Inadequacy of Recurring Expense Allocation to Schools

Adequacy of Financial Allocations for

Recurrent Expenditures in Public Sector
Schools of Punjab

Author Muhammad Afaque Durrez

PhD Scholar EPM
AIOU, Islamabad
Cell: 0333-5141866
Email: afaqdurrez@hotmail.com
Co-Author Dr Afshan Huma
Assistant Professor
Department of EPPSL
AIOU, Islamabad
051-9250059
Email: afshanhuma@gmail.com

1
 Adequacy of Financial Allocations for Recurrent Expenditures in Public Sector
Schools of Punjab

Abstract

Public sector schools need finances to run their day to day activities. Budgets
allocated to any school comprised of salary budget and Non Salary Budget (NSB). NSB
is usually allocated to Educational Institutions through financial tiers of provincial and
district administration which is meant for meeting recurrent expenditures to include
payment of utility bills, purchase of expendables, procurement of uniforms / books,
purchase of stationary, minor maintenance work of school building, postage and
number of other such expenditures. In present security threatened scenario provision
of security equipment has also been included in the purview of NSB. School covered
area and locality has nothing to do with these allocations whereas these factors play
pivotal role in increasing expenditures drastically.

Less allocations coupled with increased recurrent expenditures is creating gap

in meeting overall output of schools in delivering quality education to the students. NSB
allocation criteria needs revision to meet the increasing expenditures. This paper has
brought forward the existing criteria including missing links and has suggested the
ways to overcome these gaps and make allocation procedure more effective.

Keywords: Recurrent Expenditures, Educational Expenditures, Insufficient Funding

Introduction

Whenever there is a discussion about the schools or educational institution,

mind is automatically diverted towards the learning outcomes in terms of addition to
knowledge base and civilized society which contributes towards the brighter and
prosperous Pakistan. Achieving this goals is not possible in the absence of refined
infrastructure coupled with knowledgeable human resource which can impart the
education in a way that the desired targets can be achieved in an immaculate way. To
attain such infrastructure and resources there is always a requirement of abundant
finances.

In the current scenario finances available to schools in Punjab can be broadly

distributed in three categories i.e. Salary Budget (SB) for payment of salaries of
teaching / non-teaching staff, Non Salary Budget (NSB) meant to cover recurrent
expenditures of institution and Farrogh e Taleem Fund (FTF) comprising of fee
collected from students. The allocations of these funds less FTF is made through
approved financial tiers. Sufficiency of such allocations depends on the type and
locality of school coupled with the enrolment of students in terms of existing data.

NSB is the only fund available to school which can be utilized for the day to
day needs. Allocation of NSB is dependent on the total enrolment of students as on 31
October of previous year. Rate of NSB is approximately PKR.1000 per student per year.
NSB comes under tied grants and whatever is approved from the provincial government
is provided to the school. NSB is allocated to schools on annual basis and disbursed
quarterly in school accounts. The budget is meant to cover recurrent expenditures to
include Repair & white wash of classrooms, material for gardening, utility bill,
accessories for cleanliness, cleanliness of school, repair of electric wiring, repair of
furniture, purchase of furniture, sanitary work and drinking water, learning material for
children, utility bills’ payment etc.(PMIU, 2016).

NSB plays an important role in maintaining the quality of school in terms of

academic standards, secure environment and comfortable classrooms with requisite
facilities. The studies carried out in past have brought forward overall paucity of fund
allocations but were unable to pinpoint the exact expenditures and receiving of the
schools. The current study is significant in terms of identifying and bridging the gap
between existing and needed steps to resolve financial issues faced by public schools
in Punjab. The objectives of study were as under:

1. To find out the existing funding options available to schools.

2. To find out the expenditures incurred by schools.
3. To identify of other sources available to fund the expenses.
4. To recommend measures to bridge the shortfalls.

To achieve the objectives, researcher found out the answers of following

questions:

1. What all sources of funding are available to meet the recurrent expenditures of
school?
2. What are the major expenditures on day to day maintenance of school?
3. What criteria is being followed for allocation of NSB to schools and how it can
be improved?

