Education in States and Nations: 1991

(ESN) Note on international comparisons of current public education expenditures: Indicators 30 to 34, 36 and 37

Use of current public education expenditure

These indicators include only current public education expenditure. Current expenditure is used for educational goods and services whose life span should not in principle exceed the current year (salaries of personnel, school books and other teaching materials, scholarships, minor repairs and maintenance to school buildings, administration, etc.). Current expenditure excludes both capital expenditure (construction of buildings, major repairs, major items of equipment, vehicles) and the servicing of debt.

Public expenditure excludes private spending. Public education expenditure includes funds channeled to both public and private schools by Federal, state, and local governments, either directly or through students. This includes expenditures at public schools funded by public sources and subsidies to students at private schools from government agencies.

Per-student expenditure, as it is used here, excludes private spending but includes private-school students. It is calculated as current public expenditure for education divided by enrollment at both public and private schools. Thus, this is a measure of average public investment per student in the education system. It is not a measure of the total resource a student receives, which would include private expenditure.

Private expenditure

Data on private education expenditure were not available for the U.S. states or for several of the countries. To illustrate how the inclusion of private spending might affect the country-level comparisons, the table below presents current education expenditure as a percentage of GDP, by G-7 country and public or private source. Among the five G-7 countries for whom private expenditure data were available, considering private expenditure does change their relative rankings. France would be ranked second and the United States third based on public current expenditures alone. But, the United States would be ranked second and France third based on both public and private current expenditure.

Though the addition of private education expenditure may affect the country rankings on current education expenditure at the primary through higher education levels only slightly, it could profoundly affect the country rankings in certain categories of expenditure. In certain countries, for example, private sources account for a large portion of total higher education expenditure. Most notable among those countries with some private expenditure on higher education are Australia, Canada, Japan, and the United States, four countries with especially large private proportions.

Unlike the United States, other countries have left unallocated some expenditures that are difficult to attribute accurately to levels of education, such as those for regional or national education agency administrative expenses and those for ungraded courses, which are sometimes in special, vocational, and adult education programs. If an appropriate proportion of these "undistributed" expenditures were added to the country figures in Tables S4 and S5, those figures would, of course, increase for some of the countries.

Table S3: Current education expenditure at the primary through higher education levels as a percentage of GDP, by source and country: 1991

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Country          Public sources          Private sources          Total
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Canada              6.12                     0.68                 6.80
France              4.62                     0.35                 4.97
Germany (West)      3.29                     1.48                 4.77
Italy*              4.13                      +                     +
Japan               3.11                     0.82                 3.93
United Kingdom       +                        +                     +
United States       4.57                     1.20                 5.77
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+ Not available.

* 1989 data.

SOURCE: Organization for Economic Co-operation and Development, Center for Educational Research and Innovation.

Table S4: Current higher education expenditure per student (in U.S. dollars), by source and country: 1991

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               Public      Private
               sources     sources      Total
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Australia      $7,830      $1,995      $9,825
Canada         8,556        1,439       9,995
Denmark        7,160            0       7,160
Finland        6,357          530       6,887
France         5,048          494       5,542
Germany (West) 5,539            0       5,539
Hungary        5,855          420       6,275
Japan          2,362        3,662       6,024
Netherlands    8,552           17       8,569
Spain          2,778          630       3,408
Sweden         8,204            0       8,204
United Kingdom 10,228           0      10,228
United States  6,767        5,274      12,041
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SOURCE: Organization for Economic Cooperation and Development, Center for Educational Research and Innovation.

Table S5: Current expenditure on higher education as a percentage of GDP, by source and country: 1991

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              Public         Private               
              sources        sources          Total
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Australia       1.41           0.36           1.77
Canada          2.08           0.35           2.43
Denmark         1.19           0.00           1.19
Finland         1.23           0.10           1.33
France          0.83           0.08           0.91
Germany (West)  0.79           0.00           0.79
Hungary         0.84           0.06           0.90
Japan           0.27           0.42           0.69
Netherlands     1.53           0.00           1.53
Spain           0.68           0.16           0.84
Sweden          1.07           0.00           1.07
United Kingdom  1.01           0.00           1.01
United States   1.17           0.91           2.08
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SOURCE: Organization for Economic Cooperation and Development, Center for Educational Research and Innovation

Table S6 Estimated higher education proportion of undistributed current public education expenditure, by country: 1991

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                (in $ per          (as % of
                student)              GDP)
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Australia          $0                0.00
Canada              0                0.00
Denmark            208               0.03
Finland            601               0.12
France             205               0.03
Germany (West)     720               0.10
Hungary            169               0.03
Japan              442               0.06
Netherlands        293               0.05
Spain               74               0.02
Sweden               0               0.00
United States        0               0.00
-------------------------------------------

SOURCE: Organization for Economic Cooperation and Development, Center for Educational Research and Innovation.

How expenditures are compared across countries

To compare public expenditure-per-student in the United States with expenditures-per-student in other countries, expenditures must be converted to a common currency.

Purchasing Power Parity Indices (PPPI) are calculated by comparing the cost of a fixed market basket of goods in each country. Changes over time in a PPPI are determined by the rates of inflation in each country. A PPPI is not as volatile as market exchange rates.(2)   Measures of education expenditure and GDP/GSP used in this report have been adjusted with a PPPI.

