Finance and funding

The state plays an important role in the funding and financing of education (funding refers to party ultimately responsible for bearing the cost, while financing refers to the timely provision of money (in exchange for interest and repayments). In compulsory education, the state bears the vast majority of the cost, while education after the compulsory schooling period (e.g. higher education or a lifelong learning programme) is often part privately and part publicly funded. Private funding can also be combined with public financing, as in the case of student loans. The Education Council has adopted a number of positions on this in its recommendations.

1. Deploy public resources to increase private investment in education 

The Education Council is in favour of fiscal stimulus measures for private contributions to education after the compulsory schooling age (such as higher education and lifelong learning programmes). By allowing additional tax facilities for private investments in education, public expenditure automatically grows with private investment. Such a tax facility could be implemented in a variety of ways, for instance, by creating a tax break for business-funded scholarship programmes and by extending the tax break available for expenses incurred for lifelong learning programmes (Goal-oriented investments in education, 2006; The State of Affairs in Dutch Education, 2009). Safeguarding accessibility is an important component of this.

2. Increase the private contribution in the master’s cycle of higher education

Additional resources are needed to raise the quality of higher education. Experience has shown that the scope for extra public investment is limited, especially in times of an economic downturn. Furthermore, higher education also has significant benefits for the individual. For this reason, the Education Council advocates a gradual increase in the contribution payable by master’s students. To safeguard accessibility, the Education Council recommends that the individual contribution be increased more in the master’s cycle than in the bachelor’s cycle. In its 2006 report on Goal-oriented investments in education, the Education Council proposed a gradual increase of the individual contribution from 20% to 30% in the bachelor’s cycle and to 40% in the master’s cycle. In return for this higher individual contribution, the state itself should also make an additional contribution in the near future to ensure that the quality of the education also increases. See the report on Wijziging van de wet Studiefinanciering 2000 (Amendments to the Student Finance Act) (currently under embargo, due for release in 2012).

3. Promote an effective use of resources in education

In a number of its reports, the Education Council has expressed its view on the effectiveness of education (i.e. making optimum use of the available resources). The Education Council therefore recommends examining opportunities to increase the effectiveness of educational improvements, for example, by varying education types, class size and the use of ICT resources. An important condition in this is that school leaders and school governors should not only have educational expertise, but also the right level of financial expertise. Furthermore, schools could improve effectiveness by benefiting from scale. Once a certain scale has been reached, a school or its governing body will benefit from increased opportunities to differentiate or specialise. By contrast, a loss of effectiveness can occur in oversized schools: there comes a point when the costs of coordination increase faster than the benefits of further growth. There is also a risk of monopoly formation. In its report on this, the Education Council recommended the introduction of a merger check and experiments into new entrants (De bestuurlijke ontwikkeling van het Nederlandse onderwijs (Development in governance in Dutch education), 2009; see also the section on governance and administration in education). This helped bring about the introduction of a merger check for schools in October 2011.

4. Take a critical look at the cost-effectiveness of investments in education

Even at the level of education policy, a critical look is needed at the effectiveness of education institutions. Major external social effects can be expected in particular from interventions in initial education (such as investments in preschool and early years education and measures to prevent dropping out), such as cost savings in healthcare, social security and criminality. However, the state must critically assess whether the instruments chosen actually produce the expected effects by devoting more attention to serious policy evaluation (Goal-oriented investments in education, 2006; Create scope for gradual improvement, 2011).

5. Use the language proficiency of pupils as an indicator for the funding of pupils from disadvantaged backgrounds

In the past, the Education Council has made recommendations on extra funding for pupils from disadvantaged backgrounds in primary education: funding is based on pupil weighting. Given the fact that the parents’ level of educational attainment is the primary indicator of educational disadvantage and that the importance of ethnic background as an indicator is waning, the Education Council proposed that funding be based on the parents’ level of educational attainment and the language proficiency of the pupil (rather than the previously used ethnic background indicator). This resulted in funding no longer being based on ethnicity, but primarily on the level of educational attainment of the parents. The recommendation to also include the language proficiency of the pupil as a factor was not adopted. The Education Council also called for removal of the threshold of 9% pupils from disadvantaged backgrounds before a school qualifies for additional funding to ensure that every pupil from a disadvantaged background counts. At the same time, the Education Council recommended that the additional funding be capped, because benefits of scale can be expected in tackling disadvantage. Both recommendations were adopted by the education minister (Over leerlinggewichten en schoolgewichten (Pupil and school weighting), 2002; Social disadvantage in the future, 2011).