RATIONAL CRITERIA FOR ALLOCATING FUNDS WITHIN THE EDUCATIONAL SECTOR IN THE NIGERIAN ECONOMY

RATIONAL CRITERIA FOR ALLOCATING FUNDS WITHIN THE EDUCATIONAL SECTOR IN THE ECONOMY

By
Dan-Eheremwen ENOWOGHOMWENMA
Introduction
The purpose of this paper was to explore and formulate recommended criteria for allocating funds within the educational sector of the economy and the strategies for improving the allocation of funds to support greater product (students ') performance. Allocation of funds within the educational sector of the economy is issues of paramount concern to all levels of educational system both at federal, state, and local government level. The high expectation of the society for educational products (students) and teachers to perform at higher levels, and for schools to guarantee the success of all students, the question of how best to support the expectation through effective and efficient allocation of funds becomes even more critical. Funds as a resource have remained a controversial issue at all levels of the educational sector in the economy. Okunamiri (2000) noted that educational finance critically examines all the costs and expenditure in the production of educational services which is both labour and capital intensive.
Funds allocation is one of the most challenging tasks that our educational sector faces, whether they are in the early stages of reform or years into sustaining improvements. To sustain improvement, schools must devote sufficient funds to fully implement priority goals before moving on to others. Knowing how to allocate Funds effectively can lead to long-term accomplishment of goals rather than short-lived success. Facing the challenge of funds allocation begins with knowing the range of funds available. But knowing at one point in time is not enough; schools must periodically take stock of their funds. This means revisiting regularly whether funds are allocated in the most appropriate ways to achieve school 's goals.
Education has been in crisis for many years, much of the difficulty lies in the fact that the sector is poorly funded. This result in shortages of material and human resources experienced in the system: lack of qualified teachers; high turnover rate of teachers; shortage of classrooms, and a host of other problems. These difficulties have been most pronounced at both the primary and secondary schools levels. The system of education at all levels has undergone rapid changes and growth within a context of an unstable economy. The educational sector continued to expand even though there were substantial economic setbacks. The economic crisis has had a negative impact on the educational system and played a major role in the decline of the quality of education offered.
The 1970s were the period of the oil boom in Nigeria. The economy expanded and with it came rapid growth and development of the education sector. By the 1980s, in contrast, major economic problems were encountered following the decline in revenue from petroleum products. The decline in the real gross domestic product in the 1980s and 1990s was estimated to be 6%. By 1994, the Central Bank of Nigeria reported that the money supply, particularly by way of deficit financing, had increased tremendously in a period of ten years. By 1995 the value of the Naira had fallen from a US$ ratio of 1:1 in 1985 to one of 85:1. For budget purposes the rate used at present is N100: US$1. The rate of inflation remained high and this had a negative impact on the education sector as well. Funding responsibilities during the crisis were transferred from one level of government to another, as well as to families, to help subsidize education through fee payments at secondary school and in higher education (Moja, 2000).
According to CBN (2000), poor financial investment has been the bane of Nigerian education system to the extent to which the budgeting allocation has been very low compared to others. Furthermore, the federal government allocation to education has declined steadily since 1999 and is much lower than the average in the last 13 years of military rule. This is particularly important in view of huge increase in number of intake at all levels of education - primary, secondary and tertiary. This present paper has examined the allocation of funds in educational sector of the economy. Hinchliffe (2002) estimates that education expenditure is equal to only 2.4% of GDP and 14.3% of government expenditure. Ross and Ward (1999) saw funding formula as referring to the application of an agreed set of explicit rules that are applied systematically and impartially in other to allocate resources among schools with the objective of increasing equity in the allocation of government budget to institutions according to their needs. The share of these funds going to primary education has dropped to 35% and secondary education 's portion has remained relatively unchanged at 29%, but tertiary education 's share has nearly doubled to 35%. This information and the recent allocation shares for education have shown that Nigeria deviates sharply from regional and international norms.
Schools that have authority over their budgets are better able to sustain school improvement efforts because they can direct money to support priority goals and programmes (NCREL, 2000; Odden & Archibald, 2000; Klein, Medrich, & Perez-Ferreiro, 1996). If a school does not have adequate budget authority, it may need to seek funding outside or form partnerships to support its priority reform efforts (Klein, Medrich, & Perez-Ferreiro, 1996).
