicly owned facility.

The government provides financing, the private partner designs, constructs, and operates facility for a specified time period, while the public partner retains ownership of facility.

The private partner leases a facility to the government for a specified time period, after which ownership is vested with government.

The private partner leases or buys a facility from the government and develops and operates the facility under contract to the government for a specified time period.

The private partner obtains an exclusive contract to finance, build, operate, maintain, manage, and collect user fees for a facility for a fixed period to amortize its investment, and at the end of the franchise, the title reverts to the government.

79 Ibid.

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The government either transfers ownership and responsibility for an existing facility or contracts with a private partner to build, own, and operate new facility in perpetuity.

Source: World Bank 2006.

While arrangements can differ widely, infrastructural PPPs have a number of characteristics in common. Private sector partners invest in school infrastructure and provide related non-core services (e.g. building maintenance); the government retains responsibility for the delivery of core services such as teaching; arrangements between the government and its private sector partner are governed by long-term contracts – usually 25–30 years. Contracts specify the services the private sector has to deliver and the standards that must be met; service contracts are often bundled, with the private sector taking on several functions such as design, building, maintenance and employment of non-core staff; and payments under the contract are contingent upon the private operator delivering services to an agreed

Infrastructure PPPs differ from traditional procurement methods in several ways. First, the private sector provides the capital required to finance the project. Second, the government specifies the contract in terms of ‘outputs’ or service level requirements, rather than in terms of ‘inputs’. Third, the newly constructed facility is not turned over to the government upon completion. As noted above, it is operated by the private sector until the end of the contract period.

Education Philanthropy. One of the most common forms of partnership at the Basic Education level between the public and private sectors is educational philanthropy. There are any number of examples of individuals and private sector firms donating goods, services or cash to schools in either an ad-hoc fashion or as part of an organized Corporate Social Responsibility initiative. Educational philanthropy can also involve broader programs to improve education through the development of new forms of educational provision, policy advocacy, financing of scholarships/vouchers and other initiatives. For example, India’s Bharti Foundation committed $50 million to the creation of strictly non-profit, private schools in the nation’s poor rural areas. Corporate foundations in the Philippines are well organized and donate considerable amounts to schools, both through the country’s Adopt-a-School program (se below) and through various other initiatives. This work is coordinated by an umbrella group – the League of Corporate Foundations – which has developed a roadmap of corporate giving to the education sector. Corporate foundations in the Philippines donated $P543 million in 2007 – up from just P189 million in 2002 (Table 7). This assistance included infrastructure/facilities, teacher training, TVET, ICT integration, tertiary education, curriculum support and health/social services.

One form of education philanthropy that is common in the Basic Education sector is adopt-a-school (AAS) programs. While these programs may have different objectives, broadly they seek to encourage the private sector (individuals, corporations and NGOs) to partner with the government to address problems in public schools such as shortages of classrooms, desks and textbooks, to improve quality or to broaden educational access.

The Sindh Education Foundation (SEF) operates an AAS program in the Pakistan province of Sindh. Under the program, which was launched in 1997, government schools are adopted by private individuals, companies or organizations. The program aims to improve government schools in the area of quality, access, infrastructure and community participation. The SEF acts as facilitator between the school and the adopting body and provides ongoing technical support and monitoring of

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processes and outcomes. Other AAS programs exist in Pakistan, including one operated by the Pakistan Center for Philanthropy.

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Table 7: Total Amount of Philanthropic Investments in Education, 2002-2007

189165

194

296

367

543

0

100

200

300

400

500

600

2002 2003 2004 2005 2006 2007

Mill

ions

of P

esos

Source: Investing in Education, League of Corporate Foundations

The AAS program in the Philippines was established in 1997, although it did not come into effect until 2003 when the implementing Rules and Regulations and the regulations authorizing the tax incentives associated with the program were approved. Under the program, private entities are allowed to assist a public school or tertiary institution, preferably located in the twenty poorest provinces of the Philippines. This assistance can involve any number of activities, including staff and faculty development for training and further education, construction and upgrading of facilities, provision of books and other instructional materials and modernization of instructional technologies. Donors are eligible for tax breaks for donations. By 2006, some 22,000 schools had benefited from more than $50 million provided by 300 donors under the AAS program.

PPPs and Pro-poor Policies

From the above brief survey, it can be seen that there is a wide range of PPP models in use in both developed and developing countries, the bulk of which target the poor or disadvantaged. These models include educational service delivery programs, voucher and voucher-like programs, private management programs, infrastructure PPPs, professional support services and adopt-a-school models. On the other hand, philanthropic initiatives such as AAS programs generally involve private financing (rather than delivery) of education. Infrastructure initiatives are a hybrid – involving elements of both financing of school buildings and delivery of ancillary services such as building maintenance. In all cases, there is ample scope to design these models to address inequities in access and quality and to lever the private sector to help overcome inequities in existing school systems, rather than reinforcing them.

