How Can the School Education Funding Model Become Fairer?

In recent days, the important debate on the funding of school education and on how the model can become fairer, providing greater security for small schools and creating the conditions for higher-quality education, has once again begun. The issue is not new – it has been discussed for years, generating polarised views: from proposals on how to overcome the shortcomings of the “money follows the pupil” model without abandoning it, to ideas for abandoning the model altogether and even for funding without delegated budgets. In this way, quite different issues become intertwined – delegated budgets and funding based on the number of pupils; the unequal situation of schools with small numbers of pupils (particularly in rural areas); securing teachers’ salaries, especially in small schools; and many others. Every discussion brings an opportunity to find better solutions. I hope this will happen now – that the debate will lead to improvements in the funding model, which is certainly not perfect and has much room for improvement… What should we bear in mind when discussing the funding of school education, and what mistakes should we avoid?

As I write these lines, I would like to make it clear that I am not doing so as an “impartial observer”: as Chair of Amalipe, a Roma organisation that has been working for two and a half decades with a broad network of between 260 and 300 schools across the country, I have always advocated for schools with a high concentration of vulnerable groups and for rural schools. I believe that the teachers and educational mediators working in these schools are the modern-day enlighteners of our society, and that the state should give them the recognition they deserve for their work and support them in fulfilling their mission (I do not like lofty words, but this really is a mission). I have repeatedly witnessed the exceptional achievements of some of these schools, as well as the opposite – hardly anyone would deny that some of them face serious problems that remain unresolved. I have also become convinced that two seemingly contradictory statements about school education funding are both true: “it’s not all about money” and “you cannot do without money”. Moreover, I am not impartial because, from the very beginning of the education reform introducing the “money follows the pupil” principle, combined with delegated budgets, I criticised the way in which the reform was implemented and warned that it would lead to the closure of hundreds of rural schools, an increase in dropout rates and a deterioration in the quality of education. I therefore consider the debate currently gaining momentum on changing the school education funding model entirely justified and capable of bringing about positive change. What should we take into account in these discussions?

“Money follows the pupil” and delegated budgets: two different principles

A common mistake made by many education professionals is to conflate the two principles according to which school education has been funded since 2008 – delegated school budgets (today also applied to many kindergartens) and the “money follows the pupil” principle. The confusion probably stems from the fact that they were introduced simultaneously through the 2008 State Budget Act. They were introduced in a way that foreshadowed the closure of hundreds of schools – funding based solely on the number of pupils and very low values for the unified expenditure standard per pupil.

Delegated budgets describe how the funds allocated by the state are spent. Until 2008, education funding was provided to municipalities, which had the right to redistribute it among different schools. Thus, a school principal literally had to “beg” the municipality for everything – from appointing new teachers and setting up elective classes (today known as FUC) to every sheet of paper. Many of the older school principals remember those days and shudder at the thought of “abolishing delegated budgets”. With their introduction, the municipalities’ role in redistribution was reduced to 20%, and subsequently even to 15%. Principals had to learn to become real managers: some succeeded, others did not. Yet it can hardly be denied that delegated budgets have played a positive role in the development of schools: compare schools and kindergartens that do not operate under delegated budgets.

From this perspective, it is important that the debate on changing the “money follows the pupil” model does not lead to proposals to abolish delegated budgets! In my view, the latter would bring school education to ruin.

“Money follows the pupil”: is this the funding model today?

The introduction of this model took place “with a bang” in 2008, but it had already been determined by the National Programme for the Development of School Education and Pre-school Education and Preparation (2006–2015), prepared by the Ministry of Education and Science (under Minister Daniel Valchev) and adopted by a decision of the National Assembly on 7 June 2006. This document provided for the parallel introduction of delegated budgets and the funding of schools solely on the basis of the number of pupils.

When the National Programme for the Development of School Education and the introduction of delegated budgets + “money follows the pupil” were being discussed in 2008, Amalipe Center warned of three key negative effects – the closure of many rural schools and the underfunding of those that remained; a worsening of the problem of pupil dropout (particularly among Roma children); and a deepening of educational segregation. Unfortunately, all three negative consequences became apparent quickly. For example, in 2008 and 2009, more than 450 schools were closed, primarily in villages. Dropout rates also increased, as many Roma children in villages where schools had been closed did not continue their education, despite the provision of free transport.

These negative effects gradually led the Ministry of Education and Science to reconsider the one-dimensional “money follows the pupil” principle. In the 2013/2014 school year, an institutional standard was introduced in addition to the unified expenditure standard (UES) per pupil. When the Pre-school and School Education Act was adopted, Article 281(1) stipulated that school education would be funded through three standards – for a pupil, for a class and for an institution. Their implementation began in 2018.