Literature Review

Internationally, refined instruments have been employed to know about the

inflow of public money to state hierarchies. Public Expenditure Tracking Survey
(PETS), a tracking instrument which was initially tested in Uganda. It produced
unmatched results including decrease in pilferage of grants to schools from 80% to 20%
a span of short time. The same was picked up by other countries including Peru,
Zambia, India, and Nepal brought results in key areas including primary education. In
total PETS succeeded in identifying low allocations, pilferages, corruption,
bureaucratic hurdles and political pressures (World Bank, 2015).

NSB allocations is done from the overall budget being diverted to the education
sector. If we critically look at the educational budget, current Prime Minister of Pakistan
Mian Muhammad Nawaz Sharif promised at Oslo summit on 7 July 2015 that
government will spend 4% of Gross Domestic Product (GDP) whereas the actual
figures in general budget never exceeded for about 2.59% in 2013-14, 2.62% in 2014-
15 and 2.68% in year 2015-16 (Alif Ailaan, 2015). These allocations give an idea that
very meager allocations are made for education in general budget and out of it about
3% counts for NSB which is enhanced to about 15% in year 2013-14 (School Non
Salary Budget, 2015). In Punjab NSB allocations / expenditure in last 5 years from 2010
to 2014 is about 11%, 11%, 7%, 7% and 8% respectively of total educational budget
(Institute of Policy and Social Studies, 2014). This pattern of allocation of funds in NSB
gives a fair idea that in existing resources, infrastructural development with its
maintenance and other allied expenditures is difficult despite how best we plan or make
modules.
 Public Expenditure Tracking Survey (PETS) report of Jhang District, Punjab
province delineated on the cost incurred per student per school (Shoaib, 2015). The unit
cost per student and per school was calculated by using the district budget statistics and
enrolment of target district. During year 2013-14, total 294,365 students went to 1664
schools, while 210885 students out of the total were enrolled in 1326 primary schools.
During FY 2013-14 the government spent PKR 15,285 on each primary school student
out of which only PKR 129 was spent on non-salary expenditure. Whereas an average
of PKR 2,430,963 was spent on each primary school with a meager average of PKR
20,587 as non-salary expenditure during FY 2013-14. The formula is same for whole
Punjab hence condition of remaining districts is expected to be same.

A study carried out by UNESCO Pakistan in 2013 (Education Budgets, 2013)

regarding budgeting process in Pakistan and they have observed some serious flaws in
the system. Most of these flaws are prevalent in the budget making process and the
process is neither open nor participatory. The budgeting process is exclusively
dominated by government educational echelons and the views of teachers, parents,
students and communities regarding needs and priorities are not taken into account at
any stage of the process. Civil society is not consulted and the budget making process
is treated as a confidential process. Furthermore, developmental priorities are not
determined in an informed, transparent or fair manner. The Budget Calendar, as
provided in the Budget Rules of 2003 (District Budget Rules, 2003), is not followed
and therefore does not ensure efficiency and public participation in the budgeting
process. The budget making process starts very late and the process is not completed in
time.

In 2014, government of Punjab introduced a step to improve school security

with issuing a notification by Government of Punjab on 16 December 2014
(Government of Punjab Home Department, 2014). Schools were told to utilize already
depleting NSB for enhancement of security with no augmentation in shape of any
security grant thus taxing already less funds at school level. The pattern of allocations
of the budget clearly show that there is not much available in terms of development.
Most of the budget chunk goes in salary of the employees and non-salary budgetary
allocations are not much to cater for needs of improvement in building infrastructure or
meeting of recurrent expenditures of the schools.

The study “An Analysis of Public Expenditure on Education in Pakistan”

(Hussain, Qasim, & Sheikh, 2003) analyzed the allocation of funds to the education
sector at various tiers. At the provincial level allocations to the education sector as
percentage of total budget stands between 20 to 30 percent. The major proportion of
provincial education budget is used to meet the recurring expenditures, the expenditures
meant for the maintenance of existing national assets. The development expenditures,
necessary to generate future national assets, on the other hand are less than ten percent
for Sindh and Punjab whereas for KP and Baluchistan it is 15 percent to 20 percent of
the total education budget. The allocation of resources at the districts of Punjab and
Sindh depict the similar picture as for the provincial level. There are no disparities
between the districts on allocation of funds to the education sector. It is, however,
noticed that there is a positive correlation between the district’s literacy rates and the
district’s allocation of funds to education sector.

