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
The financing of educational institutions depends on their ownership. There are three types of educational institutions: state, municipal, and private. State education institutions are financed from the state budget in accordance with the annual State Budget Law, while municipal education institutions are financed from the municipal budgets.
Schools of general education and upper secondary education are owned by the local governments. According to national legislation, every municipality is responsible for ensuring that all the children who live within the territory of the municipality receive pre-primary and basic education at an educational institution close to their place of residence. In general, wages for pedagogical staff are allocated from the state budget while maintenance and utilities costs are covered through local government budgets. The Education Law states that a city self-government and a municipality self-government must allocate self-government budget resources to educational institutions, and control utilisation of these resources.
The central government allots funds to local municipalities. Additionally, education institutions may receive extra finances from donations, sponsorships, or service provisions.
Government education expenditure in 2021 was 5.6% of GDP. A high share of the education budget is spent on immediate consumption (18.5%) and on gross capital formation (14%). Teachers’ salaries account for 62.5% of education expenditure.
1. Education resources to subnational governments
Local municipalities are primarily responsible for financing education in their areas. Funds come from two main sources: the local budget (maintenance) and the state budget (teacher salaries). In 2009/2010 the financing model, ‘money follows the pupil,’ was introduced with the aim of “ensuring equal and transparent allocation of financial resources to cover teachers’ salaries, thus developing an optimal school network and allowing an increase in cost-effectiveness". Under this system, the local government decides on the financing of schools in their territory. The earmarked subsidy for teachers’ salaries and taxes is transferred from the central level while the maintenance of schools remains the responsibility of the municipalities.
For the 2025/26 school year, the Ministry of Education and Science has begun a shift towards a new financing programme titled, “Programme at School” (See section 2).
The state distributes equitable grants to local governments through the Equalisation Fund, which was established by law in 2015. The fund redistributes financial resources among local municipalities to address disparities in revenue and spending capacity, ensuring a more balanced public service provision - including education - across municipalities. Statistical indicators include the number of children and young people up to 6 years and aged from 7 to 18—the first of which is equivalent to 2.34, the second of which is equivalent to 3.26 units.
The equation is as follows:
N_i = 1 · a_i + 2.34 · b_i + 3.26 · c_i + 0.74 · d_i + 1.52 · e_i
Where,
1 — number of equalization units per inhabitant;
2.34 — equalization units per child under 6 years of age;
3.26 — equalization units per child and youth aged 7 to 18 years;
0.74 — equalization units per inhabitant over working age;
1.52 — equalization units per square kilometre of the territory of the municipality;
a_i — number of inhabitants in the respective municipality;
b_i — number of children under 6 years of age in the respective municipality;
c_i — number of children and youth aged 7 to 18 years in the respective municipality;
d_i — number of inhabitants over working age in the respective municipality;
e_i — area of the territory of the respective municipality in square kilometres.
2. Education resources to schools
The Ministry of Education and Science has developed a new funding mechanism for financing schools called the “Programme at School” model, which will begin in the 2025/26 school year. The programme is a major national reform in school financing and resource allocation intended to improve the quality and equity of education across all schools.
Under this plan, funding is calculated for each educational institution by taking into account the number of educational programs implemented by it - the set of classes and the number of learners, support and administration staff. Additional resources are awarded for specific programmes like vocational tracks, minority education modules, STEM initiatives, gymnasiums, and support for students with special needs. This allows schools to better tailor their education to local needs, including more targeted support for rural, disadvantaged, or minority groups. Funds may be used to upgrade equipment, introduce new technologies, and support curriculum reforms, including newly launched work-based learning programmes and digitalisation initiatives.
Funding decisions are tied closely to the core curriculum and optional educational profiles offered at each school, incentivising innovation and broader learning opportunities. As the funds are determined at the central level- this will give local governments less financial autonomy. The model will be fully implemented by 2028.
Currently, allocations from the state and local budgets for the activities of educational institutions are planned according to the budgetary requests submitted by the educational institutions. Financing of educational institutions is planned according to the number of students at the institution and the minimum cost for the implementation of the educational programme for each student.
The state provides the funds for schools established for children with special needs, boarding schools, and schools and classes for social correction. Schools with a licensed special education programme receive double financing for every learning in the special education programme. State gymnasiums also receive extra finances because they fulfil other functions such as teacher training and as regional centres of methodology.
According to the 1999 Education Law, the State may also provide additional financing for the implementation of education programmes for minority language and cultural history, as well as remuneration for the teachers implementing minority education. In recent years, Latvia has been phasing out the Russian language as a medium of education in schools. As of September 2025, all public and private schools must use Latvian as the sole language of instruction, with exceptions only for extracurricular and private courses
3. Education resources to students and families
The main public financing policy instruments are directly based on state and local government support for families, infrastructure, and for special needs, but there are no widespread direct scholarship or grant systems directly benefiting students and their households.
Many programmes that support students are provided at the municipal level. For example, local municipalities may provide transport support through discounts or reimbursements. Others may grant allowances for students to purchase education supplies.
4. Social policies and family support programmes
Latvia has a number of social protection policies and programs to reduce social inequality among school children, young people and their families. Among the ones relevant to school-age students and their families are state family allowance and benefit for guardianship and foster care.
The State Social Insurance Agency (SSIA) is responsible for distributing the state family allowance. The allowance is provided monthly for each child until the age of 16. Funds are also provided for youth between the ages of 16 and 20 if they are continuing their education and have not yet entered marriage. Children with a disability are able to receive an additional supplement to the state family allowance.
The amount varies depending on the number of children:
One child- EUR 25
Two children- EUR 100
Three children- EUR 225
Four children or more- EUR 100 for each child
Child with a disability- EUR 160
Children over 16 must be attending in general education or in vocational education. Those studying at university no longer qualify.
The benefit for guardianship and foster care is support for children who live in guardianship or foster families, for example, compensation for the duties of a guardian or adoptive parent.
Most state-determined social benefits are paid to both rural and urban families according to the same criteria and amounts, thus at the national level there are no significant differences between rural and urban families. However, differences arise at the municipal level - the amount, conditions and payment of specific social assistance benefits can differ significantly between urban and rural municipalities.
Municipal via their social services can grant different levels of guaranteed minimum income and housing benefit. The calculation formula is the same, but the actual amount of support/real income limit for low-income status is different; for example, in Riga the threshold is higher than in most rural municipalities. Further, cities, especially Riga, are better funded to grant more diverse crises, meals and other support in situations where it is necessary.
5. School meal programmes
The Free Meals programme started operating in 2008 and is a joint effort between several ministries. The Ministry of Education and Science implements and funds the programme. The Ministry of Health is responsible for regulation while the Ministry of Agriculture is responsible for monitoring and control.
As of 2015, the programme has provided universal school meals to students in grade levels 1-4.
Nutritionists were employed by the local government for the free meals programme. The programme also provided complementary education on food safety and addiction.
For several groups of children, meals at school are provided for free. This includes those from large families, low-income families, and orphans. These measures vary at the municipal level. Some municipalities offer free lunches for all pupils in other grades.
National rules are detailed in the 2012 Regulations Regarding Nutritional Norms for Educatees of Educational Institutions, Clients of Social Care and Social Rehabilitation Institutions and Patients of Medical Treatment Institutions.
Latvia also participates in the EU co-financed programmes “School Fruit Scheme” and “European Milk Scheme.”
This profile has been reviewed by national expert Zane Varpina.