(It is interesting to note that some of the arguments for introducing the three standards are precisely the ones being used today. In 2018, Silvia Georgieva wrote in Sega newspaper: “The new funding model for secondary education is definitely being awaited with hope by the profession because of the promised additional funds for small schools and those with a concentration of vulnerable pupils… The expectations from the new school funding model are that it will, as far as possible, put small and large schools on an equal footing, i.e. balance the system… The great expectations of the new funding model are that it will weaken the now-rejected principle of ‘money follows the pupil’, which teachers believe has led to various distortions. Teachers have already suffered so much from the current way of distributing funds, which forces them to conceal pupils’ absences simply to retain the funding that follows them, that they welcome any change.”)

Thus, school education funding today is based not only on the number of pupils, but also contains two additional standards that reduce the differences between large and small schools. The institutional UES is the same regardless of whether an institution has 50 or 1,500 pupils. The same applies to the UES for a class – the funding received is the same whether the class is undersized (it may even have only 10 pupils) or at the full maximum of 26+3. The latter provides a good opportunity for more balanced funding of different schools – urban and rural, with large and small numbers of pupils. Here, the “key” lies in the amount: how high are the standards for an institution, a class and a pupil? The more funding allocated for a class and an institution, the smaller the “curve” in the differences between individual schools. Clearly, there will always be a difference between a school educating 100, 500 or 1,000 pupils, but higher UES values for classes and institutions give teachers in different schools a chance to receive salaries that are more equal in size, while pupils can have equal or almost equal opportunities. (During a meeting on 1 August 2024 between then Minister of Education Prof. Galin Tsokov and Chair of the Parliamentary Education Committee Krasimir Valchev, on the one hand, and Amalipe Center and schools from the “Mission Achiever” network, on the other, to discuss funding problems faced by rural schools, Krasimir Valchev identified an increase in the UES for a class as one of the steps towards addressing these problems.)

It is a fact that the largest UES is the one for pupils and, from this perspective, “money follows the pupil”. But it is also a fact that the UES for a class and for an institution are established by law and have proven over the years to be “buffers” that provide an opportunity for more balanced and fair funding of different schools. The question is what the ratio between the three unified expenditure standards will be.

Funding for work with vulnerable groups – an opportunity for fairer funding

In 2018, the Ministry of Education and Science and then Minister Krasimir Valchev introduced another important buffer that gives schools with Roma pupils and rural schools a chance to provide higher-quality education. Through Article 52a of the Regulation on the Financing of Educational Institutions, institutions with a concentration of vulnerable groups have received and continue to receive additional funding for their work. The vulnerability of pupils is determined on the basis of their parents’ educational status – if the parents have less than secondary education, their children are considered to belong to a vulnerable group (in other words, this is not based on mother tongue or ethnic origin). Schools and kindergartens are divided into five groups according to the percentage of parents without secondary education and without basic education, with the additional funding being highest in Group 5 (between 80% and 100% of parents have a low level of education) and lowest in Group 1.

The funds received under Article 52a fall under the so-called Pillar 1 of delegated budgets, meaning that they can be used exclusively for salaries and fees. Through these funds, schools pay for the employment of educational mediators, participation in outreach teams, additional Bulgarian language training and all other activities that contribute to ensuring full enrolment and attendance (including additional remuneration for teachers). The logic behind this investment is clear: educators working with children from vulnerable groups make additional efforts, which should be better remunerated, thus creating the conditions for quality teachers to work in these educational institutions as well. In addition, schools and kindergartens with a concentration of vulnerable groups need educational mediators, teacher assistants and social workers, and the funds under Article 52a cover their salaries.

It is important to note that this investment indirectly helps to stabilise the funding of rural schools. It was not designed for this purpose, and funding under Article 52a is received by all schools with a concentration of vulnerable groups – regardless of whether they are urban or rural schools, or institutions with many or few pupils. However, the fact is that out of 800 schools that are the only school in their locality, 750 have a concentration of vulnerable groups. In practice, almost all rural schools educate predominantly pupils from families with a low level of educational attainment. The number of pupils in them is small (the exceptions can be counted on one hand and are primarily in Sliven Province – for example, the schools in Topolchane, Gradec, Sotirya and others), and in this way the funding under Article 52a becomes a key prerequisite for the survival of these rural schools.

As I pointed out, this support for schools that are the only school in a locality, based on the vulnerability of their pupils, is indirect: it does not apply to the small number of rural schools without a concentration of vulnerable groups. Amalipe Center has repeatedly proposed the introduction of another UES – for schools that are the only school in the respective locality. The fact is that these schools are the only educational institution providing the relevant educational stage in a particular village and, as such, they should perform additional functions.