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The categories of PPP differ in other ways as well. In the case of voucher and educational service delivery PPPs both involve 'core' educational services – ie. teaching related activities. In contrast, infrastructure initiatives involve the financing and delivery of services that are not part of the 'core' mission of schools, namely building management. In that sense the latter's impact on educational outcomes is likely to be less direct than the impact of educational contracting or vouchers. Professional and support services are a hybrid, with some services involving 'core' educational services such as teacher training and curriculum design, while others such as ancillary services involve 'non-core' services such as food and transport services.

Many EAP countries face significant educational challenges related to access and quality of delivery. A number also have large and growing private education sectors – an important pre-requisite for introducing PPPs. Despite this, there is comparatively little use of PPPs in EAP countries. Indeed, regions such as South Asia and Latin America seem to be the regions making the most use of the private education sector in education.

The private education sector has not traditionally been seen as a vehicle for helping the poor or disadvantaged communities. Rather it has commonly seen as a preserve of the rich. This section has shown that is false. Indeed, private schools serve large and growing numbers of poor children. Well-designed PPPs offer developing country governments another potential policy tool for harnessing the skills and talent in the private sector to help improve access and quality for children who are poorly served or not served at all by the public school system. This section has highlighted a number of examples of PPPs that either have operated or are currently operating that focus on serving the needs of the poor – including the Concession Schools and PACES voucher in Colombia, the Education Service Contracting Scheme in the Philippines, the PEF FAS and the Education Voucher Scheme (EVS) programs in the Punjab province of Pakistan and the Adopt-a-school programs in the Philippines and Pakistan.

PPPs provide governments with an additional mechanism for increasing educational access among disadvantaged groups, including the poor and those in remote regions who are underserved or not served at all by the existing school system. PPPs can be targeted toward particular groups of beneficiaries – whether based on geography, gender or other factors. In addition, it is often easier to implement a targeted policy instrument using private schools because the private sector operates within a more flexible regulatory environment that allows increased scope for innovation. In addition, as Lewin and Sayed (2005) note, contracts with private providers increase the government's ability to influence non-government provision in a pro-poor way through conditions attached to subsidy.80

80 Lewin, K. and Y. Sayed. 2005. “Non-Government Secondary Schooling in Sub-Saharan Africa: Exploring the Evidence in South Africa and Malawi.” London: Department for International Development, p. xii.

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IV. MAKING PUBLIC-PRIVATE PARTNERSHIPS WORK: REGULATION AND IMPLEMENTATION

PPPs can bring great potential to improve the education sector and address disparities. Sound policy and regulatory frameworks that encourage private involvement in education, well-designed contracts and robust institutional capacities will all encourage the effective implementation of PPPs. Governments, duty-bound to ensure the fulfillment of rights to education of all children, bear the responsibility to ensure all three factors are integral part of all education partnerships. Failure to do so can not only result in the loss of opportunity to improve both access and the quality of education, but also create government exposure to financial and policy risks.

FOSTERING A VIBRANT PRIVATE EDUCATION SECTOR

PPPs involve agreements between the public and private sectors on agreed targets, outputs and goals, sometimes through formal contracts with a specified timeframe. Partnerships require partners. In order to operate effectively, PPPs require a vibrant and dynamic private education sector. Governments can promote the use of PPPs for the poor by taking steps to facilitate the involvement of the private sector in education. One of the most important ways it can do that is to create an enabling policy and regulatory environment that encourages private involvement in education, allows private providers to operate effectively and efficiently, and promotes the delivery of quality education. Whether engaged in direct service delivery or in broader policy advocacy for education, the private sector – broadly defined to include for-profit institutions, NGOs and faith-based organizations – requires a sound policy and regulatory framework if it is to assist governments to meet their educational and wider objectives.

