Does local financing make primary schools more efficient : the Philippine case

In the highly centralized system of the Philippines, local funding provides the only source of flexibility to meet specific and urgent needs. The government in Manila, which pays all teacher salaries, finds it easier politically in times of fiscal belt-tightening to cut recurrent costs. Although local funds are a relatively small percentage of the education budget, they make an important contribution to covering maintenence and operating costs. The total cost of education per student also appears to lower in schools with greater local financing. Administrators and teachers have greater incentive to be cost-effective when forced to consider the effect of their behavior on the people who live and work in the local community. The policy implications of these findings for the Philippines, as well as other developing countries, are important. They strongly suggest that decentralization will increase efficiency. Without an increase in local funding, the quality of primary education will suffer.