1.0 country is seen primarily as the process by


Adequate funding ensures
quality educational services. The availability of school funds and how they are
allocated, distributed and utilized in the different areas of the school system
determine the achievement levels of school goals. Without funds, in-service
programs that are designed to improve teaching and support students’ learning
cannot be developed. Hough (1993) stated that, financial management in
education is an integral part of general educational management which embraces
curriculum, staffing and timetable decisions, all of which relate directly to
essential function of the educational institution and also essential non
instructional activities. School finance is one major component in every
education system. World bank (1986) claims that financial management in
developing country is seen primarily as the process by which funds are
allocated or budgeted, transferred, expended and evaluated or audited, a prime
focus being on the budgeting and transferring of federal funds to the various
states within the country. This section will address education financing in
developing countries. All over the world, education system of countries are
assessed through various indicators. One of the important indicators of
education is the public expenditure on education as percentage of Gross
Domestic Product (GDP) of the country and expenditure on education as
percentage of the total expenditure by the government.

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2.0 Recent Studies from Developing Countries

 2.1 Management of
school finance in Malaysia


Malaysia, Federal Government is the sole provider of national education. This
can be seen through free education at primary and
secondary levels, a centralized education system, and minimum
involvement by the state government, local authority and private sector in the
provision of primary and secondary education.The importance of finance for
education can be seen by the annual allocation given by the Federal Government
to the education sector. Every year the education sector receives about one
fifth (20-22%) of the total federal government allocation and about 5–6% of
educational allocation against Gross National Product (GNP) e.g. in 2004 total
educational allocation was 23 billion and total federal expenditure was RM 112
billion, in term of % of total educational allocation against total federal
allocation was 21.28%, and 6.26% against GNP.


            The government of Malaysia has allocated an huge amount
of money for the education sector with the establishment of school as
Responsibility Centre or Pusat Tanggungjawab (PTj) to guarantee the utmost quality
of education for Malaysian society. Therefore school finance has to be managed tactically
to ensure the best educational outcome through efficient resource allocation.
The state education department will act as the Head of PTj schools with
responsibility in the distribution of the allocated warrant, supplying related
facilities and monitoring the financial administrative tasks. The findings
shown a few crucial strategies that need to be emphasized by schools both at
individual level and school level so as to successfully manage school finances.
The collaboration and shared  effort from
all stakeholders are expected to bring transformation toward effectual school
based financial management in Malaysia. Throughout the years of establishment
of PTj schools in Malaysia, one issue involved a certain group of schools that
still demonstrated a weak quality of financial management. Even though the PTj
schools are appointed based on good financial management, they were reported to
be in poor condition in terms of lacking resources and unsatisfactory financial
performance. This was especially certain in the aspect of internal audit and
financial controls. It was found that most of the schools fail to follow the
rules on cash saving, salary remuneration and bill payment. Another problem
identified was the principals’ lack of knowledge and necessary skills in school
financial management; the principals merely delegate their duties of overseeing
the school finance to the administration clerk. 
(Wan Azman Wan Idris, 2002). There was no consistency in monitoring the
financial records or documentation during the school expenses transactions. In
some rare cases, principals simply neglected duty in monitoring the school
financial management because of their other responsibilities (Mohd Noor Said,
2004; Rusli Wahab, 2005; Wan Shamsiah Wan Yusoff, 2008). The School Audit
Division in its Annual Report has reported that some principals of PTj schools
failed to list their objectives based on priorities and to provide a proper
strategic plan for schools to reach their objectives (Kementerian Pelajaran
Malaysia, 2007). In another case, some principals used the money for wrong
purposes in a large and significant amount even though the specific allocation
had been planned in the school budget every year (Kementerian Pelajaran
Malaysia, 2007.


The attitude of readiness
and awareness is important for all stakeholders to reinforce the effort toward
the best education outcome through improvement in school site financial
management. The profile of effective school-based financial management in
Malaysia is organized into four main financial functions, namely planning, financial
acceptance, acquisition and disbursement, and control and evaluation. The
function of planning consists of five elements: school vision and mission
establishment, financial purposes, school finance organizational structure,
role of financial planner, and budget management procedures.