However, throughout the region, several common weaknesses are found in the overall policy and regulatory environment for private actors in education.81 Underlying those weaknesses are the prevailing historical, social and political realities of many countries, where popular views of the roles of public and private sectors heavily favor the former in defining the public interest, and thus, delivery of basic goods and services and policy formation.82 Private funding and delivery of education services may be perceived with particular suspicion, with actions of private providers regarded as possible threats to State authority (rather than complementary or as agents of government programs), and in the case of for-profit institutions, the profit motive may be seen as incongruent with the perception of education as a social rather than commercial good. Therefore, while private actors with relatively limited scope of mainly charitable mandates are generally accepted, those engaging in policy advocacy and social service delivery are often marginalized from legitimate means to participate in their endeavors. This is most evident at the primary education level, where, unlike pre-primary and secondary education, political

81 For a more detailed discussion, see Fielden, J. and N. LaRocque. 2009. The Evolving Regulatory Context for Private Education in Emerging Economies, World Bank, Washington DC; LaRocque, N. 2008. Public-private Partnerships in Basic Education: An International Review, CfBT Education Services, pp. 38-47; and Patrinos, H. et al. 2009. The Role and Impact of Public-private Partnerships in Education, World Bank, Washington DC, pp. 43-58.

82 For more on the historical accounts of the role of central governments and the private sector, see Yamamoto, T. (ed). 1995. “Emerging civil society in the Asia Pacific Region”, Singapore: Institute of Southeast Asia Studies.

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commitments to free and compulsory education seem to create greater political sensitivities to engaging with the private sector due to either political factors or the association of “private” education with user fees and increased inequity. These weaknesses are discussed briefly in turn.

First, governments are often reluctant to recognize explicitly the role played by the private sector in legislation or in education plans and strategies developed across the region. In some cases, government may ban outright the existence of private schools or may limit the number that can be established. This is not always the case as some countries, including PRC and the Philippines provide explicit Constitutional or legislative recognition of the private sector's role in education. In addition, some countries with dominant religious affiliations (e.g., Indonesia, the Philippines and island states in the Pacific) explicitly mention the contribution of the church to education development. In the case of Philippines, the role of NGOs is also institutionalized in its Constitution of 1987 as well as in relevant development strategies.

Second, government school registration criteria and processes often limit the scope for new private providers to establish themselves. These regulations include minimum requirements for a school's land area or minimum requirements for building space, onerous approval processes or high registration fees. The objective of many of these regulations is laudable – to protect consumers from sub-standard education services. However, this objective must be balanced against the adverse impact that overly restrictive establishment criteria can have on schools' ability to set up, especially in under-served or poorly served areas. The administration of regulations pertaining to private providers can often be inconsistent, subjective and non-transparent, all of which provide opportunities for corruption. Overlapping jurisdictions – across Ministries and between different levels of government – can result in rules and regulations that are contradictory and difficult to implement.83 Limits on the entry of new schools – due to inappropriate criteria or to cumbersome/non-transparent processes – can raise the costs of provision to such a degree that potential providers are deterred from setting up or newly created schools must charge such high fees that children from poor families cannot afford to attend. They may also push schools to operate as unregistered or clandestine providers, meaning that the poor who attend these schools have no legal or regulatory protection. The costs of such regulation will fall disproportionately on the poor, who have fewer education options than others.

Third, the ability of the private (non-government) sector to flourish is further limited by weaknesses in the legal framework for not-for-profits. In some countries, there is simply no legal form for NGOs, while in others, it is typically more difficult to register "associations" such as NGOs than to register commercial institutions and charitable “foundations”.84

Finally, education policies in the region generally restrict funding to public schools only – irrespective of whether particular schools serve the rich or poor. Limiting funding only to public schools does little to encourage the spread of private schools or to promote quality in private education – particularly in areas with education and limits the entry of private schools – especially those that might serve poorer

83 Ibid.84 NGOs can be distinguished between “foundations,” a collection of assets, and “associations,” a collection of

people. See: Baron, Barnett. The Legal Framework for Civil Society in East and Southeast Asia. Opening remarks for a workshop held at the Catholic University of America, Washington, April 12, 2002. Available at http://www.icnl.org/journal/vol4iss4/ar_baron1.htm. [Accessed on 15th March, 2010].

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populations. Over the longer term, this is likely to reduce both the quality and sustainability of the private school sector in developing countries.

Governments can do a number of things to address the above problems. They can provide legal recognition for private providers – both for-profit and not-for-profit – which offers a platform for building political and public support for private sector involvement in education. Governments can also ensure there is a legal framework in place for not-for-profits and encourage the creation of new private schools by implementing establishment criteria that are: attuned to the local context, objective and measurable, open to all prospective private school entrants and focused on outputs and outcomes, rather than inputs. Improvements can also be made to streamline school registration processes, including ensuring that such processes are time-bound and that all establishment requirements are transparent, set out in advance and applicable to all potential school operators.

Governments can promote investment in private education by following the lead of countries as diverse as the Philippines, Pakistan, Bangladesh, Senegal, Australia and Canada by opening up government funding to private schools. Such funding can be provided either in cash (eg. subsidies, vouchers, contracting) or in-kind (free or discounted land, building materials or water pumps). Funding should be open to both for-profit and not-for profit providers and should be targeted at poor students and schools serving low income populations. Finally, policymakers can also improve the functioning of the education system by ensuring that families are well informed about the performance of schools, either through public dissemination of school test scores or introducing independent school review systems to provide information on schools’ performance.

