Financing for equity in primary and secondary education
1. Education resources to subnational governments
2. Education resources to schools
3. Education resources to students and families
4. Social policies and family support programmes
Introduction
In Estonia, education is provided free of charge under both the Education Act and the Basic Schools and Upper Secondary Schools Act. The education funding mechanism is essentially two-tier: money flows from the state budget to municipalities, and then municipalities allocate it to their schools. In some special cases (e.g., boarding education), funds flow directly through contracts between the Ministry of Education and Research and municipalities.
1. Education resources to subnational governments
The central government provides more than 80 per cent of funding for primary and secondary education to municipalities through a block grant allocated per student, adjusted for demographic and socioeconomic factors, and an equalisation grant for municipalities with lower tax revenues. These subsidies, drawn from the state budget, cover costs such as teachers’ salaries, social taxes, training, and learning materials (including textbooks). The central government does not impose restrictions on how municipalities must utilise these funds. Private general education schools also receive comparable support under the provisions of the 1998 Private Schools Act. The formula for the equalization fund is:
T=(AK–AT)∗k+ÜK+VT+AMK+EAMT+HRF+LKA+TBK,
where AK represents a municipality’s estimated expenditure and AT its estimated revenue, adjusted by a coefficient (k) of 0.9 or 0 if revenues exceed costs. The calculation includes merger compensation (ÜK), small-island costs (VT, based on ferry connections, population, and a base grant), transitional foster care and funeral grant support (AMK), demographic adjustment (EAMT), care reform support (HRF, EUR 455 per person monthly in general care plus EUR 227 in specific cases), land tax loss compensation from state nature reserves (LKA), and income tax reform compensation for six municipalities (TBK). The formula also accounts for population structure, unit costs, and remoteness coefficients. For 2025, income tax shares are set at 5.5 per cent on pensions and 11.29 per cent on other income, while annual land tax growth is capped at 10 per cent.
Municipalities in rural areas may apply for an additional annual state grant to sustain small primary schools (grades 1–6) with enrolment between 20 and 89 students. This support, aligned with the 2021–2035 Education Strategy, ensures access to teachers, specialists, and education within local communities.
2. Education resources to schools
Medium Education Reform
Starting from 2024, the government targets kindergartens and basic schools in grades 1 and 4 as the entry point for the transition to Estonian-medium education, a reform designed to strengthen social cohesion by gradually phasing out parallel language streams by 2030.
The reform is accompanied by targeted financial measures, including a nationwide increase in the minimum teacher salary to EUR 1,820 in 2024, and additional allowances in Ida-Virumaa – up to EUR 902 monthly for full-time teachers and support specialists – alongside proportional benefits for part-time staff, with grants calculated as EUR 18 per child in pre-primary education and EUR 30 per student in general education and vocational training.
3. Education resources to students and families
Free Textbooks and Student Benefits
Under the Education Act and the Basic Schools and Upper Secondary Schools Act, all students are entitled to free textbooks and learning materials. The state also provides various concessions and benefits, including healthcare and public transport support, to assist students in accessing education.
Public Transport Concessions
In accordance with the 2015 Public Transport Act, children under seven years of age, children with postponed school attendance, and students with disabilities are entitled to free travel on domestic routes. The Act further allows state and municipal school owners to compensate up to 100 per cent of travel costs on commercial routes for students enrolled in basic, general secondary, vocational, or additional studies. The level of compensation depends on education level, travel distance, or local budget limits. Compensation is not provided where costs are already covered under other provisions. Detailed rules are established by the responsible minister for state schools and by municipalities for municipal schools.
4. Social policies and family support programmes
The Social Insurance Board (Sotsiaalkindlustusamet) administers a range of allowances to support families and students, including both universal benefits and targeted assistance for guardians and students with disabilities.
Family allowances – Child allowance
The child allowance is paid monthly (on the 8th) to parents or guardians for each child up to 19 years of age, or beyond this age if the child continues studies without having completed secondary education, until graduation or the end of that academic year. Families receive EUR 80 per child per month for one or two children and EUR 100 per child per month from the third child onwards. The school year runs from 1 September to 31 August (30 June in the final year). Overpaid benefits must be repaid if the child no longer meets eligibility requirements.
Family allowance – Guardianship allowance
The guardianship allowance of EUR 240 per month is paid for each child placed under court-appointed guardianship where the parents are unable to raise the child. It is provided until the child turns 18, or until the end of the academic year in which they turn 19 if they remain in education without having completed secondary studies. Payments begin from the date the court order takes effect and may be made retroactively for up to six months. Education status is verified through the national education information system (EHIS), though proof of enrolment must be submitted for children studying abroad.
Benefits for disabled people – Study allowance
A monthly study allowance ranging from EUR 6.39 to EUR 25.57 is available for non-working students with disabilities enrolled in grades 10–12, vocational education, higher education, or state-managed full-time continuing education. The allowance helps cover additional study-related expenses, including special learning or communication tools, and is paid throughout the academic year except during July and August.
5. School meal programmes
Launched in 2002, the school meals programme operates as a decentralised initiative in which financing is jointly managed by the state and municipalities, allowing for local oversight of procurement. The programme follows national nutritional guidelines and is supervised by government-financed nutritionists and trained caterers, incorporating health promotion and obesity-prevention objectives into meal provision. Unlike targeted schemes, it is universal in scope, providing meals to all public primary and secondary school students.
This profile has been reviewed by Hasso Kukemelk.