The “Financing Education in Pakistan – Opportunities for Action” is a country

case study carried out to highlight the problems in education in Pakistan and was
presented at Oslo Summit (Malik & Rose, 2015). It has been highlighted that since 2000
government of Pakistan did promise the increase in educational spending but in any FY
the promised spending never exceeded 4% of GDP. In actual the maximum spending
merely reached 2.5% of GDP. The major portion of the budget goes to the defense and
debt servicing hence leaving meager amount for health and education. As per the
research, maximum chunk of educational budget goes to recurrent expenditures which
form 90% of salaries thus leaving 10% for other developmental costs. Hence
improvement or maintenance of existing infrastructure or developing new is a difficult
task.

Methodology

Research Design: The research was descriptive in nature comprising of both

quantitative and qualitative data. The results of study can be verified and adopted for a
larger population at a later stage. The study was basically conducted in two phases.
Phase-I was purely quantitative survey in which questionnaires were served and taken
back from respondents by hand. Phase-II was comprising of qualitative data sources
used to support and clarify already collected Phase-I data i.e. Interviews, document
analysis, video / photographic analysis.

Participants: The population for this study was all primary schools of district Attock.
The rationale of choosing Attock was the farthest district from the provincial center and
is less developed. Primary schools were chosen because these are more in number and
less developed as compared to other schools. A representative sample of 98 respondents
out of total population of 1118 primary schools (Including 95 School Heads, 1 DEO, 1
DDEO, 1 Assistant from EDO F&P). Purposive sampling was used to select the schools
from 3 categories i.e. schools with less than 100 students, schools with less than 200
students and schools with less than 300 students. Reason was that the allocations of
NSB is on enrolment and not the size. School heads were given questionnaire check list
to fill the expenditures of school. DEO, DDEO, 1 school head and Assistant EDO F&P
were interviewed to know about NSB allocations.

Instruments: Data used was collected through survey method using structured
questionnaire. First part of the questionnaire was in the form of checklist where
respondents were asked to give answers in “YES” or “NO”. Second part of the
questionnaire was comprising of answers giving strength of students and certain
financial figures clarifying allocations and expenditures in terms of rupees. Document
analysis included budget allocation documents and subsidy grants. Interviews were
conducted to counter check the data gathered during survey or to explore any other
factor which was left out. Photographic interpretation was used to know the size of
school as size did not play any part in NSB allocation. Procedure of transcription and
open coding was adopted to get the correct interpretation from interviews and document
analysis as specified by Strauss and Corbin (Corbin & Strauss, 2015). At the same time
open coding technique of Johnny Saldana was also consulted and adopted (Saldaña,
2009). Coding was done which emerged into main themes and sub themes there by
giving the gist of findings to achieve precise results.

Reliability and Validity: Researcher consulted subject specialists for content and
construct validity of questionnaire and modification process. After validation the
reliability of final questionnaire was tested. The questionnaire was pilot tested on 10%
of sample outside population. Since the answers were figures which are supported by
documents hence statistical test was not required to be applied. However grey areas
were addressed and corrected in the light of feedback. Interview protocols for semi
structured interviews were made and finalized in the light of guidance provided by the
subject specialists.

Results

In view of the available literature data was collected through questionnaire

comprising of three parts. First part was to know about the existing sources available
for financing at school level i.e. NSB / FTF, second part was comprising of the
exploration of additional sources other than existing sources and third part was to know
about the average annual expenditures of school. In addition to this, security
expenditure was calculated for three types of school sizes. This was done in the light of
expert opinion obtained from security specialists about equipment needed and by taking
price quotations. This data gave fair idea about the allocation of NSB from financial
tiers and collection of FTF from the school students.
Table 1
Existing Sources of Funding for School
Codes to Interpret the Answers of Table 1
Q.4
Codes Q.1 Q.2 Q.3
Any Security Head
Funding Sources Annual NSB receipts Annual FTF receipts
in NSB/FTF
1 NSB and FTF Below PKR.50000 Below PKR.50000 Yes
2 All funds / Grant Below PKR.100000 Below PKR.100000 No
3 Below PKR.150000 Below PKR.150000 N/A
4 Below PKR.200000
5 Below PKR.250000
6 Below PKR.300000
7 Below PKR.350000
8 Below PKR.400000
9 Below PKR.450000
10 Below PKR.500000
N/A stands for Not Applicable
Responses
Question Label
1 2 3 4 5 6 7 8 9 10 Total
1 Funding Sources 99% 1% - - - - - - - - 100%
2 Annual NSB receipts 2% 6% 8% 69% 6% 5% 1% 1% 1% 1% 100%
3 Annual FTF receipts 63% 35% 2% - - - - - - - 100%

