Indicator 16. Change in Annual Expenditures for Education

In all G-8 countries with data reported except the United Kingdom and the United States, the percentage of GDP spent on education at the combined primary and secondary education levels was higher in 1995 than in 2007.

This indicator begins by examining public and private education expenditures per student across the G-8 countries in 2007, including total education expenditures as well as the portion of total expendi- tures devoted to core services. Total expenditures are the combined expenditures for core and ancillary services, and also including research and development activities in higher education. Expenditures on core services pertain to spending on instructional services, including faculty/staff salaries, professional development, and books and other school materials. Expenditures on ancillary services pertain to spending on education services other than instruction, such as meals at school, transportation to and from school, and campus housing. Using data from 1995 and 2007, this indicator also examines annual public and private education expenditures as a percentage of gross domestic product (GDP), allowing a comparison of countries’ education expenditures relative to their overall economic output.

In 2007, the total expenditures per student and the portion of these expenditures devoted to core education services were higher in the United States than in all other G-8 countries with data reported at the combined primary and secondary education levels18 and the higher education level (figure 16-1).

Annual expenditures per student on core education services in the United States were about $9,900 at the combined primary and secondary education levels and about $21,200 at the higher education level. In the other G-8 countries with data reported, annual expenditures per student on core education services ranged from about $7,000 in France and the United Kingdom to $7,600 in Canada at the combined primary and secondary levels and from about $5,200 in Italy to $13,600 in Canada at the higher education level.

In both 1995 and 2007, all G-8 countries spent a larger percentage of GDP at the combined primary and secondary education levels than at the higher education level, where the student enrollment is lower (figure 16-2). In 1995, the percentage of GDP spent on primary and secondary education was highest in France (4.5 percent), followed by Canada (4.3 percent), while it was lowest in Japan (3.1 percent). However, in 2007, the percentage of GDP spent on primary and secondary education was highest in the United Kingdom (4.2 percent), followed by the United States (4.0 percent), while it was again lowest in Japan (2.8 percent). In all G-8 countries with data reported except the United Kingdom and the United States, the percentage of GDP spent on education at the combined primary and secondary education levels was lower in 2007 than in 1995.

At the higher education level, all G-8 countries except Canada and the United States spent less than 2 percent of GDP in 1995 and 2007. Germany and France spent about the same percentage of GDP on higher education in 1995 and 2007 (1.1 percent in Germany in both years and 1.4 percent in France in both years). In all other G-8 countries with data reported, the percentage of GDP spent on higher education was higher in 2007 than in 1995. In Italy, the United Kingdom, and Japan, the increase from 1995 to 2007 was no more than two-tenths of a percentage point. However, in Canada, the percentage of GDP spent on higher education increased from 2.1 percent in 1995 to 2.6 percent in 2007, and in the United States, it increased from 2.3 to 3.1 percent.

In 1995, overall (i.e., primary, secondary, and higher education together), Canada spent a higher percentage of GDP on education (6.4 percent) than all other G-8 countries with data reported, followed by the United States (6.2 percent). In 2007, the United States spent a higher percentage of GDP on education (7.1 percent) than all other G-8 countries, followed by Canada (6.1 percent). Italy spent the lowest percentage in both years (4.2 percent in 1995 and 4.0 percent in 2007).

Definitions and Methodology

Expenditures per student (see figure 16-1) are collected by type of institution, while expenditures as a percentage of gross domestic product (GDP) (see figure 16-2) are collected by source of funds. Since the two sources are not the same, the totals can differ in some countries. Per student expenditures are based on public and private full-time-equivalent (FTE) enrollment figures for the 1994–95 and
2006–07 school years and current expenditures and capital outlays from both public and private sources, where data are available. Data for GDP per capita are for calendar years 1995 and 2007. Dollar figures for education expenditures and GDP per capita were converted to U.S. equivalent dollars using purchasing power parities (PPPs), which equalize the purchasing power of different currencies. Using PPPs to convert all education expenditures data to U.S. equivalent dollars allows for cost-of-living differences across countries to be taken into account. Within-country consumer price indices are used to adjust the PPP indices to account for inflation because the fiscal year has a different starting date in different countries.

The national averages shown here do not represent the within-country variation that may exist in the annual education expenditures per student.

Expenditures on core education services are the remaining expen- ditures net of the expenditures on ancillary services and research and development.

Ancillary services are services provided by education institutions that are peripheral to the main educational mission. At the primary, secondary, and postsecondary nontertiary levels, ancillary services include meals, school health services, and transportation to and from school. At the higher education level, these services include residence halls (dormitories), dining halls, and health care. Ancillary services also include services for the general public such as museums, radio and television broadcasting, sports, and recreational and cultural programs.

Research and development includes research performed at universities or other higher education institutions, regardless of whether the research is financed from general institution funds or through separate grants or contracts from public or private sponsors. This category does not include research and development activities outside education institutions, such as research and development spending in industry.

As shown in the figures, education levels are defined according to the 1997 International Standard Classification of Education (ISCED97). For more information on the ISCED97 levels, see appendix A.

Percentage-point differences presented in the text were computed from unrounded numbers; therefore, they may differ from computations made using the rounded whole numbers that appear in figure 16-2.

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18 In this indicator, the category of "primary and secondary education" also includes postsecondary nontertiary programs. See figure 16-1 and appendix A for more information on education levels.