Governments can also promote PPPs by offering tax breaks and incentives to businesses that adopt a school or make contributions to school systems and provide funding to private and faith based institutions to carry out teacher training or other technical support activities, with supporting policies and clear financial viability.

DESIGNING AND IMPLEMENTING PUBLIC-PRIVATE PARTNERSHIPS

Section III outlined a number of examples of PPPs that could be introduced in the education sector. To be successful, PPPs must be well designed and well implemented. The design of PPPs should be based on an assessment of the appropriate role of government in education and the specific context in which they are proposed. PPPs such as vouchers, contracting and private management of public schools all involve government finance of education delivered in private schools or by the private sector. In this way, they recognize the range of policy instruments available to government, the need to distinguish between the financing and provision roles of government and the fact that there are strong arguments to support a role of government in education that is limited to finance and regulation. 85 PPP design should reflect a number of factors, including:

the objectives sought (ie. improve access, enhance quality, increase efficiency of delivery);

the nature of targeting and the target group to be assisted (ie. girls, ethnic groups, remote geographic areas); and

85 Poterba, J. 1996. ‘Government Intervention in the Markets for Education and Health Care: How and Why?’, in Fuchs, V. (ed.) Individual and Social Responsibility: Child Care, Education, Medical Care and Long-term Care in America, National Bureau of Economic Research, University of Chicago Press.

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'market' factors such as the extent of the existing private school network, the potential for new education providers to establish themselves and the extent of the existing not-for-profit delivery network.

For example, voucher programs are more likely to be successful in situations where there are large numbers of private schools that could accept publicly financed students. On the other hand, contracting arrangements may be more appropriate in rural areas that are under-served by the public sector system. Vouchers or scholarships may be better suited than contracting arrangements to targeting access for disadvantaged girls or ethnic groups, while contracting arrangements may be better suited to targeting access for a particular geographic area. The equity impact should be a key consideration in the design and selection of education PPPs if the objective is to address the causes of poverty. PPPs may also reflect ‘social responsibility’ factors, such as the ethos of charity and corporate social responsibility trends in the private sector, civil society and self help groups to augment government provision of education to disadvantaged groups.

Good PPP design, while critical, is not sufficient to ensure the success of a PPP in education. To be successful, education PPPs must also be well implemented.86 An important factor in the successful design and implementation of education PPPs is the need to ensure that the government agency responsible for these partnerships has the resources, information, and skills needed to design, develop, and manage the contracting processes that underlie PPP programs. PPPs require a significant mindset change among public sector officials – from seeing their role as managers of inputs to seeing themselves as contract managers with a focus on outputs delivered and on program outcomes achieved. To be effective and build support for PPP programs, it is essential that bidding processes be seen as fair, transparent and competitive. Bidding for service delivery contracts such as school management initiatives or private finance initiative contracts should be open to all private organizations, including both for-profit and not-for-profit providers. A well run bidding process is likely to have positive effects in both the short and long term, yielding bids that offer value for money, minimizing the potential for corruption in contract awards and building market confidence in PPPs thereby encouraging growth in the private education market. A crucial component of any PPP in the education is an effective communication plan. Such a plan can help to overcome opposition to private involvement in education and highlight the benefits of the programs introduced.

V. UNICEF/ADB AND PUBLIC-PRIVATE PARTNERSHIPS IN EDUCATION

In recent years, the ADB has made a strong commitment to the expansion of private involvement in education and to the use of PPPs in the sector. For example, the ADB Education Policy (2002), states that the ADB "will actively support private sector education institutions and education-related industries and services … when this is clearly the more cost-effective alternative."87 More recently, the ADB's long-term strategic framework Strategy 2020 (2008), made a further commitment to "explore opportunities for new approaches and instruments involving public-private partnerships" across all education levels. 88 The ADB's Education and Skills: Strategies for Accelerated Development in Asia and the Pacific report (2008) 86 For a more detailed discussion, see LaRocque, N. 2008. Public-private Partnerships in Basic Education: An

International Review, CfBT Education Services, pp. 38-47; and Patrinos, H. et al. 2009. The Role and Impact of Public-private Partnerships in Education, World Bank, Washington DC, pp. 43-58.