2..2 Management of school finance in Indonesia


In Indonesia, equity and
equality of educational opportunity have been a major issue and the Indonesian
government has introduced a variety of programmes to universalise nine-year
compulsory basic education. In 2015, public
spending on education as a share of GDP for Indonesia was 3.6 %. Though
Indonesia public spending on education as a share of GDP fluctuated
substantially in recent years, it tended to increase through 1972 – 2015 period
ending at 3.6 % in 2015. School Based Manaegement (SBM) in Indonesia was
introduced in some pilot areas in 1999 and expanded to throughout the country
in 2001. SBM in Indonesia is targeting four aspects of basic education:
quality, equality, relevance and efficiency. Schools receive government
subsidies from the district bureaus of education. The amount of the budget to
each school is determined by its immediate district bureau, according to the
situations and academic performance of the school. In order to receive their
budgets, schools are required to formulate annual plans and implementation
programmes. The annual plans are submitted first to the county offices, and the
county offices submit the plans to the district bureaus. Pupils or students,
parents and other community members as well as teachers need to participate in
the formulation and implementation of the plans and programmes.


The percentage of education
budget provided by the Provincial Government tends to decline due to limited
authority (Sartono, 2010). The percentage of education budget provided by the
District Governments remain stagnant and even declining – most of the district
“already allocated” above 20%, just using the transfer from central government.
The School teacher’s salary and allowance consume approximately 60% of the
national budget. Budget for improving the access and quality of education
mostly coming from the central government.


The Bantuan Operasional
Sekolah (BOS), school grants program introduced in Indonesia in 2005 as a
financial support scheme of the central government that seeks to improve access
to and the quality of basic education for every child in Indonesia. In this
regard, the BOS program in Indonesia represents a significant and innovative
approach to the trend found in many countries of the world towards more
genuinely “free” basic education by providing funds from the central government
to support the operational costs of schooling previously borne by families
through a variety of fees and other voluntary or involuntary contributions..
The objectives of the program are to reduce the public’s financial burden of
education in the framework of providing 9-years of good quality compulsory
education and to support school based management reforms. The program is
financed by the central government and allows schools to utilize funds
according to lists of authorized and unauthorized categories of expenditure.
The program aims to ensure that schools have sufficient funds to operate,
reduce the education costs faced by households and improve school based
management. The program is huge and covers approximately 43 million primary and
secondary school students across Indonesia. 


2.3 Management of school finance in Rwanda


Since 2005, the education
sector in Rwanda has been decentralized. Schools at the basic education level
are controlled by district education officers, school principals, and PTAs.
Although PTAs have no authority over budgetary decisions or management of staff
but they do have the power to reprimand permanent teachers and to be consulted
in the hiring of contract teachers Whereas, budget allocation and distribution
of resources to federal secondary schools in Nigeria is independent of school
type, ethnicity, school composition, and region of school location.The Nigerian
National Policy on Education (2014) stated that, in order to achieve human
development through education, the educational goals must be consistent with
the basic needs of citizens and those of the society, with respect to the realities
of the changing environment and the modern world. Based on the Nigerian
educational policy, education is seen as means or vehicle for achieving
national development. At the administrational level, managing of schools as
well as funding is more or less distributed between the various State
Ministries of Education, the National Secondary Education Commission (NSEC) and
other agencies respectively.


 The ministry of education received the highest
share in the budget allocation. The Federal Government allocates funds to
federal secondary schools (Unity Schools) while the State governments are
responsible for funding and managing the rest of the state secondary schools.
However, at the administrational level, managing of schools as well as funding
is more or less distributed between the various State Ministries of Education,
the National Secondary Education Commission (NSEC) and other agencies
respectively. Bahamas, Jamaica and Suriname’s educational budget system highly
depend on external factors which in turn affect their economic and educational
development; education is the largest item of their government expenditure; and
all of the 3 countries are faced with rapidly-increasing staff costs. This
study concluded that various factors need to be considered in the funding
allocations to ensure all students regardless of their socio-economic status
have access to quality education.



2.4 Management of school finance in Kenya


The government of Kenya recognizes
education as the primary means of ongoing economic development, social
mobility, national cohesion, and social development. This has led to the
implementation of programs that rapidly expanded the education sector. The challenges
and gaps in the education sector include lack of comprehensive strategies for
teacher development and provision of holistic early childhood care and
education. Ineffective and uncoordinated monitoring and evaluation of education
outcomes and programs has worsen the weaknesses.