To use financial resources wisely, schools also should understand guidelines for combining various funding streams. In particular, schools should be familiar with federal regulations that allow funds to be combined to support school improvement. Combining funds is a good strategy for sustaining improvement because it allows money marked for special programmes to be redirected to support the school 's overall academic priorities.
There has been three generation formula for the allocation of funds:
First generation formula, allocation was based on pupils/teachers and staff ratio with no increment from year to year. This formula assumes that all at a given grade level in a school have the same educational needs and hence cost per student is the same. Ross and Ward (1999) and Wilawsky (1998) agreed that this method should be referred to as historic or incremental method. Samuel (2002) concluded that historic funding formula is based on what has been happening in the funding agency allocation to education without any regard to the actual educational needs of the students. Basic needs are likely to be eroded because of budget pressures, competing political values and inflationary needs
Second generation formula is developed in order to account for the differences in the needs of the students. This implies that some students cost more to educate than others. A formula such as, Ross index from Australia which indices made up of variables such as lack of fluency in language of instruction among other factors which correlates with students level of education.
Third generation formula, Moss and Guither (1976) were of the opinion that modern formula, that is, the third generation formula is date back to early 50 's with development of California faculty formula. Rose et al (1999) noted that this formula were developed in the 60 's and 70 's in order to guide resource allocation decision for educational programmes in U.S, France and United Kingdom. Moss and Guither (1976) concluded that as the best practice due to its cost based incentive appropriateness its detailed structure.
There has been clear departure from the generational funding formula to other formula as follows:
1. Need Based Funding Method: This is a method or an arrangement that seeks to ensure that the resources allocated to each school are derived directly from a systematic analysis of what each school needs in order to provide a specified quality of education to schools.
2. Discretion Funding Method: The schools are funded according to the opinion and judgments exercise by funding agencies or administrator.
3. Bidding Method: The schools presents a business case for the funding based on specific criteria. The schools are funded based on the findings of the funding agency who considered the funding necessary.
4. Performance Funding Method: (Klein, Medrich, & Perez-Ferreiro, 1996) were of the opinion that performance funding relates financial allocation to prescribed level of achievement. It ties state funding to institutional performance thereby encouraging external accountability and instructing performance.
5. Activity Led Funding Method: This approach is based on the analysis of the actual costs of the activities required to provide and support specified educational programmes in schools.
Okebukola (2003) suggested that performance based funding approach model could be a major allocation mechanism used by the National Universities Commission (NUC). This model ranges from a formula approach as research block funding to a construct type where satisfactory performance is made a condition of funding with suitable reward or penalties applied. School finance analysts point out that there are three commonly used criteria or objectives for informing decisions for raising and allocating school resources: adequacy, equity, and efficiency (Levin 1995; Monk 1990).
Adequacy refers to the mobilization of sufficient resources to support a desired level (in terms of both quantity and quality) of educational services. Equity relates to fairness in resource mobilization and allocation so that children with similar characteristics are treated equally (horizontal equity) and that children with different needs receive different treatment (vertical equity). Efficiency in resource allocation in education refers to maximizing the performance of the education system given resources. Thus in assessing the impacts of a school-finance system, one needs to ascertain the defining criteria and examines the extent to which the system meets such criteria. In addition to decision-making criteria, experience has also shown that transparency and accountability are two system features that could enhance the operation of the system with respect to its stated objectives.
Conclusion
Funds are vital factors that make a system functions especially the educational sector that is not profit marking oriented. It is the provision of resources into system and the effective allocation and utilization of such resources that determine the success or achievement of the set goals of the system. So, funds are very important in the development of qualitative education. The success of educational sector in the economy otherwise depends on the availability and efficient allocation of funds.
Recommendations
From the above discussions, it is therefore recommended that the combination of both the generational and the deviation from the generational formula which are Need Based Funding formula; Discretion Funding formula; Bidding formula; Performance Funding formula and Activity Led Funding formula should be employed in allocation of funds within the educational sector of the economy by the various stallholders
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