Quality of education – the missing component

One of the important criticisms levelled at the “money follows the pupil” model is that it does not incentivise – or, at the very least, does not take into account – the quality of education. The UES values are the same for schools with high and low levels of quality. In fact, there is no objective criterion defining what “quality of education” means. Should it be based solely on school attainment, on the results of the national external assessment (NEA) and state matriculation examinations (DZI), or should it also include the number of pupils who drop out, those who do not continue to the next educational stage, the competences acquired, as well as a range of other elements?

This raises another key question: how do we measure the quality of education in different educational institutions? For years, two approaches have been competing. Horizontal ranking/comparison of different schools based on NEA and DZI results has become popular and has proven to be ineffective and unfair. It is not the same thing to educate children from families of university graduates with a high socio-economic status.

An alternative approach is to measure the so-called added value that a school provides for its pupils. In other words, the extent to which the school and the educational process within it contribute to the pupils’ literacy and learning (I use the word “literacy” in its broadest sense, meaning educational attainment). What matters here is what kind of pupils the school educates, what level they are at when they enter school, and how they develop over the different years, grades, stages and levels of education. Schools are not compared with one another; instead, the development and added value of each individual school are tracked – in other words, the school “competes” with itself.

The principle of measuring schools’ added value began to be developed in Bulgaria as early as 2013, with the support of the World Bank and the participation of a team led by Prof. Kiril Bankov. The model was subsequently further developed within the Ministry of Education and Science. The idea is that a school’s quality should not be measured solely through pupils’ absolute results in the NEA and DZI (at the time, the usual practice of the Ministry of Education and Science and the Regional Departments of Education was to produce horizontal rankings of all schools according to external assessment results), but through the progress pupils make during their education, taking into account their starting level and the influence of factors such as socio-economic status, family environment, language and school characteristics. In 2021–2022, the Ministry of Education and Science and Prof. Bankov’s team developed and piloted a more comprehensive statistical model for assessing added value, which makes it possible to determine the extent to which a given school achieves better or poorer results than expected for pupils with similar characteristics. The initial ranking of schools according to “added value” was presented to the sectoral council at the Ministry of Education and Science (which includes both ministry experts and education trade unions and principals’ associations). As expected, many schools with a concentration of vulnerable groups were among those at the top of the ranking. The ranking was supposed to be published in September 2022, but this did not happen – at the time there was yet another change of government, a vote of no confidence and a new caretaker government. In any case, no minister has published the ranking since then, although all have expressed support for assessing added value.

Importantly, the Ministry of Education and Science explicitly stressed at the time that added value should not be the sole indicator of quality, but should be combined with other indicators that differ according to the type of school. It is precisely this approach, which has already been under development for more than a decade, that is relevant again today – not as the only indicator, but as a mandatory one.

What can be done?

The stated desire to improve the school education funding model so as to provide security for teachers, including those working in small rural schools, is entirely justified and timely. More and more rural schools will have undersized classes and declining numbers of pupils. This is an objective consequence of the migration of many families to Western Europe, as well as lower birth rates, including within the Roma community. (Contrary to widespread stereotypes, the average number of live births per Roma mother is 2.0, according to the latest census.) In this situation, it is hardly surprising that some schools resort to negative practices, such as enrolling pupils who do not actually attend school, moving pupils up to the next grade even when they do not have the necessary knowledge, and so on. It is important to find an appropriate funding model that provides security for all schools.

What could this model include?

As I pointed out above, let it be developed within the framework of delegated budgets rather than leading to their abolition. The current legal and regulatory framework provides opportunities to improve funding through:

1. Increasing the UES for a class and an institution: the higher they are, the greater the security for small schools and kindergartens.

Let us make a sample calculation of the budget of a school with 100 pupils and one with 1,000 pupils at the current UES levels: €1,859 per pupil, approximately €9,428 per class and approximately €44,450 per institution. Of course, the actual budget includes additional components – for example, funding for material facilities, full-day organisation, extracurricular activities, resource support, transport and others, as well as regional coefficients and additional funding. But for the purposes of our “intellectual exercise”, we will not take these additions into account. Nor will we consider the possibility for municipalities to redistribute up to 15% of the resources received among individual educational institutions. What does the school-level budget look like based on the current standards for pupils, classes and institutions?

Let us also assume that you are the principal of a primary school with 100 pupils and that you want all of them to be educated in separate classes – a prerequisite for higher quality and for ensuring that your pupils do not “escape” to other schools. Clearly, some of these classes will be undersized. Municipalities usually allow them to operate, but do not provide additional funding for them.

Your school, with 100 pupils and 7 classes, would receive a basic delegated budget of €296,346: €185,900 under the UES for pupils, €65,996 under the UES for classes and €44,450 under the institutional standard. This amounts to €2,963 per pupil.