Because the fiscal year has a different starting month in different countries, within-country consumer price indexes (CPI) calculated by the International Monetary Fund were used to adjust educational expenditure data to allow for inflation between the starting month of the fiscal year and July 1, 1991.

Problems in comparing education expenditures across countries

There exists some variation in the coverage and the character of the education expenditure data that countries submit to the OECD. Sometimes, an individual expenditure item may be included in the expenditure data from one country, but not included in the expenditure data from another. Discrepancies arise because one country may collect certain kinds of data that another country either does not collect, or does not collect in its "education" data collections. Or, one country may define what constitutes an "education" expenditure differently than another country does.

Discrepancies between which expenditure items are included in one country's expenditure figures and not in another's tend to arise in three general domains:

• Non-instructional (or, ancillary) services - Some countries provide fewer ancillary services in their schools and, thus, include fewer expenditures for such services in their education expenditure figures. Examples of ancillary services are: school cafeterias; dormitories; school sports programs; school health clinics or visiting school nurses; attendance (i.e. truancy) services; and speech or psychological therapy services. U.S. schools tend to subsidize relatively more ancillary services through their education budgets than do schools in most other countries. In some countries (eg. Germany), none of the aforementioned services are provided at the primary and lower secondary levels by many schools.

• Private expenditures - Some countries' education systems receive large private contributions. The most common forms of private contributions to education are student tuition or fees; organizational subsidies, such as those provided by religious denominations to their own schools; and corporate in-kind contributions, such as those provided by German and Austrian firms that provide vocational courses on the shop floor for participating youth apprentices. Private expenditures have not been included in the indicators used in this report, in part because precise figures for private education expenditures are not available for the U.S. nor for several other countries.

• The boundaries of education - There exist fewer (though, still some) inconsistencies in comparing just the instructional expenditures for primary and secondary public education in just the academic track. But, the "borderlands" of education cause comparability problems. The borderlands include: preprimary education and daycare; special education; adult education; vocational and technical education; and proprietary education. Some countries, for example, simply do not collect expenditure data for private "center-based" daycare as they do not define such to be "education." Indeed, in some countries, even public daycare is not managed by education authorities; rather, it is the responsibility of human services departments.

  The exact location of each "boundary" also varies from country to country and even within each country. In Canada, for example, vocational/technical students in Qubec who so choose enter vocational/technical college in the 12th grade. In the other Canadian provinces with vocational/technical colleges, entry is in the 13th or the 14th grade. Thus, vocational/technical students in the other provinces spend more another year or two at the upper secondary level. The more time the average student spends in a level of education, the greater will be the expenditure at that level.

Even these three domains do not include all the possible comparability problems. There remain, for example, inconsistencies in how different countries treat public contributions to teacher retirement and fringe benefits, student financial aid, and university research and hospitals.

The (NCES) has sponsored two studies designed to examine the issue of the comparability of national figures of education expenditure. The studies, entitled The International Expenditure Comparability Study and Improving the Comparability of International Expenditure Data, involve ten countries and examine, in detail, the content of their education expenditures, as they are reported to the OECD.

Thus far, participating education ministries have been receptive to the idea of improving comparability in the OECD data collection. Indeed, some countries have already modified their data submissions to the OECD for subsequent years, thus improving the comparability of education expenditures across countries for the data collection used in The Condition of Education 1995. These changes were motivated in part by preliminary findings from the NCES expenditure comparability studies.(3)

Expenditures in the United States

Primary through secondary

For the United States totals, current public expenditure for primary through secondary education includes current expenditure in state education agencies and local public school districts funded by state and local taxes and Federal programs administered by the U.S. Department of Education (ED). Programs operated outside of ED that are not administered by state or local education agencies (e.g, Department of Defense Schools, and schools operated by the Bureau of Indian Affairs) and Federal expenditures to operate ED and other activities (such as research, statistics, assessment, and school improvement) are included in the current public expenditure figure for the United States that is used in the international tables but not in the state-level data.

While only public expenditures are included in the finance indicators, both public and private school enrollments are included in Indicators 32 and 33.

Higher education

Current public expenditure for higher education in the United States includes expenditure at both public and private colleges and universities funded by Federal, state, and local governments. Current expenditure by public and private non-profit institutions is separated into public and private expenditure based on the share of current fund revenues from Federal, state, and local sources. Tuition payments are considered to be private expenditures that may or may not be derived from public sources (e.g., Pell Grants).

Most Federal aid goes to students who then spend it on education (e.g., tuition) and non-education (room and board) services. It was assumed that 60 percent of Federally administered Pell Grants were spent by students on education expenditure.

The U.S. national figure contains some expenditures that are not included in the state-level figures. They include: U.S. Education Department administrative expenses and Department of Defense expenditures on the service academies.

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Footnotes

(2)   For a further argument against using market exchange rates, see Rasell, Edith M. and Lawrence Mishel, Shortchanging Education, Economic Policy Institute, January 1990         . . . return to section

(3)   See Barro, Stephen M. Preliminary Findings from the Expenditure Comparability Study, SMB Economic Research, Inc., June, 1993          . . . return to section

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Enrollment reference groups... Labor force participation...