Study done by Erick Ochieng
Magak (2013) shows that there are challenges faced by head teachers in
financial management in public secondary schools in Kenya. The major kinds of
challenges included over spending and under-spending, entry into books of
accounts, low salaries of bursars and accounts clerks incompetent bursars, teachers
failure to handover accounting supportive documents, delay in disbursement of
FSE funds, school fees defaulting, unauthorized levies, inadequate knowledge by
the head teachers, inadequate knowledge by the head teacher, incompetency of
committee, inadequate auditing knowledge by the head teacher, irregular
auditing of schools by district auditors, inability to prepare books of
accounts up to final accounts. Parents no longer were required to pay fees, with
the introduction of free primary school in Kenya. This resulted in large
increases in student enrolment, but it meant that school committees no longer
could raise sufficient funds to pay for PTA teachers, so pupil-teacher ratios
increased significantly in Kenyan primary schools.


Budget preparation is an
important activity in financial management, where it is necessary to involve
all stakeholders to make it more acceptable and realizable. Failure to involve
stakeholders will lead to deficiencies in the budget where some areas will not
be catered for. In the study done in Lurambi Sub-county, it was evident that
schools did not involve all the people in the school system in budget building.
The budgets produced were therefore the work of the principal and the bursar
and this could have been poor. It was clear that monitoring and supervision was
only done by principals and the (Board of Governors) B.O.G and this raised
opportunities for corruption. In this study, it was found that schools have not
fully established other ways of raising funds and depend mostly on parents and
the government and therefore burdening them. Parents paid heavily in terms of
tuition (recurrent expenditure) and capital expenditure through P.T.A fund. Whereas,
the government on the other hand bear the payment of man-power. Data analysis shown
that budget approval was mainly carried out by B.O.Gs while the government was
not consulted on this.  It is recommended
in the study that schools should find other ways of raising finance to lessen
the strain on parents and the government as far as funding is concerned. This
will help open up the budget to include items that are necessary to make the
schools offer quality services. Besides, principals should involve other people
in the school system in budget building to provide cost effective educational
programs that meet children’s needs. Those included should be those that are
directly involved in the provision of education because they are in a better
position to know the needs of their areas of authority.


            In Kaloheni, like in all other districts of Kenya,
principals have to administer and manage their schools. Moreover, principal
have to carry out the financial management of their schools. Section 21 of the Education Act of 2010 (MOE 2010) states that, the
principal is the head of accounting  of the school and is he or she is responsible
to the management committee or school board for the effective control and
use of school finance. Findings of the study on  the financial management in Kenyan secondary
schools, repudiate the argument that the existence of a financial policy will
inevitably lead to good financial management in Kenyan schools, and
consequently quality education.


Proper management of
finances in secondary schools is very imperative to their operations. However, there
are serious financial challenges in public secondary schools in Kenya as
characterized by unexpected high fees charged on students. Study on the factors
influencing financial management in public secondary schools  by Munge, Kimani and Ngugi (2016)  shows that budget management and financial
controls positively and significantly influenced financial management. The
study concluded that existed policies and procedure of how funds were utilized
was the key in tracking funds and enhancing sensible financial management in
public secondary schools and there were instances of strong financial controls
observed in monitoring of how finances were utilized by involved departments
and persons and more so existence of control activities in the schools. The
study recommended that public secondary schools should have effective budget
management mechanisms and strong financial controls.



2.5 Management of school finance in Thailand


In Thailand, it is reported
that 800,000 children, or 15% of primary school-age children, are still out of
school, out of which 54% are females. To overcome these inequalities in
educational opportunity, the Thai government identified major target groups and
recognised the importance of delivering education to those groups. The groups
include children from low-income families, the underprivileged in overcrowded
communities, those residing in remote areas, child labourers and orphans. In
1997, Thailand launched SBM reforms with the purpose of overcoming the
deterioration in the quality of education. Thailand’s educational reforms put
special emphasis on decentralising administrative and financial authorities to
local and other educational institutions. In order to accelerate the reforms,
in 2003, the Ministry of Education legally incorporated every public primary
and secondary school. The incorporation of public schools gave them the
responsibility for their financing, allowing them to receive funds from
outside, for example, their communities, NGOs and private companies and primary
and secondary schools in Thailand are no longer under the direct jurisdiction
or control of the government. A school itself is entirely responsible for the
improvement of its teaching and learning environment.