If you are the principal of a school with 1,000 pupils and 40 classes, you will receive a basic delegated budget of €2,280,570, of which €1,859,000 comes from the UES for pupils, €377,120 from the UES for classes and €44,450 from the institutional standard. This amounts to €2,281 per pupil.

Thus, the basic funding per pupil in the small school is approximately 30% higher than in the large school. But the proportion of expenditure devoted to salaries is significantly higher, making life considerably more difficult for the principal of a small school. Various studies indicate that in small schools between 82% and 90% of the delegated budget is used for salaries and social security contributions, with teachers’ salaries at the statutory minimum. In large schools with 1,000 pupils, this percentage is significantly lower – around 70% – while salaries are higher.

Thus, the opportunity to invest in the quality of education through the delegated budget is significantly smaller in schools with a small number of pupils. Dysfunctional practices also exist in large schools (the widely publicised case of a school entering grades for and promoting to the next grade a pupil who had already died occurred in one of the large schools in Plovdiv and has nothing to do with Chudomir’s feuilleton “For God’s Sake”). But the fact remains that insufficient funding creates conditions for dysfunctional practices (let us recall the proverb “A poor man is a living devil”).

If we increase the UES for an institution by 15% and the UES for a class by 10%, while keeping the current level of funding per pupil, the increase in the budget of a school with 100 pupils will be 4.48%, while for an institution with 1,000 pupils it will be 1.98%. The Ministry of Education and Science’s financial experts can easily calculate what is necessary to secure the funding of small schools. In any case, increasing the UES for institutions and classes is the way to create a fairer funding model for educational institutions if we want to secure the future of smaller schools.

2. Continuing funding for work with vulnerable groups under Article 52a of the Regulation on the Financing of Educational Institutions: this is of key importance for educational mediators (their salaries are covered precisely by these funds, and without them at least two-thirds of the current positions would be cut), as well as for ensuring the operation of rural schools serving vulnerable groups. A positive development since 2025 has been the introduction of a standard for an “institution with a concentration of vulnerable groups” within the funding provided under Article 52a. This standard is the same for all schools and kindergartens receiving support for work with vulnerable groups, regardless of the number of pupils they educate. It differs only according to the group – the amount is highest for Group 5 and lowest for Group 1. At present, this standard is relatively small, but there is nothing to prevent it from being increased.

The funding under Article 52a itself is intended for the salaries and fees of teachers and mediators. It should be updated and increased, which would also create the conditions for greater security for schools.

Of course, regulatory and legislative changes could also be introduced to support all schools, including those in small settlements and with small numbers of pupils. For example:

3. Introducing a UES for a school that is the only school in a locality: as noted above, these educational institutions perform additional educational and cultural functions and should therefore receive additional funding – regardless of whether or not they have a concentration of vulnerable groups;
4. A standard for the quality of education: the introduction of such a standard has been discussed for years. It may not necessarily take the form of a UES, but rather an additional allocation or component through which schools with low results could be supported in catching up. The latter should be complemented by an allocation for high achievement and quality, which would incentivise educational institutions. These types of allocations could be distributed in a way that encourages greater effort, diversification of educational provision and the achievement of better results. In my view, the funds provided to schools with low levels of educational attainment should be higher, but their use should be regulated much more strictly and principals should have less discretion in this regard. Conversely, the allocation for high-performing schools could be lower but linked to greater freedom in how it is used. Of course, there can hardly be any doubt that schools providing high-quality education will gain much greater prestige, which will in turn be linked to attracting more pupils.

The big question that always arises is how to assess the quality of education. I believe that a balance needs to be found between several objective indicators (something like a “public procurement” based on NEA and DZI results, absences, dropout rates, the number of reintegrated pupils, performance in academic competitions, etc.) and an assessment of added value. The latter is particularly important so that the efforts of educators and mediators in educational institutions with a concentration of vulnerable groups can be recognised and valued. It is high time for the assessment of added value to be introduced and formally recognised by the Ministry of Education and Science.

The ideas presented here are merely “food for thought” in the discussion on changing the school education funding model. They can and should be supplemented and diversified. What is important is that a broad group of principals, teachers, mediators, experts and representatives of educational NGOs participate in the discussions, rather than these being “confined to the usual suspects” – the Ministry of Education and Science, the Regional Departments of Education and the social partners. The broader the contribution from the field, the better the new school education funding model will be. I believe that we should focus more on optimising and making use of the opportunities offered by the existing model, rather than creating an entirely new one. I have become convinced that an evolutionary, rather than revolutionary, approach to education produces better results.

Author: Deyan Kolev