FINANCING FOR EQUITY
1. Overall Education Financing Mechanisms
2. Policies and Programmes to Provide Resources to Schools
3. Education Policies and Programmes to Provide Resources to Students and Families
4. Social Policies and Programmes to Provide Resources to Students and their Families
In Viet Nam, primary education (5 grades) is free and compulsory and pre-school (children under 5 years old), and lower secondary is to progressively become compulsory and universal. The government budget covers salaries, current expenditure, capital expenditure, purchase of fixed assets, and subsidies. Households cover uniforms, textbooks, notebooks and other materials, transportation, and extra courses.
In 2019, Viet Nam spent 4.17% of the country’s GDP on education and the State spent a total of approximately USD 10.6 billion or VND 245trillion representing 14% of the total State expenditure. Viet Nam’s sub-national governments account for approximately 55% of the total government expenditure and 85% of the total education spending. The school-aged population was 28.2m.
The Ministry of Education and Training (MOET) is the main agency responsible overall; however, the management of schools, teachers and financial resources is decentralized to the local level. The government pursues a policy of “education socialization”: households participate in filling the education funding gap through students’ fees and other contributions. In 2006, the government issued a decree to encourage schools to expand their own non-budgetary sources of income. Non-state schools may charge fees following official rules.
The People’s committees at the district and province levels approve provincial budget estimates and final settlements, and the tuition norms and administration fees for public educational institutions. Because the Provincial People’s Councils (PPC) lead the decision-making process, there are multiple financial management systems. For example, in some provinces, the PPC delegates to financial management units, in others to educational units, and in others to schools directly. There is no agreement on the reporting channel and system.
The current budget allocation formula for education is based on the school-age population (0 to 18 years) of each province and the population of remaining groups for the training budget. The formula is weighted by poverty, remoteness, health and education norms, and the presence of disadvantaged populations. The calculation is per head and by level of priority among regions with different socio-economic circumstances. The government additionally allocates at least 20% of total expenditures for school operations (excluding compensation for personnel) to provinces with high student per population ratio to address additional costs of nonresidents or temporary immigrants. Poorer provinces have a higher average expenditure per primary and lower-secondary student than other regions because of higher costs of regional support. For example, children from mountainous areas receive 1.7 times the allocation of a child living in urban areas.
Primary Education for Disadvantaged Children (PEDC) project (2004-2010)
The Fundamental School Quality Level (FSQL) standards cover a range of inputs including infrastructure, didactic materials, school organization, and teacher qualifications to ensure that every primary school in Vietnam is provided with certain minimal conditions. PEDC covered 4,751 schools in 227 disadvantaged districts across 40 provinces. This US$ 244 million project (corresponding to 2.5% of the yearly education expenditure) received donor support from the IDA and other countries.
GPE-Viet Nam Escuela Nueva project
From 2013 to 2016 MoET aimed to improve learning of primary school children from disadvantaged background in 20 priority provinces. The funds were US $ 84.3 million provided by World Bank (corresponding to 1% of the yearly education expenditure). The project’s target were those from (i) poor families; (ii) ethnic minority groups; (iii) distance of the school from the district center; and (iv) students who perform as average or poor in Vietnamese student achievement measures. The project expected to reach 440,000 children (6% of total primary level school-age population). Component 3 of the project includes School Campus Sub-Grants, school equipment, lunches to students at schools, Vietnamese summer classes, classroom furniture, teaching and learning aids, and extra-curricular activities.
The government has a set of subsidies to help disadvantaged children. In 2017-2018, 16.3% of students came from an ethnic minority and in 2013, 0.69% of the total expenditure of central and local governments in education went to transfers and subsidies. Among the programs are:
- Tuition fee exemption and support for learning expenses at pre-school and lower secondary: disadvantaged students such as those with handicaps, who have economic difficulties and who are ethnical minorities and orphans.
- Lunch Subsidy for Disadvantaged Children: targets socio-economically disadvantaged children between the ages of 3-5 years for preschool education. The government provides lunch at USD 5 (VND 120,000) per child and the subsidy consists of 50% of the fee. During 2013-2017, the World Bank reimbursed the expenses of the Ministry of Education on this subsidy amounting to USD 95.1m.
- Cash support: Children who belong to ethnic minorities and are from poor households receive cash support equal to 30- 100%t of the minimum wage (depending on the education level).
- Food and accommodation allowances for semi-boarding students: targets semi-boarding students who study at a semi-boarding ethnic minority school and students at other public primary and lower secondary schools in an area with difficult socio-economic conditions.
This program is operated by the Bank for Social Policy and its financed from the state budget. The program started in 2007 and provides loans to students of universities, colleges or vocational training schools with financial difficulties. The students are part of a list of poor households issued by the People’s committee and validated by the commune people. Students can borrow a maximum of USD 65.8 (VND 1.5m) per month to help cover their tuition and subsistence allowance. As of June 2016, more than 3.4 m students had benefited of the program. In 2019, 200,000 students or 0.7% of the total school aged population benefited from the program. In 2012-2013, the government planned to spend USD125m (VND 1.5bn) or 0.07% of the country’s GDP on this program.
The National Targeted Program for New Rural Development (NTP-NRD) consists of 11 main activities (including rural education) implemented in 8,921 communes across all 63 provinces of Vietnam. Targeted populations are communities in rural mountainous areas belonging to ethnic minorities. Investment choices and expenditure allocation decisions are made by the relevant departments at the provincial, district and commune level, with minimal input from the central office. The estimated funding envelope for the NTP over five years (2016–2020) is US$35.3 billion for NRD and US$0.91 billion for SPR-P135, totaling US$36.2 billion in a five-year implementation period (corresponding approximately 2.7% of the GDP in 2019) of which US$9.4 billion comes from direct central and state budget allocations, and US $ 153 million through a World Bank credit.