4 Any Security Head in 0% 100% - - - - - - - - 100%

NSB/FTF

Table 1 indicates that all types of school expenses were met from NSB and FTF.
Only 1% schools had shown other funds i.e. SMC which was discontinued. Annual
NSB receipts per school at average were around PKR.150000 to PKR.200000. Annual
FTF receipts per school were around PKR.60000 which were received from students
on account of monthly fee. These amounts also include leftover / unspent amount of
previous years. The picture becomes clearer once table is scanned about the exact
amounts. In view of the above answers it is clear that no head other than NSB and FTF
is available to finance for school expenditures including strengthening of security.
There was a need to ascertain some other source of financing available to the schools.
Responses are tabulated as under. This part is also the continuity of the same
questionnaire.

Table 2
Identification of Sources other than NSB/FTF for Financing
Responses
Question Label
Yes No N/A Total
5 Any grant received since 2014 other than NSB 0% 100% 0% 100%
6 Amount of grant if received. 0% 0% 100% 100%
7 Any financial help from community/NGO . 0% 100% 0% 100%
8 If help received from community/NGO, Amount 0% 0% 100% 100%
9 Suggest any other financing mean 2% 98% 0% 100%

Table 2 shows that no additional grant has been given to primary schools.
Schools did not receive any amount from community or NGO to supplement the
existing funds. Only 2% school heads suggested that some additional grant should be
given to meet security related expenses or equipment is to be provided and fixed by the
educational management at district level.

After ascertaining all the financial funding, spending was ascertained through a
questionnaire cum checklist from school heads. They were asked to furnish actual
expenditures required to be incurred annually. Details are reproduced in table 3.
Table 3
Actual Average Expenditures of School
Amount in PKR
Type of Expenditure School with 100 School with 200 School with 300
Students Students Students
Electricity 12000 24000 48000
Gas 0 0 0
Water 0 0 0
Stationary 12000 24000 40000
Expendables 5000 10000 15000
Travelling 5000 8000 12000
Transportation 1000 2000 3000
Telephone / Cell 500 1000 1500
UPS Maintenance 15000 15000 15000
Computer Maintenance 3000 3000 5000
Internet / DSL 2000 2000 2000
Gardening / Plants 5000 10000 15000
Postage 300 500 1500
School Uniform 5000 10000 15000
Building Maintenance 30000 40000 50000
Furniture 8000 15000 25000
Electric Fixtures 5000 10000 15000
Library Books 5000 10000 15000
Medicines for First Aid 3000 4000 5000
Hot and Cold Charges 6000 10000 15000
Total 122800 198500 298000

The expenditures produced in Table 3 clearly shows that schools need minimum
PKR.122800 for a small school, PKR 198500 for medium and PKR 298000 for a large
school which does not include security expenditures.

Data collected amply supported that the allocations as given by school heads
are not sufficient to cater for the recurrent expenditures but it was to be counter checked.
Interviews were conducted from administrative tiers to know about the actual
allocations and problem areas. There are 1118 primary schools in district Attock. On
examining the budget document acquired from DDEO office gives following figures: -

1. A maximum quarterly allocation in NSB to any school is Rs.126238.00. It

means that this specific school will get in total Rs.504952.00 per annum. This
is maximum allocation which only 1% primary schools are getting in total NSB.

2. A minimum quarterly allocation in NSB to any school is Rs.293.00. It means

that this specific school will get in total Rs.1172.00 per annum. This is minimum
allocation which any primary school is getting in total NSB.

3. 33 Schools are those which get below Rs.4000.00 as quarterly NSB allocation.
It means that they will get in total less than Rs.16000.00 per annum.

4. There are only 14 schools which are getting quarterly above Rs.100000.00
making it Rs.400000.00 per annum.

5. All remaining schools of district are between Rs.1172.00 to Rs.400000 per

annum.