87 Asian Development Bank. 2002. Education Policy, Manila, p. 40.

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identified scope for innovative partnerships at both the Technical Vocational Education and Training and higher education levels.89

A recent study examined all ADB education projects from 2000-2009 and found that just under 40 percent of those projects included some kind of a PPP component, including voucher or voucher-type programs, capacity building initiatives, government purchase arrangements and private management of public institutions. About one-quarter of the projects that included PPPs involved voucher/voucher-type arrangements or private management. The bulk involved capacity building or similar initiatives. Education PPPs were most common in South Asia and in Bangladesh in particular.90 There are few examples in the region, however, of PPP projects in education the explicitly address the educational needs of the poor and other disadvantaged communities.

The ADB is currently undertaking a number of other initiatives aimed at promoting the use of PPPs in ADB projects, including development of a PPP strategy study to support implementation of education PPPs in ADB, preparation of draft assessment instrument for PPPs in education, preparation of case studies of lessons learned from the international experience with PPPs in education and development of a toolkit for implementing PPPs in education.

In UNICEF, efforts to support PPPs have not been at an operational level through specific project activities. Rather, emphasis have been made in policy-level support through advocacy, policy reform and improved coordination. For example, in a number of countries where UNICEF coordinates the Education sector Working Group (ESWG), efforts are being made to bring NGOs, faith-based organizations and private sector associations into the ESWG as members. In Cambodia, UNICEF provides funds for the administrative expenses of KAPE, a consortium of NGOs and civil society partners active in education, which has an official seat at the table to guide the Education Sector Plan. Similarly, EFA National Committees, which have varying degrees of functionality in the region, are comprised of governments, NGOs and private sector partners and are responsible for developing and monitoring EFA National Plans. As part of this, UNICEF continues to advocate with Ministries to ensure that National EMIS include data on private schools (both registered and unregistered) as well as schools run by faith-based organizations and NGOs.

UNICEF is also active in broadening the scope of Corporate Social Responsibility (CSR). In addition to partnering with large private sector companies, such as IKEA or AEON to provide resources for education projects, UNICEF also encourages the private sector to take a seat at the policy table., Recently, in early 2010, CISCO agreed to become a full member of the UN Girls’ Education Initiative (UNGEI) Global Advisory Committee, the first private sector company to do so. Plans for a concept note and technical paper on the role of PPP in promoting child rights is also being planned, and will certainly benefit from the lessons learned in the collaboration with ADB.

VI. MOVING FORWARD

88 Asian Development Bank. 2008. Strategy 2020 The Long-Term Strategic Framework of the Asian Development Bank 2008-2020, Manila, p. 20.

89 Asian Development Bank. 2008. Education and Skills: Strategies for Accelerated Development in Asia and the Pacific, Manila.

90 Asian Development Bank. 2010. A Review of Public Private Partnership in ADB Education Lending 2000-2009, Manila.

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Private sector providers present a significant resource for improving access and quality in education. In most countries in East Asia and the Pacific, a range of private providers exists to meet the demand for education. Private education is likely to remain a major force in the overall market for education, with or without State support. The State can foster a dynamic private sector and can harness its strengths by introducing well-designed policy frameworks and by promoting PPPs that improve education provision for the poor. To be successful, PPPs must be effectively designed and implemented.

Building on our respective strengths, the ADB and UNICEF can promote enhanced understanding of NSPs and the potential for PPPs to leverage resources toward achieving the goals of education for all. Several critical areas can be supported as part of our existing efforts:

Building the evidence-base: Country-level situational analyses are critical first steps to understanding the scale and nature of private sector providers, as well as the legal, political and regulatory frameworks that impact their ability to reach the disadvantaged. Piloting of successful PPP models, particularly those based on lessons available from ADB and UNICEF programs worldwide can also be a way to build evidence of effective, sustainable measures to design/implement PPPs.

Policy Advocacy: ADB and UNICEF can also collectively advocate for PPP policies that ensure a “level playing field” for private sector providers serving the poor. Again, the evidence-base from our programs, at both programmatic and policy levels, can be great resources for policy advocacy, and the CRC and EFA commitments provide legal and political basis to hold governments accountable to action.

Capacity building of governments and private sector providers: In general, governments have relatively limited experience working with the private sector, and therefore, human resource capacity to develop and manage PPPs is often weak. Private providers also need capacity development to ensure delivery of quality services. ADB and UNICEF have long engaged in capacity development of governments as well as private, community actors, and such support should also be extended for PPPs.

Coordination: Governments and private sector traditionally do not have a common platform whereby they come together for policy dialogue. Private sector providers are also likely to be very diverse and unorganized particularly small-scale actors, rendering it difficult to voice their common issues and concerns during policy development processes. Coordination among various types of private sector providers as well as with government is an important area ADB and UNICEF can support.

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