2.6 Management of school finance in India


Education in India is given by the public sector as well as
the private sector. The funding was controlled and coming from three
levels: central, state and local. Free and compulsory
education is provided as a fundamental right to children between the ages of 6
and 14 under various articles of the Indian Constitution. 7:5 is the ratio of public schools to
private schools in India. The
Union Budget 2017-18 has fixed an outlay of Rs79,685.95 crores for the
education sector for financial year 2017-18, up from Rs72,394 crore in 2016-17
9.9% rise. Of the total expenditure, Rs46,356.25 is for the school sector and
the rest for higher education. India still lags behind most countries in terms
of its education spending. At around 4% of GDP, India’s expenditure on
education is behind that of comparable economies. World Bank data for 2012
shows that countries like Brazil and South Africa were spending at least 6% of
their GDP on education.


is equally a mean to enhance India’s competitiveness in the worldwide economy.
Therefore, making certain of the  access
to quality education for all, for the poor and rural population, is vital for
India’s economic and social development. Since 2000, the World Bank has
executed over $2 billion to education in India. World bank also provides
technical support for education in India. In India, education is the joint responsibility of state and union
governments. Ever since decentralization has been promoted in the field of
education, different states in India have undergone various decentralization
processes with distinct outcomes.


2.7 Management of school finance in Pakistan


In 2010, Pakistan’s constitution made education a
legal right, deeming it the state’s responsibility to provide free and
compulsory education for children aged 5-16 years. However, Pakistan’s education sector
has continuostly suffered from under-investment by the state, irrespective of
the governments in authority. Years of lack of attention to the education
sector in the form of inadequate financing, poor governance as well as lack of
capacity, has translated into insufficient number of schools, low enrolment,
poor facilities in schools, high dropout rate, shortage and incompetent
teachers, etc. All of this has led to poor quality of education for those who
are fortunate enough to get enrolled and no education for the rest.


Pakistan spends 2.4% GDP on education.
At national level, 89% education expenditure includes current expenses such as
teachers’ salaries, while only 11% includes development expenditure which is
not adequate to nurture quality of education. The official data shows the
allocation of funds for educational projects but there is no mechanism which
ensures the proper expenditure of those funds on education. The issues faced by
the education system are enormous, requiring a lot of financial resources for
interventions to put the system on the right track. It has been agreed by the
world community that economic development of a country is dependent on the good
quality of education system.


The Constitution of Pakistan does not
fix a specific percentage of GDP, or of total budget, to be provided for
education sector, each year. Thus the respective governments are not bound to
allocate enhanced education budget allocations, as recommended in policies and

There are a number of issues and challenges related to financing of
education in Pakistan. The Education Sector in Pakistan suffers from
insufficient financial input, low levels of efficiency for implementation of
programs, and poor quality of management, monitoring, supervision and teaching.
Despite some improvement in different education indicators, Pakistan has not
kept pace with other countries, and so ranks among the world’s worst performing
countries in education.

The government of Pakistan is committed to improving
both the quality and the coverage of education through effective policy
interventions and expenditure allocations. While literacy and enrolment rates
are lagging behind other countries in the region, they have been improving over
the past five years. To achieve the goals of providing higher quality education
and expanding the coverage of educational services, more resources will need to
be allocated to providing training and high quality facilities. The existing infrastructure
is not being properly utilized in several parts of the country. There are
various challenges that include expertise, institutional and capacity issues,
forging national cohesion, uniform standards for textbook development, and quality
assurance.The Government of Pakistan is looking
to increase resources for the education sector by ensuring proper and timely
utilization of funds in order to achieve the target of 4.0 percent of GDP by
2018. The provincial governments are also spending sizeable amount of their
Annual Development Plans (ADPs) on education to achieve the target.


3.0 Conclusion


In conclusion, countries around the world, particularly the developing
ones, the government sector primarily has the obligation to manage the public
money to ensure a successful flow of money for education.the management of
school finances is one of the most challenging task if there is little or no
training or expertise. Financial management involves budgeting, granting the
money, accounting and financial reporting, evaluating and the critical aspect
of auditing and internal control. To ensure a continuous provision of education
to society, educational resources have to be directed and allocated to the
establishment and improvement of the teaching and learning process. As
resources are essential and finances are necessary to get the resources,
financial aspect thus plays a role in ensuring a continuous access to education
for society.