It was also pointed out by administrative echelons that the school heads are not
experienced in independent handling of financial matters there by not meeting demand
and supply. Reason for variable holdings of NSB in schools was due to non-spending
by school heads in fear of audit objections. Monitoring and Evaluation Assistants
(MEAs) do not provide requisite assistance to school heads or do not highlight the grey
areas. Verbally it was told to schools to spend NSB on additional security related
expenses. F&P in reply told that enhancement in annual budget is not approved by
PMIU and is reduced equivalent to old allocations.

Aerial view of schools clearly showed that some schools are constructed on an
area of about 1-2 Kanal whereas many are with area exceeding 10 Kanal. Covered area
of class rooms was almost same for both categories therefore almost same strength of
students can be accommodated. So, area plays important role and school with more area
needs more efforts in maintenance than the school with less area. Likewise, the school
with more area needs more funds than the school with less area. Since funding is
dependent on strength and not area hence both type of structures will get same
financing.
Discussion

Researchers reported in earlier studies mentioned in literature review supports

the Educational financing is not sufficient where the promised goals are mostly not met.
Pakistan spends 2.4% GDP on education. At national level, 89% education expenditure
comprises of current expenses such as teachers’ salaries, while only 11% comprises of
development expenditure which is not sufficient to raise quality of education(Aftab,
2015). From this 11%, very meager amount goes for NSB thereby contributing to
deplorable situation of schools and general and primary schools in particular. It is a fact
that money matters in educational outcomes / achievements, the significance of
educational financing plays a pivotal role in shaping society. Deborah &
Richardconcluded from 35 years of production function research, a positive and
significant relationship between expenditure and student performance in
education(Deborah & Richard, 1998).

The study was aimed after deliberate analysis of national as well as international
studies. There are national studies aimed at strategic financing in education but very
less work was found at micro level to find out what lowest tiers are receiving. A
requirement was felt by the researcher that some work should be undertaken to bridge
the gap between recurrent expenditures and financing. The study with an aim to make
school productive for coming generations was taken up. Numerous problems were
highlighted including financing, administration and non-availability of funds. The
questions which were posed include; availability of funding, existing expenditures and
funding options.

The research study has addressed the financing issues and identified weak links
which if addressed will help in improving financial condition of the schools. The study
will be of great help to the administrators at decision tiers to address the issues of
management and financing.

Conclusion

At times there are flaws in policies because the centralized management issuing
policies may not be fully conversant with the general situation prevailing in the specific
region. It’s the duty of the recipients that they highlight the problem areas for
practicability in implementation. Despite redress of many aspects, it has been observed
that on ground situation is not healthy as it should be. In the light of analysis of the data
and the findings of the study, following conclusions are drawn: -

1. Existing budgetary heads with schools include NSB and FTF. These heads are
being utilized for routine expenditures but the sub heads in these funds do not
justify certain expenditures like security spending.
2. School heads are not proficient enough in handling accounts and financial
matters and mostly dependent on clerks. This is the reason that distribution of
NSB in appropriate heads is not being done.
3. None of the primary school has been given special grant for enhanced
expenditures not covered in existing heads.
4. No suggestion in improvement of funding options has been given by school
heads. This makes it clear that either they have no interest or they are
incompetent / not trained to think on such issues.
5. Budget demanded as per requirement are not approved and are reduced to
previous year’s allocations by PMIU.
6. Allocation of NSB in purely based on total strength of the students in particular
school as on 31 October each year. It was seen that the area of schools varies
from 1 Kanal to more than 16 Kanals. Area of school has no link with allocation
of budget of NSB. This clearly shows that two schools with same strength but
different areas get equal budget which may not be sufficient for school with
bigger area.

Recommendations

Keeping in view the conclusions drawn out of results. It is evident that the
procedural errors are contributing to the low financing to schools. School heads do not
raise voice to highlight their problems or the same is not being considered by higher
echelons. Following is recommended for streamlining the financing issue to meet
recurrent expenditures at school level: -

1. NSB allocation criteria i.e. Rs.1000 per student per annum should be revised to
at least Rs.2000 per annum. Some fixed grant e.g. Rs.50000 per Kanal of area
is to be added to cater for variable sizes of schools.
2. Budgeting heads of NSB are to be revised to include new heads so as to avoid
audit objections at later stage.
3. In service training of school heads in basic accounts so as to enable them to
handle accounts as well as forecasting of future expenditures.
4. Budgetary cuts by PMIU should not be imposed unless policies permit such
deductions to regulate funds in developmental heads.
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